Stocks were mixed in early trading, with a decline in tech names after Friday’s turnaround. Tesla share price has shed nearly 33% since it’s all time high in late January, partly due to a whole barrage of younger EV companies making their mark on the scene. The expected widespread adoption of EV use will also boost the need for rare earth elements, but we use rare earths for many other things too.
Everything from our cell phones to the lighting in our homes rely on rare earth minerals, not to mention the importance of rare earth minerals for defense, weaponry and other advanced technology.
China controls about 80% of rare earths supply and has been considering an export ban, leading to fears it will gain military and commercial advantage over the US and Europe.
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. However, our research team has a recommendation for savvy investors who want to get some skin in the rare-earth.
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.
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