BFTP: Rare Earth Day 5.0

BFTP:  Blast From The Past

Wow, here is a blast from the past.  Ahhhh, the daze of trading rare earfs!

Watch this one, folks.  It may play big in the trade war with China.

Rare earth minerals could be weaponized by China, which has essentially cornered the market — now accounts for 90 percent of world’s production — which would disrupt many firms in the U.S. tech sector, including Apple.

“There are 118 elements on the periodic table. An iPhone contains about 75 of them,”  so says Gizmodo.

 

Rare earth_1

 

Apple has announced it is moving away from rare earth minerals but we can’t yet find confirmation it has.   The stock is down over 3 percent as we write while the S&P is down about a half percent.

More on China weaponizing Rare “Earfs”,

  • President Xi Jinping’s visit to a rare earths facility fueled speculation that the strategic materials could be weaponized in China’s tit-for-tat with the U.S. on trade.
  • The Asian country raised tariffs to 25% from 10% on American imports, while the U.S. excluded rare earths from its own list of prospective tariffs on roughly $300 billion worth of Chinese goods to be targeted in the next wave of measures.
  • The U.S. relies on China, the dominant global supplier, for about 80% of its rare earths imports.
  • The visit “sends a warning signal to the U.S. that China may use rare earths as a retaliation measure as the trade war heats up,” Yang Kunhe, analyst at Pacific Securities Co., said by phone from Beijing. That could include curbs on rare earth exports to the U.S., he said.  – Bloomberg

We had a lot of fun trading these beasts after the market made them the flavor of the day just after the GFC but they fizzled out relatively fast.   Molycorp, was a fun one as the vol was nothing less than stunning.    Moly owned one big mine,  it’s Mountain Pass mine in California, which once supplied the world’s majority of rare earth minerals.

Rare earths are a series of chemical elements found in the Earth’s crust that are vital to many modern technologies, including consumer electronics, computers and networks, communications, clean energy, advanced transportation, health care, environmental mitigation, national defense, and many others.

Because of their unique magnetic, luminescent, and electrochemical properties, these elements help make many technologies perform with reduced weight, reduced emissions, and energy consumption; or give them greater efficiency, performance, miniaturization, speed, durability, and thermal stability.

Rare earth-enabled products and technologies help fuel global economic growth, maintain high standards of living, and even save lives.

There are 17 elements that are considered to be rare earth elements—15 elements in the lanthanide series and two additional elements that share similar chemical properties. – Rare Earth Technology Alliance

Molycorp eventually went bankrupt and was acquired by Oaktree.

Keep this issue on your radar.

 

Rare Earth Day 4.0

Rare earth stocks rocked today on the back of an article in PC magazinem which is really old news.   Molycorp (MCP) was up almost 10 percent,  hitting  a high of $50.29 a share, and Rare Earth Elements (REE) up almost 20 percent.   Molycorp has doubled since we first posted our views on Rare Earth Elements (REEs) in September,

Scarce commodities, which have no substitutes and critical for industry and national security?   Sounds like “Gold on Steroids” to us.  We wouldn’t bet the ranch, but don’t want to miss what could be a nice run as the market begins to focus.  This is a long-term story and experts say that rebuilding an independent U.S. supply chain could take 15 years.   The Defense Department is about to release a study on the national security aspects of the U.S. REE dependence on China.

After China cut-off rare REE exports to Japan in a diplomatic dispute, we suspected a “Sputnik Moment” and panic among end users as China controls more 90 percent of the world’s production.   These are very volatile stocks and we have existed our position looking to reload at lower prices.   Also, check out the very informative charts below from the Department of Energy.

Related Posts
Rare Earth Day
The New Gold Rush?

What is Spec? Baby, don’t hurt me, don’t me. No more!

Rare Earth Day 2.0
Rare Earth Stocks Up Big on China Restrictions
Rare Earth Day 3.0
Did the Chinese Drop a Rare Earth Trade Bomb?
Rare Earth Metals ETF (REMX) Begins Trading October 28th
China to Resume Shipping Rare Earth Minerals – NY Times

This entry was posted in Black Swan Watch, Commodities, Rare Earth Elements and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.