How this coal company could help break U.S. dependence on China for rare earths

CNBC

13-05-2025

A small coal miner headquartered in Kentucky could play an important role in helping the U.S. break its dependence on China for rare earth elements that are crucial for national defense.
Ramaco Resources unexpectedly discovered in 2023 that a Wyoming coal mine it purchased for $2 million is sitting on top of a major trove of rare earth elements. The Brook Mine outside Sheridan is estimated to contain as much as 1.7 million tons of rare earth oxides, according to an analysis this month by the mining consultant Weir International.
The discovery is potentially a major turn of fortunes for Ramaco, a relatively small company with a market cap of $571 million that mines coal in West Virginia and Virginia for steel production. It could also help wean the U.S. off imports from China, a key priority of the Trump administration.
The U.S. was almost entirely dependent on foreign countries for the roughly 10,000 metric tons of rare earths it consumed in 2023 with China representing 70% of the country's imports, according to the U.S. Geological Survey.
Beijing imposed controls in April on exports of seven rare earth elements to the U.S retaliation for President Donald Trump's tariffs. Those rare earths are critical for weapons like the F-35 warplane, which contains more than 900 pounds of them, according to the Defense Department.
The Brook Mine "has the potential to help address what is an acute national strategic supply shortfall of precisely the rare earths and critical minerals which we happen to possess," CEO Randall Atkins told analysts on the company's first-quarter earnings call Monday. "From a national security standpoint, we will never need to ship our ores to China or any other country for processing."
Only one rare earth mining and processing facility is operational in the U.S. at Mountain Pass, California. Ramaco's Brook Mine would be the first new rare earth facility in the U.S. in more than seven decades. The facility could produce an estimated 1,400 metric tons annually, Atkins said.
Ramaco aims to begin large-scale coal production at Brook Mine in June and start construction on a pilot plant for rare earths this summer, Atkins said.
"In simple terms, the coal sales will help us lower the overall cost of the rare earth mining so that we will have an extremely low mine cost basis in the critical minerals," the CEO said.
The pilot plant is expected to start operating in 2026 and run for roughly a year in order to figure out the design of the full commercial facility, Atkins said. Ramaco plans to start construction on the commercial facility as soon as late 2026 with refining and processing to start in 2028, he said.
It is unclear how much the project will cost and whether Ramaco can shoulder the burden alone. Fluor, an engineering firm, is delivering an estimate in June of the capital spending needed for the project and its economics, Atkins said.
Ramaco's stock has pulled back 11% this year as its metallurgical coal business is under pressure due to overproduction by China. The miner posted a loss of $9.5 million in the first quarter, compared with a profit of $2 million in the same-period in 2024. It generated revenue of around $666 million last year.
"They have solid liquidity, solid access to liquidity," said Nick Giles, analyst at B. Riley Securities, one of three Wall Street firms that covers Ramaco. "I don't think the weakness in the [metallurgical coal] markets is going to spoil the party here in rare earths," he said.
Ramaco is not looking for a joint venture with another company to help finance Brook Mine, Atkins said.
"We view this project as one that Ramaco is going to be able to finance on their own," the CEO said. "There really aren't any other third parties out there that are in the rare earth business in the United States that are really operating."
Ramaco is interested in pursuing federal support for the project, Atkins said. The company is in contact with Trump's National Energy Dominance Council about Brook Mine, the CEO said. Once the financial dimensions of the project are clear, Ramaco intends to look into potential federal financing, procurement or relationships with the Defense Department, he said.
Mountain Pass owner MP Materials, for example, received $35 million from the Pentagon in 2022 to build a facility to process rare earth elements. Interior Secretary Doug Burgum said last month that the Trump administration is considering making an "equity investment in each of these companies that's taking on China in critical minerals." Burgum said China dumps minerals on the global market to depress prices and undercut U.S. companies.
"You're competing against state capital because China is picking these strategically as areas that they want to invest in," Burgum at a conference in Oklahoma City.
Ramaco plans to hold a ribbon-cutting ceremony at Brook Mine in July. Senior officials from the federal government be attending, Atkins said.