US president Donald Trump is getting serious on rare earths, officially involving the Pentagon in the search for more supply.
Reuters has reported that Trump has written to the Pentagon under a 1950s-era US law which gives the president and the Pentagon a “wide berth to procure equipment necessary for the national defence”.
Rare earths are a group of 17 minerals used in things like precision-guided missiles, smart bombs, and jets — so the strategic value of the minerals are without question.
However, the president and the Pentagon is a sign that it doesn’t believe the market is sorting out the problem quickly enough — and it may take a more interventionist approach to secure the minerals.
Interestingly, the Pentagon has already asked miners in the US to come up with a plan to secure more home-found sources of the minerals amid the ongoing trade war with China.
China produces the lion’s share of rare earths, and so any protracted trade war with the US risks tightening supply even further.
Trump’s plea to the Pentagon to get more involved in securing rare earths is a sign that the rare earths supply outside of China may soon attract a premium.
Luckily the ASX offers several investment opportunities in companies with rare earths projects outside of China, such as Arafura Resources (ASX:ARU).
It has a world-class Neodymium-Praseodyium (NdPr) resource in the Northern Territory, about 90 minutes’ drive to Alice Springs.
It’s thought the project could supply 10 percent of the total demand for NdPr when in full operation.
This content is produced by Star Investing in commercial partnership with Arafura Resources. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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