News Summary
Cleveland-Cliffs is considering developing a rare earths mining business, with sites identified in Michigan and Minnesota. This comes amid increasing U.S. dependence on rare earth imports from China, prompting a push for resource independence. The company’s shares surged after a recent earnings report, indicating a potential shift in the U.S. rare earth industry landscape that could foster domestic job creation and reduce reliance on foreign suppliers.
Cleveland, Ohio – Cleveland-Cliffs is considering the development of a rare earths mining business, according to its CEO Lourenco Goncalves, who made this announcement during an investors’ call. The steelmaker has pinpointed two potential rare earth sites in Michigan and Minnesota based on geological surveys and is collaborating with geologists to assess the commercial viability of these deposits.
This move comes amid rising interest in rare earth elements, which are vital for various technologies, including U.S. weapons platforms, electric vehicles, semiconductors, and robotics. Currently, China maintains a dominant position in the global rare earth supply chain, leading to a heavy reliance by the U.S. on Chinese imports.
Following the announcement about the potential mining operations and a third-quarter earnings report that showed a narrower-than-expected adjusted loss, Cleveland-Cliffs’ shares surged over 20%, closing at $16.18. The report revealed an adjusted loss of $0.45 per share and a 3.6% increase in revenue, reaching $4.73 billion, albeit falling short of analysts’ forecasts.
Concern Over Rare Earth Dependence
The significance of Cleveland-Cliffs’ exploration comes at a pivotal time as recent actions by China, including the imposition of strict export controls on rare earth elements, have prompted reactions from U.S. officials. President Trump has even threatened 100% tariffs on imports of these critical materials, highlighting the urgency for the U.S. to secure its own supply chain.
The U.S. currently has only one operational commercial rare earth mine, owned by MP Materials, which recently struck a deal with the Defense Department that included equity stakes and pricing agreements. Investor speculation suggests that similar partnerships may be sought by the Trump administration with other domestic companies engaging in rare earth mining operations, particularly if Cleveland-Cliffs is successful in its endeavors.
Aligning with National Strategy
CEO Goncalves emphasized the necessity for American manufacturing to decrease its reliance on foreign nations, particularly China, for essential minerals. The potential success of Cleveland-Cliffs’ mining sites would align well with the U.S. administration’s strategy to achieve independence in critical mineral resources, aimed at bolstering national security and economic resilience.
In addition to the prospect of rare earth mining, Goncalves commented on signs of recovery in demand for automotive-grade steel, attributing this to current trade policies. Cleveland-Cliffs has also revised down its estimates for full-year capital expenditures and selling, general and administrative costs (SG&A), contributing to its overall positive market response.
Market Impact and Future Prospects
The increase in Cleveland-Cliffs’ share price reflects a broader market trend among companies involved in rare earths mining, which have seen trading activity surge in light of recent U.S.-China trade tensions and ongoing agreements related to rare earth supplies. As the global landscape shifts towards securing resource independence, Cleveland-Cliffs’ strategic venture into rare earth mining could position it favorably within both the market and the national interest.
As the company continues its exploration and evaluates the economic feasibility of the identified sites, the implications of its success could potentially reshape the U.S. rare earth industry landscape, reducing dependence on foreign sources and fostering job creation within the domestic mining sector.
Deeper Dive: News & Info About This Topic
HERE Resources
Cleveland-Cliffs to Begin Domestic Production of Rare Earth Minerals
Additional Resources
- CNBC: Cleveland-Cliffs Explores Rare Earths
- Wikipedia: Rare Earth Element
- Fox Business: U.S. Steelmaker Pivots to Rare Earths
- Google Search: Cleveland Cliffs Rare Earths
- Bloomberg: Cleveland-Cliffs and Rare Earth Exploration
- Google Scholar: Cleveland Cliffs Rare Earths
- Mining.com: Cleveland-Cliffs Eyes Rare Earths
- Encyclopedia Britannica: Rare Earth Element
- Seeking Alpha: Cleveland-Cliffs Surges on Rare Earth Plans
- Google News: Cleveland Cliffs Rare Earths
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