The world is in desperate need for rare earth supply outside of China. Not only is the U.S. trying to new supply, Europe is in desperate need, too. In fact, according to the South China Morning Post, “In a speech touting the bloc’s ‘industry strategy’ this week, European Commission President Ursula von der Leyen pointed to the scarcity of raw materials needed to power the switch to electric vehicles and green energy sources, much of which are buried in China.”
“We import lithium for electric cars, platinum to produce clean hydrogen, silicon metal for solar panels,” she added. “Ninety-eight per cent of the rare earth elements we need come from a single supplier: China. This is not sustainable. So we must diversify our supply chains.”
The situation has become so dire President Biden signed an executive order on supply chain security, noting, “From rare earths in our electric motors and generators to the carbon fibre used for aeroplanes – the United States needs to ensure we are not dependent upon foreign sources or single points of failure in times of national emergency.”
Most of the companies looking to break China’s stranglehold on the industry are still in the planning or exploration stages, and many of them are still private. But there are a few ways for savvy investors to get some skin in the rare-earth game.
Continue reading to find out which three non-Chinese rare earth tickers our research team recommends.
Lynas Rare Earths (OTC: LYSCF)
Lynas Rare Earths (OTC: LYSCF) is only one of two companies in the world who have rare earth processing capacity that is not located in China. Other companies are looking at significant investments to build more global processing capacity, but this will take time and hundreds of millions (if not billions) of dollars, never mind that ore supplies that are currently under contract to be processed in China. Lynas also recognizes this and has announced construction of additional rare earths processing centre in western Australia. As you can see, it has shares that trade on the U.S. OTC markets.
The company has a partnership with private Blue Line Corp. to develop rare-earths processing plants in Texas because we can’t be independent if we’ve got to send our rare earths to China for processing.
The joint venture has been chosen to receive funding by the Pentagon from the DPA to the tune of $30.4 million to “build a Texas facility to process specialized minerals used to make weapons, electronics, and other goods,” as reported by Reuters.
MP Materials (NYSE: MP)
MP Materials (NYSE: MP), the largest rare earth materials producer in the Western Hemisphere, is a recent return of the Mountain Pass rare earths mine to the space. The only rare earths mine in the US was recommissioned in 2017 after a storied history (anyone remember Molycorp?) of corporate intrigue and insolvency. Clearly, the public markets love the idea of Mountain Pass and management’s Stage II and Stage III plans, as the share price has rocketed to levels at which some analysts are calling a massive short. However, let your runners run, as MP Materials is one beneficiary of the US Government’s determination to create a strategic critical metals reserve and MP Materials is in the game.
A significant knock on the Mountain Pass mine however is that it produces none of the heavy rare earths, which are so critical for all of our technology nowadays. Secondly, the company is currently sending its’ production to China for processing – problematic until the company can fund and deliver on their stated future expansion plans.
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Energy Fuels Inc. (NYSE: UUUU)
Energy Fuels Inc. (NYSE: UUUU) CEO Mark Chalmers was a key participant in the drive for the establishment of a critical materials reserve of up to 35 strategic metals to be created in the US. Part and parcel of this is the company’s 100% owned While Mesa Mill, which is licensed for 8 million pounds U3O8 per year and can process 2,000 tons of ore per day and is the only conventional uranium plus vanadium processing facility in the US. More importantly, in just nine months, the company pivoted to the rare earths sector and will be producing a rare earth concentrate from monazite ore sourced in the US. This will require only minor processing adjustments within the White Mesa Mill with relatively minimal capital costs, with first product expected to be produced in Q1/21.
Going forward, Energy Fuels is engaged with a number of leading rare earths industry experts across a broad spectrum to advise the company on the rare earths segments including a technical agreement with Neo Performance Materials, a US Department of Energy contract (along with Penn State University) for the recovery of rare earths from coal. The company is also working with noted rare earths industry expert Jack Lifton.
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