Cleveland-Cliffs: New Opportunities in Raw Materials

Cleveland-Cliffs' Innovative Step

Today, China's new restrictions on rare earth materials have triggered a political and economic turmoil globally. However, this trade conflict has unexpectedly created an opportunity for American companies like Cleveland-Cliffs (CLF) to enter the rare earth mining sector.

Developments Catching Investors' Attention

The Ohio-based steel company announced that it has discovered two promising areas for the extraction of rare earth materials. Following this announcement, investors have tried to get involved in the resource game, boosting their stock values by over 20%. The sudden excitement in the mining sector has gained momentum similar to previous institutional pivots, but this time, it is truly about mining.

Era of Corporate Nationalism

Cliffs' ambition heralds an era of corporate nationalism. The second year of Donald Trump's presidency creates an atmosphere where trade conflicts will be decisive. Companies aligning their priorities with national goals will stand out as a significant theme in 2025 and beyond.

CEO Lourenco Goncalves stated in the company's latest quarterly earnings report, "If we succeed, Cleveland-Cliffs will align with the national strategy for critical material independence. American manufacturing should not be dependent on China or any foreign country for the minerals required. Cliffs aims to be part of this solution."

A New Weapon in the Trade War

Cliffs, with its new strategy on rare earths, offers more than just earning money from its existing assets; it provides further opportunities for engagement in the trade war. The government's investments in rare earth mining, processing, and magnet production indicate that some facilities may not become operational before 2028.

However, it is worth noting that mining is theoretically easier than chip production. Niron Magnetics, based in Minnesota, has initiated a project with Stellantis (STLA) to develop an engine that does not contain rare earth elements.

Uncertainties for the Future

However, the future of Cliffs remains uncertain as to how it will shape if the political atmosphere changes. If the next administration reverses current policies, where will Cliffs stand with the influx of cheap Chinese rare earths into America?

In the markets, a promise of a solution to the foreign-dependent supply chains is becoming important enough to stimulate the markets, despite delays.