Shares of Energy Fuels (UUUU 10.35%) rallied another 12.3% on Tuesday as of 2:35 p.m. ET, marking a third straight day of double-digit games.
Energy Fuels owns the White Mesa mill, which is the only U.S.-based facility that can process certain minerals, such as monazite, into high-purity rare-earth element oxides.
Since President Trump and Chinese President Xi Jinping renewed their trade war late last week, especially around the subject of rare-earth elements, Energy Fuels has been on a tear.
Image source: Getty Images.
Overnight, China appeared to make another escalation ahead of talks in the coming weeks, sending Energy Fuels up for a third straight day, with the stock now up over 420% on the year.
Rare-earth element outsourcing comes back to bite the U.S.
Today, China imposed sanctions on five South Korean shipping firms, essentially preventing Chinese exporters from doing business with them. The move appears to be the latest salvo in the escalation to trade tensions that began last week, when China imposed greater export restrictions on rare-earth elements.
Rare-earth elements are crucial metals used in a variety of industrial and military applications used by the U.S. and others all over the world. Yet China manages to control almost the entire market, with 70% of global rare-earth mining but a whopping 90% of the separation and processing operations that the world needs.
This is what makes Energy Fuels' White Mesa mill so potentially important, and it's likely the reason Energy Fuels' stock has rocketed over the past three days and over 420% this year, despite Energy Fuels' main mining operations being in uranium. But uranium has become more important this year too, amid the nuclear energy push to serve AI data centers.
U.S. Treasury Secretary Scott Bessent responded unfavorably to the provocation, saying that China's economy is weakening and that this latest move is an indication China appears to "want to pull everybody else down with them." Although today's back and forth mentioned shipping and not rare-earth elements, the market is rightly focusing on these materials as a key bargaining chip between the U.S. and China.
Energy Fuels doesn't trade on fundamentals, but it's a hedge
Some commodity stocks, such as oil, gold, or in this case, rare-earth elements, can function as a hedge against certain geopolitical "Black Swans," such as China cutting off rare earths to the U.S. or others.
That makes Energy Fuels a potential stock to own. But investors should also be aware its current valuation is detached from fundamentals. Energy Fuels has only made $65 million in revenue over the past 12 months and is losing money, and its current market cap of $6.1 billion is almost 100 times sales.
Still, the past year of tariffs and trade wars has exposed vulnerabilities of the U.S. having outsourced critical mining and manufacturing operations over decades. Thus, companies like Energy Fuels, which have invested in strategic U.S. assets, seem poised to benefit.
