What happened
Rare earth company MP Materials (MP -0.19%) saw a material jump in its share price Wednesday. The stock shot 6% higher thanks to ostensibly negative news from overseas. Such performance crushed that of the bellwether S&P 500 index; the leading market indicator slumped by 0.2% on the day.
So what
China, a major source of numerous rare earth materials, is about to impose heavy curbs on the export of such goods. Its Ministry of Commerce will restrict exports of germanium and gallium to foreign companies that are licensed by the government agency specifically for that purpose.
According to Chinese authorities, the new regulation is critical for protection of its interests, and for bolstering national security. It comes into effect on Aug. 1.
Currently, China produces 94% of the world's gallium, or roughly 650,000 kilograms of the material. It is a soft metal used in the production of semiconductors.
MP Materials, which says it is the No. 1 producer of rare earth materials in the West, owns the only rare earth extraction and processing site in the U.S.: Mountain Pass in California.
Now what
Yet MP Materials' top materials are praseodymium and neodymium (also materials used for important tech components), not gallium. That being said, with the new (and fairly tight) restrictions on imports of certain important rare earths, China has opened the possibility for operators outside the country to benefit from the mining and sale of others. MP Materials very much stands to be a beneficiary of the move.
