It may be time to rebalance a portfolio with rare earths, the high tech metals used in cruise missiles, clean energy, smart phones and audio speakers.
Many assets are in bubbles right now especially stock and real estate (NYSEARCA:IYR) values. Its hard to find cheap discounted assets trading at bargain basement valuations despite the ability to turn around quickly and make exponential moves.
Rare earths especially neodymium are critical for electric vehicles and military technologies yet pricing is controlled by the Chinese who have a monopoly on exports. This rare earth crisis is beginning to change with companies advancing deposits and technologies right here in North America independent of Chinese influence. Prices are beginning to turnaround according to many sources.
The only producer outside of China, Lynas has reported record production and revenue possibly indicating a turnaround in the entire sector boosting the shares of high quality juniors whose management teams have stood the test of time and a bear market in rare earth pricing. Researchers are looking into increasing the role of permanent rare earth magnets in electric vehicles and energy storage especially if there are safe and secure long term supplies.
The billion dollar question is does North America have the ability to increase rare earth supply domestically and separate the rare earths economically. This requires major chemical investments and Nobel Prize expertise to make rare earth separation competitive and cleaner. Unlike Lynas, Molycorp Mountain Pass appears to have failed and gone bankrupt not being able to make it through the tough times.
So I am seeing some signs of a rare earth prices rising higher as demand picks up from electric vehicles and possibly huge new weapon manufacturing for contracts the US has entered into with Foreign Allies.
The escalation with North Korea could be the starting point to send rare earths soaring as they have been firing into Japanese waters. China doesn’t mess with North Korea as they have large reserves of rare earths. A conflict in the South China Seas could be weeks away.
The US is already working on bills in Congress called the METALS Act to secure strategic supplies of rare earths. If things go crazy with N. Korea and/or the South China Seas the end user manufacturers will go berserk and pay astronomical prices for technologies and long term supplies.
Commerce $CCE.V $CMRZF and Ucore $UCU.V $UURAF will be working on separating the rare earths from Commerce’s Quebec Ashram Project at Ucore’s Strategic metals separation Complex in the engineering stage. If the Ashram Concentrate can be separated with Ucore’s Molecular Recognition Technology then I expect a potential merger or partnership.
Why does Ucore like Commerce’s ore from Quebec? Because Commerce’s ore from Ashram has a simple mineralogy, its a well advanced asset in a mining friendly jurisdiction and it could produce a mixed rare earth carbonate concentrate suitable for separation potentially using Ucore’s MRT.
I believe Ucore and Commerce have withstood the test of a bear market in rare earths and time to be the leaders in the North American REE Supply Chain. Ucore is planning on advancing their SuperLig® MRT Pilot Plan to the commercial stage and Commerce could be a critical supplier of ore to the facility.
In conclusion, a lot of assets are in bubbles. There are very few commodities so out of favor that are rising in demand and so scarce like rare earths. With geopolitical tensions in N. Korea and the S. China Seas a turn in the rare earths is inevitable. Both Ucore and Commerce were trading around a $1 back in 2010 when rare earths soared before. Now they are trading at a fraction of that valuation but that could change on one news item.