Rising rare-earth prices combined with a new long-term supply agreement with a customer sent shares up double digits.
Shares of Energy Fuels (UUUU 12.21%) rallied on Tuesday, rising 13.7% as of 1:26 p.m. ET.
Energy Fuels’ core business is in uranium mining and processing, but today’s rally likely had to do with its other important growth driver: rare earths.
Energy Fuels’ White Mesa mill is the only U.S. facility capable of processing monazite into rare-earth element oxides, with the vast majority of the world’s rare-earth processing taking place in China.
Today, not only did rare-earth prices spike to a two-year high, but Energy Fuels also inked an initial agreement to supply its rare-earth oxides to a U.S.-based rare-earth magnet manufacturer.
Rare earths are top-of-mind these days, putting Energy Fuels in the spotlight
Rare earths have seen a renewed spotlight amid the Trump administration’s trade war and subsequent negotiations with China. After the administration engaged in a tariff escalation earlier this year, China slowed shipments of rare earths to the U.S. Of note, rare earths are critical minerals used in a variety of industrial and defense applications.
Today saw more positive news for U.S.-based rare-earths-related companies, as prices for certain rare earths surged to two-year highs. This came as Energy Fuels mining peer MP Materials stopped shipments to China for processing, per a recent deal with the U.S. government.
In addition, Energy Fuels signed a memorandum of understanding (MOU) with rare-earths magnet maker Vulcan Elements to supply Vulcan with Energy Fuels’ high-purity rare-earths element oxides. Under the agreement disclosed today, Energy Fuels will ship neodymium-praseodymium (NdPr) and dysprosium (Dy) oxides to Vulcan for validation in its rare-earths magnets in the fourth quarter of this year. Energy Fuels will source the monazite from mines in Florida and Georgia, thereby creating an entirely U.S.-based “closed loop” supply chain for rare-earth products, from mining to processing to magnet production.
Image source: Getty Images.
Energy Fuels has more than doubled this year
Mining and heavy industrial companies can be difficult investments due to fluctuations in end commodity prices and the often high capital expenditures required. Nevertheless, Energy Fuels is now up a whopping 143% on the year, thanks to expanded U.S. efforts to wean itself off of China-sourced rare-earth oxides.
Hopefully, the qualifications with Vulcan will lead to an expanded agreement and more Energy Fuels sales volumes. Combined with renewed interest in uranium for nuclear energy to supply artificial intelligence data centers, Energy Fuels looks like a key domestic minerals supplier to watch in the years ahead.
Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.
