Key Points
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The G7 seeks to fortify the supply of rare-earth elements.
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USA Rare Earth stock is speculative, so investors seeking exposure to rare-earth elements may prefer an exchange-traded fund that targets rare-earth companies.
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Bouncing back from a dip that saw it fall 5.9% from the end of trading on Monday to yesterday’s close, USA Rare Earth (NASDAQ: USAR) stock is ripping higher today. With the Group of Seven, an intergovernmental organization of seven wealthy industrialized nations, leaders meeting today and addressing the sourcing of rare-earth elements, investors are digging in deeper to — and buying — rare-earth stocks like USA Rare Earth.
As of 1:36 p.m. ET, shares of USA Rare Earth are up 12.3%.
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Shoring up the rare-earth supply chain remains a top priority of Western nations
Addressing the increasingly important role that rare-earth elements play in the global economy, G7 leaders agreed to take steps to reduce their reliance on China for these critical elements at a meeting in France.
Reuters reported today that the G7 leaders articulated a vision to reduce dependence on any individual supplier outside the G7 and partner nations for rare-earth and permanent magnets. Targeting no single nation to account for more than 60% of the supply of rare-earth metals by 2030, the G7 leaders identified a further goal of 50% “as soon as possible.”
According to research by The Motley Fool, China is the dominant supplier of rare-earth, accounting for an average of 66% of global supply annually from 2021 to 2025.
USA Rare Earth is developing its Round Top project to be a rare-earth producing mine, and it’s also working toward commencing operations of a rare-earth magnet manufacturing facility in Oklahoma.
Is USA Rare Earth stock a buy on the news from France today?
While some investors may feel motivated to bid rare-earth stocks higher today, savvy investors recognize that this news is hardly surprising. The United States — as well as other nations — have taken steps for years to fortify the supply of rare-earth elements.
Since the company is still developing the Round Top project and the Oklahoma facility, USA Rare Earth stock still represents a sizable risk. Therefore, those who desire rare-earth exposure may prefer to invest in a rare-earth exchange-traded fund to mitigate risk.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
