Close menu




December 20th, 2019 | 11:11 CET

Lynas Corporation, Mkango, Ucore Rare Metals - who will benefit most from the U.S. Army?

  • Rare Earth Elements
Photo credits: pixabay.com

The market for rare earth elements is dominated by the People's Republic of China. Worldwide production of rare earths in 2018 was around 170,000 tonnes, of which 120,000 tonnes came from China. This shows how much the global industries have become dependent on a good relationship with China. In 2010, following a diplomatic dispute with Japan, the People's Republic restricted exports, which caused prices for niche metals to skyrocket.

time to read: 2 minutes | Author: Mario Hose
ISIN: AU000000LYC6 , CA90348V1031 , CA60686A4090

Table of contents:


    Political Cooperation with China

    Rare earths are important raw materials for mobility with electric drive motors, the generation of wind energy and modern communication with smartphones. Of course, the use of rare earths can be listed by a multitude of other applications, but the current mainstream topics make it clear how much the success of these projects depends on political cooperation with China. The supplier issue is particularly critical in connection with the national security.

    U.S. Army has financial leeway

    The trade dispute between China and the USA is about many issues, but also about rare earths. With a military budget of over USD 600 billion per year, the US understandably has a problem with remaining dependent on the emerging China. In this context, it was recently announced that the US Department of Defense is looking for ways to secure procurement in North America. Given annual military spending, building a pilot plant costing up to USD 20 million or completing a plant costing over USD 100 million is certainly not a problem. The U.S. Army wide financial latitude for national defense.

    Development between the major powers

    This development between the two major powers will also be exciting for companies that deal with rare earths on a daily basis. Lynas Corporation from Australia is one of the already established companies in the scene. The company currently has a market capitalization of just over EUR 1 billion. Ucore Rare Metals is a small player with a market capitalization of around EUR 36 million. The Canadian company with projects in Alaska may benefit from an initiative of the U.S. Army for obvious reasons.

    Rare earths in Malawi

    The developments around the Canadian company Mkango will be very interesting in the coming days and weeks. The company has several rare earth projects in Malawi, one of which is called Songwe Hill, and a bankable feasibility study is currently being conducted for this project in partnership with Talaxis. Talaxis will bear the cost of this feasibility study and subsequently, depending on the outcome of the study, the project will be brought into production.

    Partnership with potential

    On December 9, 2019, Talaxis' owner holding company, Noble Group Holdings Limited, signed a Memorandum of Understanding with Chinalco Guangxi Nonferrous Rare Earth Development Co, Ltd for a potential supply of 42,000 tons of rare earths. This volume corresponds to approximately 25% of the world's annual production in 2018. The press release also explicitly mentioned Mkango's Songwe Hill Project. As of September 30, 2019, Mkango had over USD 10 million in cash on its balance sheet and its market capitalization is currently EUR 12 million.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.

    The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.


    Der Autor

    Mario Hose

    Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

    About the author



    Related comments:

    Commented by André Will-Laudien on February 19th, 2021 | 10:25 CET

    Defense Metals, BYD, NEL, Plug Power - Rare earths, who is the fastest?

    • Rare Earth Elements

    Scarcity is the issue in 2021! Western governments have completely miscalculated regarding technological progress. They are now being driven by the industry; decisions that should have been made 5 years ago are now being followed abruptly. Since Battery Day in mid-September 2020, it has been clear that a technology giant like Tesla, led by Elon Musk, will enter large-scale battery mass production. What is missing is the complete closing of ranks between battery and car manufacturers so that the produced and expensively developed high-performance batteries are also installed in e-cars through corresponding demand. In coordination rounds between the automotive industry and the EU, the decision has probably already been made: E-mobility will come, and it will come in the big version...!

    Read

    Commented by Carsten Mainitz on January 26th, 2021 | 08:05 CET

    Lynas Rare Earths, Defense Metals, Arafura Resources - Rare Earths: still in time to get in before the boom!

    • Rare Earth Elements

    China has dominated the rare earths market for a long time. A supply shortage in the People's Republic and a substantial increase in demand can lead to a massive price increase of the commodity group at any time. These price increases are then often reflected in the share price of relevant players. Rare earth metals are in demand in a wide range of industries and to close the emerging supply gap the production of rare earth metals must be increased outside of China. We present three opportunity stocks that will benefit from industry trends and scarcity prices as producers or prospective producers.

    Read

    Commented by Nico Popp on January 18th, 2021 | 09:48 CET

    BYD, Defense Metals, Nornickel: Still investing in electromobility?

    • Rare Earth Elements

    Electromobility is a trend that is making waves on the stock market: Car manufacturers such as Tesla or BYD are benefiting from the rising demand and the vision of the future, but so are commodity companies. The reason: If you want to drive electric cars with low emissions, you need more raw materials for energy storage and motors than for classic combustion engines. Typical candidates are copper, cobalt, or lithium. Rare earth metals play a unique role. So far, most of them have come from China - and some are mined under dubious conditions. But anyone serious about sustainability must look at the entire value chain when it comes to electromobility and pay attention to raw materials from producers with a good ESG profile. For raw material companies outside China, this is an opportunity.

    Read