Shares of some rare earth companies powered higher Wednesday after China’s commerce ministry revealed that the country is restricting the exports of two metals, gallium and germanium, important to the manufacturing of semiconductors beginning August 1.
MP Materials Corp shares gained 5% to $24.78 in early Wednesday trading while shares of Australia-listed Lynas Rare Earths Ltd (ASX:LYC, OTC:LYSCF) rose 2.2% to A$7.36.
Under the new regulations imposed by China, exporters will be required to seek a license to ship the rare earth elements, and applications for the export licenses must identify importers and end users and stipulate how these metals will be used, which China stated is for national security purposes.
China currently produces about 650,000 kilograms of gallium per year, or 94% of global production, Investing.com reported.
Gallium is a soft silver metal used to produce compound semiconductor wafers for electronic circuits, semiconductors and light-emitting diodes, while germanium is used in the manufacturing of fiber optics to transfer data and information.
MP Materials owns and operates the Mountain Pass Rare Earth Mine and Processing Facility in California, the only integrated rare earth mining and processing site in North America.
Meanwhile Lynas, the world’s second largest producer of separated rare earth materials, owns the Mt Weld mine in Western Australia, one of the world’s highest grade rare earths mines, according to the company.