The Chinese government's new restrictions on rare earth materials have sparked a political and economic storm. However, this latest trade dispute has led to an unexpected outcome: an American company has announced its entry into the rare earth mining sector.
Cleveland-Cliffs, a steel company based in Ohio (stock code: CLF), announced on Monday that it has initiated exploration for rare earth materials and identified two promising mining sites. Investors have rushed into this resource sector, driving the company's stock price up by over 20%. This sudden enthusiasm for “mining” has a precedent—this time, however, it genuinely pertains to mineral extraction. In the current tense environment, a mere signal of “business transformation” is enough to sway the market, reminiscent of the period when companies flocked to pivot toward cryptocurrency/blockchain and artificial intelligence. Following Monday's announcement, investors are likely to closely monitor other mining companies, eagerly awaiting announcements of further transformations.
Despite the similarities in the rhetoric, actions, and timing of this “mining transformation” to the prior cryptocurrency boom, the situation stands in stark contrast to the chaos seen during the "Long Island Blockchain Company" era (formerly known as the ice tea company).
Cleveland-Cliffs’ ambitious move signifies a new phase of corporate “nationalism.” If trade conflicts are to become the central narrative of the first year of Trump's second term, tying corporate executives' development focus to national strategic goals will emerge as a major trend in 2025—aligning with the president's direction may confer significant commercial advantages.
Lourenco Goncalves, CEO of Cleveland-Cliffs, stated during the company's third-quarter earnings report: “If the rare earth mining plan succeeds, Cleveland-Cliffs will align with the overall national strategy for critical material autonomy, akin to our achievements in the steel sector. American manufacturing should not depend on China or any other country for critical minerals, and Cleveland-Cliffs intends to be part of the solution to this issue.”
We have seen scripts like this before—and they have indeed worked. Cleveland-Cliffs’ operational model aligns with Nvidia (NVDA), Whirlpool (WHR), many major tech companies, and the broader American manufacturing sector's ideology: to transform their businesses into vital tools for the U.S. to participate in global competition and achieve technological sovereignty.
The new restrictions imposed by the Chinese government on rare earth minerals, along with a fresh round of tariff threats from the U.S. government, highlight the strategic importance of these critical minerals while exposing the vulnerabilities associated with not having control over these resources.
Thus, Cleveland-Cliffs offers not only a new revenue generation avenue from existing assets but also a new type of “essential weapon” in the trade war—at the very least, it provides the U.S. government with potential leverage in negotiations with China.
However, "time" presents a significant barrier and constitutes the core challenge faced by the entire "reshoring" movement. Like other companies planning to expand manufacturing in the U.S., Cleveland-Cliffs will likely need years to establish infrastructure, procure equipment, and build teams.
A group of economists from Goldman Sachs released a report this weekend regarding "China's expansion of rare earth control," noting: “The U.S. government has invested in fostering the development of rare earth mining, refining, and magnet manufacturing. However, even if everything proceeds as planned, some facilities may not be operational until after 2028.” Nonetheless, theoretically, rare earth mining is less complex than chip manufacturing.
Other companies are also seeking clever alternatives. Minnesota-based Niron Magnetics announced last week it would collaborate with Stellantis (stock code: STLA) on a project to develop the next generation of electric motors—these motors would utilize magnets that do not rely on rare earth elements.
For companies like Cleveland-Cliffs, the issue of "policy continuity" remains unresolved. Should the future U.S. government repeal current rare earth related policies, lower-priced Chinese rare earths might re-enter the U.S. market; what path will these companies take then? However, in comparison to other downstream sectors, mining companies may be better positioned to adapt to such changes.
Meanwhile, even if significant delays occur, as long as there is hope of addressing the issue of "supply chains dominated by foreign entities," it could still drive market volatility and yield substantial value growth for companies.