Australian Rare Earth stocks surge after MP materials' multi-billion dollar U.S. deal
Shares of Australian rare earths producers soared on Friday following news of a major deal between U.S.-based MP Materials and the U.S. Department of Defense (DoD), aimed at boosting domestic production of rare earth magnets.
Lynas Rare Earths (LYC.AX), the world’s largest rare earths producer outside China, jumped as much as 20%, reaching its highest level since August 2022, News.Az reports, citing Reuters.
Meanwhile, Iluka Resources (ILU.AX) saw a record 27% intraday surge — the biggest in its trading history. Both companies led gains on the benchmark ASX 200, which traded slightly higher as of 0558 GMT.
The U.S. government’s multi-billion-dollar agreement with MP Materials comes amid growing concern over China's dominance in the rare earths supply chain. Last month, China slashed its rare earth magnet exports by 75%, prompting production suspensions at several automakers.
Under the agreement, the DoD will become the largest shareholder in MP Materials and guarantee a floor price of $110 per kilogram for two key rare earth elements — nearly double the current prices in China.
"This signals a strong U.S. push for rare earth magnet independence," analysts at Jefferies noted, adding that Lynas could benefit significantly from renewed government support. The brokerage upgraded Lynas from "underperform" to "buy," raising its price target from A$6.40 to A$10 per share. Lynas was last trading at A$9.67.
Rare earth elements are critical components in manufacturing electric vehicles, military equipment, and various electronics. The tightening global supply has fueled investor optimism in alternative sources like Australia.
Other mining firms also saw modest gains. Lithium players Sayona Mining (SYA.AX) and Liontown Resources (LTR.AX) rose 2.8% and 1.6%, respectively.
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