They’re in your phones, your laptops, and your cars. They’re also key components of everything from innovative green energy solutions to military hardware. Rare earth elements are everywhere, and demand is only projected to grow.
Currently, the world’s largest producer of rare earths is China by a long shot, with more than 70% of rare earth elements coming from the country. Historically, that
majority control led to trade tensions, and with the US and China currently embroiled in a trade war, the US started to reassess it’s own supply.
The Trump Administration quickly realized that the US is overly reliant on China for a
number of critical manufacturing minerals and ramped up the hunt for new supplies. While the official critical minerals list contains more than 35 minerals, the mining market quickly caught wind that rare earth elements were the key.
In July, the US government
singled out rare earth magnets to the Defense Department for expedited production in case of restricted exports. Then in August, investors woke up to international headlines that
President Trump was interested in buying Greenland. Though it seemed nonsensical to some, those aware of
Greenland’s significant rare earth supplies took notice.
Governments around the world realized the opportunity at hand:
The US needs rare earths, and the race to supply them is on. China’s majority control of rare earths supply and pricing had
initially halted mining projects and shifted focus to processing and recycling, but as the government starts to allocate funds as well, they will likely go to projects all along the supply chain.
With billions of dollars at stake, everyone has been moving to get a piece of the pie. US States evaluated their home-turf projects for project recommendation to the Defense Department,
Alaska did in August with
Ucore Rare Metals Inc. (
TSX-V:UCU,
Forum). Saskatchewan began to
rapidly develop their rare earths industry and look to creating a local processing plant.
And national governments have recently joined the fray as well. In November, Australia and the US
agreed to cooperate on funding for rare earths projects, and not to be outdone, the
Trudeau government agreed to work with the US on a supply of critical metals and is
currently studying how to bolster its mining sector in critical mineral production.
Investors should keep their eyes on rare earth element stocks as the race continues into 2020 and projects start to acquire government funds. In addition to
Ucore, companies like
Avalon Advanced Materials Inc. (
TSX:AVL,
Forum) and
Geomega Resources Inc. (
TSX-V:GMA,
Forum) are positioned to potentially capitalize on increased interest and funding.
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