Shares in Australian rare earths companies have continued to test record levels following US President Donald Trump threatening fresh 100% tariffs in an escalation of the trade war with China.
President Trump over the weekend announced the new tariffs could come into effect as soon as November 1, in a seeming retaliation to China expanding the number of rare earth minerals that required licences for export by five.
Mr Trump also flagged the possibility of calling off a meeting with Chinese President Xi Jinping, which was scheduled to take place on the sidelines of the APEC summit in South Korea in two weeks' time.
Image source: Getty Images
Blindsided by Chinese move
Mr Trump said on his social media platform, Truth Social, that the Chinese moves to restrict rare earths exports were a surprise.
They are becoming very hostile, and sending letters to Countries throughout the World, that they want to impose Export Controls on each and every element of production having to do with Rare Earths, and virtually anything else they can think of, even if it's not manufactured in China. We have been contacted by other Countries who are extremely angry at this great Trade hostility, which came out of nowhere.
Mr Trump said the relationship with China had been "very good" over the past six months, but it appeared that they had been "lying in wait".
There is no way that China should be allowed to hold the World "captive," but that seems to have been their plan for quite some time, starting with the "Magnets" and, other Elements that they have quietly amassed into somewhat of a Monopoly position, a rather sinister and hostile move, to say the least.
Mr Trump said the US was considering a "massive increase" in tariffs on Chinese products coming into the US, as well as having "many other countermeasures" under consideration.
Exports of 12 of the 17 rare earth elements are now restricted by China.
Australian shares surge once again
Shares in Australian rare earths producer Lynas Rare Earths Ltd (ASX: LYC) hit a new 12-month high on the news on Monday morning, trading as high as $21.25 before settling back to be 4.5% up at $20.72, valuing the company at north of $20 billion.
Meanwhile, shares in Arafura Rare Earths Ltd (ASX: ARU) were 20% higher at 35.5 cents after hitting a new 12-month high of 36 cents in early trade today.
Shares in Brazilian Rare Earths Ltd (ASX: BRE), which last week announced it had struck a 10-year supply deal with French company Carester, were in a trading halt on Monday while the company finalised a capital raise.
Brazilian Rare Earths shares closed at $5 on Friday, up more than 200% over the past 12 months.
Lynas on Thursday announced it had struck an agreement with US company Noveon Magnetics, with which it would collaborate on setting up a scalable rare earth magnets supply chain in the US.
Noveon, Lynas said in a statement to the ASX, is a "high-performance rare earth magnet manufacturer" supplying magnets for use in electric vehicles, wind turbines, robots, pumps, "and an array of military systems".
The companies said they had committed to finalising a "definitive agreement" and would work closely with customers and the US government to ensure supply continuity for critical applications.
