Steelmaker Cleveland-Cliffs Says It Wants to Get Into Rare Earths. Its Stock Is Soaring

Key Takeaways

• Cleveland-Cliffs shares rocketed higher Monday afternoon after the steelmaker showed interested in mining rare earths, saying that two of its sites show promise.
• The steelmaker also reported a narrower-than-anticipated quarterly loss.

Shares of Cleveland-Cliffs (CLF) popped 20% Monday afternoon after it shared some news along with its third-quarter earnings: The steelmaker said it wants to get into the rare earths mining business.

CEO Lourenco Goncalves said “the renewed importance of rare earths has driven us to re-focus on this potential opportunity at our upstream mining assets.” He added that after looking at its mines, the company believes sites in Michigan and Minnesota show the most promise.

Goncalves said that if the company is successful in producing rare earths, “it would align Cleveland-Cliffs with the broader national strategy for critical material independence, similar to what we achieved in steel.”

Most of the world's rare earths are produced in China, and American companies that produce them have seen their shares soar recently as the key minerals used in a wide range of high-tech products from electric vehicles to smartphones have become a major source of contention in U.S.-China trade tensions. Shares of other companies in the sector were also higher in recent trading, as President Trump met with Australia Prime Minister Anthony Albanese to sign an agreement on rare earths.

Why This News Is Significant

Cleveland-Cliffs' foray into rare earths comes after China moved to curb exports, and as the Trump administration looks to reduce reliance on China for the minerals.

Along with the rare earths news, Cleveland-Cliffs reported a narrower-than-expected loss for the third quarter. Its adjusted loss of $0.45 per share was slightly better than what analysts surveyed by Visible Alpha were looking for. Revenue was up 3.6% to $4.73 billion, below forecasts.

Goncalves said the performance “marked a clear sign of demand recovery for automotive-grade steel made in the USA, and that is a direct consequence of the new trade environment implemented and enforced by the Trump Administration.”

Cleveland-Cliffs also lowered its estimate of full-year capital expenditures to $525 million from the previous outlook of $600 million, and selling, general & administrative (SG&A) costs by $25 million to $550 million. 

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