Close menu




September 14th, 2022 | 13:55 CEST

Rheinmetall, Defense Metals, MP Materials - The trend persists

  • Mining
  • Tungsten
  • RareEarths
  • Defense
Photo credits: www.defensemetals.com

And once again, the recently started upward movement on the stock markets is abruptly ended by new inflation data from the US. Consumer prices rose by 8.3% last month, the core rate by 6.3%. The figures were thus once again higher than economists' estimates, making further interest rate hikes more likely. Higher interest rates are a further burden on the economy. In addition, high demand is causing prices for urgently needed raw materials to rise further.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: RHEINMETALL AG | DE0007030009 , DEFENSE METALS CORP. | CA2446331035 , MP MATERIALS CORP | US5533681012

Table of contents:


    Rheinmetall - Lack of follow-on buying

    From a chart perspective, the picture for Rheinmetall, the supplier to the German armed forces, continues to cloud over. The interim low of EUR 146.20, marked 2 weeks ago, is approaching again. After a brief rally to the EUR 160 mark, there was no follow-on buying. The Rheinmetall share bounced off the 200-day line and has since been moving south. With the break of the critical support area at EUR 146.20, no further major supports can be identified after the sharp upswing at the end of February due to the outbreak of the Ukraine conflict. In fact, this threatens the value to close the price gap at EUR 107.20.

    From a fundamental perspective, the news for positive price movements is also limited. According to its own information, Rheinmetall has largely restored 16 Marder infantry fighting vehicles from old, decommissioned Bundeswehr stocks. They are ready for delivery, but so far, there is no export license from the German government, the Company said in response to an inquiry from NDR and ARD-Hauptstadtstudio. Rheinmetall has already begun reconditioning 14 more Marder vehicles. If necessary, another 70 vehicles from old stocks could be made usable again.

    MP Materials - Western profiteer from high demand

    As interest rates continue to rise, fears of a global recession loom, thus reducing demand for many goods. However, this affects less the critical raw materials, which are indispensable to achieving the climate goals. In addition to raw materials such as lithium, cobalt and nickel, rare earths are essential, without which neither an electric car nor a wind turbine would function. Up to 4kg of the metal alone can be found in a conventional electric car, while a more efficient wind turbine generator requires around 217.52 kg per MW of dysprosium, neodymium and terbium. In addition to the renewable energy sector, demand from the defense industry is also steadily increasing. Neodymium-iron-boron magnets are considered the strongest permanent magnets in the world. They are contained in many military weapons systems, such as precision-guided weapons, satellite and stealth technologies, unmanned vehicles, and advanced communications systems.

    In the case of rare earth metals, there is a further problem that could literally fall on the feet of the Western world in the future. A possible escalation of the Taiwan conflict could lead to sanctions against the largest Asian economy, similar to those seen in Russia, which would have fatal consequences for Western supply chains because China has a virtual monopoly on the value chain for rare earth metals. Although the share of annual production fell from 92% in 2010 to currently still 60%, the further processing with the mining and processing of a rare earth concentrate, the smelting and separation of rare earth oxides, as well as the refining for the production of rare earth metals and alloys are almost entirely covered by China. For years, the West, especially the US, has tried to minimize the risk with billions in subsidies, but currently, the dependence is still enormous. With the Mountain Pass mine there is only one western alternative, which produces about 15% of the global market volume per year.

    Defense Metals - The big growth opportunity

    The Mountain Pass mine, operated by Las Vegas-based MP Materials in the US, is already in production as reported and weighs in at USD 5.86 billion on the stock market. In contrast, Canada's Defense Metals, which owns 100% of the Wicheeda project in Canada, is a lightweight with a stock market value of CAD 38.38 million. Still, the similarities to its big brother are more than similar. The 4244 ha property is located about 80 km northeast of the town of Prince George, a mining hub in British Columbia, Canada. It is strategically located on a major logging road that connects to a highway.

