Rare earth producers have certainly been in the spotlight of investors, as the Trump administration’s trade war with China resulted in rare earth supplies from China (the world’s largest producer of these key elements) seeing export restrictions in retaliation for the very high tariffs introduced by this administration on the Chinese economy. Given the importance of these rare earths (which are actually not that rare, but the smelting and refining process of these metals is highly concentrated in China) to battery technology and development domestically and around the world, the Trump administration appears to have its eyes on the sector and finding ways to boost domestic production.
USA Rare Earth (USAR) is among the rare earth mining companies building a mine in the US (this company’s mine is located in Texas). Consequently, this is one of the key companies in this sector that investors follow closely for several reasons.
Perhaps most important for investors considering this company is a recent report highlighting USA Rare Earth’s acquisition of UK-based Less Common Metals.
Let’s dive into what this deal contains and what it means for investors considering the company.
It’s been a good chart of a year for investors following USA Rare Earths.
The incredible moves USAR stock made around the time of Trump’s tariff imposition took the stock from around the $15 level prior to the tariffs to a high of around $45 per share. That’s tripling the value in essentially a span of a month.
And while this stock’s return to earth (and below its previous level of $15) may have been a move that market participants have been waiting for, the question is whether this stock is worth buying at current levels or not.
This deal for Less Common Metals should certainly strengthen USA Rare Earth’s position in its key operating market, with the combined entity better able to fully integrate its mining and smelting process to produce a finished product. At the end of the day, that’s what the U.S. market needs: more upgrading and refining capacity for these metals. Mining the metals here, shipping them to China for finishing, and then shipping them back doesn’t seem to make much sense. But that’s how the industry works (largely) right now.