    In addition to world-class infrastructure, Wicheeda has strong metallurgical similarities to the previously profitable Mountain Pass mine. According to the Preliminary Economic Assessment (PEA), it has the potential to become one of the most significant global deposits of rare earth metals. Economic metallurgy requires that the minerals and the rare earths they contain are chemically and physically such that they can be easily removed by favorable processing techniques. Bastnäsite and monazite are considered the most favourable to process. In addition, these rare earth minerals must be present in the rock as coarse, well-crystallized grains. When the Mountain Pass mine was discovered in 1950, coarse crystalline bastnäsite and parisite were easily exposed, thus becoming the preferred rare earth metal. The Wicheeda deposit also has the same coarse crystalline metals that can be processed inexpensively by conventional methods.

    A mineral exploration agreement was recently signed with the McLeod Lake Indian Band. The agreement encompasses the immediate interests of the parties with respect to mineral exploration work in the project area and provides a communication and cooperation framework for the upcoming activities. The agreement provides the McLeod Lake Indian Band with important information on how this work will occur and the economic opportunities for the community. It also provides a strategic plan for potential future commercial participation as exploration work progresses. The Defense Metals share corrected about 40% since early March due to the broader market correction and offers excellent growth opportunities due to the expected future excess demand for rare earth metals.


    Inflation data point to further interest rate hikes, and the stock markets are again heading lower. Further interest rate hikes, on the other hand, bring a global recession ever closer. Unlike other commodities, demand for rare earth metals is expected to continue to grow due to climate change and the armament of the Western world. MP Materials operates the only producing mine in North America to date. Defense Metals is another promising player operating its Wicheeda project, which is very similar to the Mountain Pass mine and thus has considerable potential.


    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 hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

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

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Juliane Zielonka on June 20th, 2024 | 06:30 CEST

    Apple, Kraken Energy, Palantir - Network effect for market expansion, who is ahead?

    • Mining
    • Uranium
    • Software
    • Technology

    Network effects play a decisive role for companies in securing and expanding market share. Apple is strengthening its consumer credit business through its partnership with Affirm. This will allow the Company to further expand its mobile payment solution in the US while it struggles with regulatory challenges in the EU. Kraken Energy is a US-based uranium exploration company strategically positioned in the global energy industry. With a focus on high-value projects such as the Apex Uranium Mine in Nevada, Kraken Energy is capitalizing on the increasing global demand for nuclear energy resources. Palantir, on the other hand, is actively expanding its business towards B2B customers, particularly through AI-driven data analysis. Which of the three companies is ahead in terms of network effects?

    Read

    Commented by André Will-Laudien on June 19th, 2024 | 07:15 CEST

    Opportunities upon opportunities: sell AI now! Nel ASA, Royal Helium, Plug Power, and BYD

    • Mining
    • Helium
    • renewableenergies
    • Electromobility

    19,887 is the new record high of the NASDAQ 100 index. Dream returns from Nvidia, Apple, and Microsoft could accelerate the stock market's growth into the summer once again. This could also make the second quarter of 2024 a good month for equities, as the saying "Sell in May and go Away" does not seem to apply this year. However, there are plenty of lagging stocks with great potential. They are currently on one side, as the attraction of the "Magnificent Seven" is too strong. We take the euphoria as an opportunity to take a closer look at a few promising stocks.

    Read

    Commented by Fabian Lorenz on June 19th, 2024 | 07:00 CEST

    Insider alert at Rheinmetall and Thyssenkrupp Nucera! Is First Hydrogen better than Nel?

    • Hydrogen
    • GreenTech
    • Defense
    • renewableenergies

    Insiders are taking action after the Rheinmetall share slipped below the EUR 500 mark in the past few days. Following share purchases last week, more board members ordered shares at the start of this week. And there is also positive news on the operational side. There is also an insider alert at Thyssekrupp Nucera. Can the German hydrogen share stop the downward trend? And should First Hydrogen be preferred over Nel? There are good reasons for this. The Canadians' hydrogen commercial vehicle has now also impressed Amazon in practical tests. The news has gone under the radar in the current negative industry environment. This presents a buying opportunity, as EUR 500 million in annual revenue potential is offset by a EUR 30 million market capitalization.

    Read