The Rare Earths Boom: A New Frontier in Geopolitical Dynamics
As the world witnesses a surge in geopolitical tensions, the focus has shifted to critical minerals, notably rare earths, as a potential game-changer in the international landscape. This shift has fueled a remarkable rally in U.S.-listed rare earth mining stocks.
In recent months, companies like Critical Metals have seen their shares skyrocket by over 241%. Other notable firms such as NioCorp Developments, Energy Fuels, and Idaho Strategic Resources have also experienced more than 100% gains. Year-to-date, Energy Fuels’ shares have quadrupled, while NioCorp Developments has nearly quintupled.
The U.S.-China Geopolitical Chessboard
Rare earths have emerged as a pivotal element in the power play between the U.S. and China. Tony Sage, CEO of Critical Metals, which owns one of the world’s largest rare earth deposits in Greenland, likens the current rare earth market boom to historical booms in gold, oil, and technology.
“I talk of it like this, I mean, there have been four big booms. You had the gold boom in the 19th century, the oil boom in the 20th century, in the early 21st century you had the tech boom — and now you’ve got the rare earths boom,” Sage stated to CNBC.
We are going from a philosophy of ‘fill the gap’ through imports to ‘mine the gap’ domestically or regionally.
Audun Martinsen, Head of supply chain research at Rystad Energy
The Essence of Rare Earths
Comprising 17 elements, rare earths are integral to modern technologies, including smartphones, electric vehicles, and military equipment. Currently, China holds a near-monopoly on these elements and recently threatened to tighten export controls, leveraging its supply chain dominance. Nevertheless, a meeting between U.S. President Donald Trump and Chinese leader Xi Jinping resulted in a delay of the proposed export restrictions, boosting U.S.-listed rare earth stocks.
Critical Metals’ Sage remains optimistic, though he warns of potential pitfalls: “There’s going to be a lot of rare earths companies that won’t make it … because when there’s a boom, there’s hype. And when there’s hype, there’s overexuberance in investing.”
The Supercycle and Market Dynamics
Kevin Das from New Frontier Minerals echoes the sentiment of a market boom but anticipates fluctuations. “People are saying we’re in an uptrend on what is a bigger supercycle,” Das remarked, attributing the trend to low commodity prices and underinvestment.
Das sees parallels with the Biden administration’s support for clean energy projects and Trump’s backing of rare earths, predicting a fruitful period in the coming years.
However, not all share this optimism. Audun Martinsen of Rystad Energy views the surge in stock prices as a mix of geopolitical tension and speculative momentum. He suggests that rare earths are central to global industrial strategy but cautions that the journey toward a stable supply chain will be challenging.
Impact on Clean Energy Transition
Gernot Wagner, a climate economist at Columbia University, identifies structural and political factors driving global competition for critical minerals. He highlights China’s strategic investment in green industrial policy, underscoring the importance of an integrated supply chain.
Wagner notes, “Some attempts to onshore supply chains are eminently justified for national security and other reasons, and those attempts will increase prices and stocks of U.S. mining companies.” He also points out that current geopolitical maneuvers could influence market dynamics.
Original Story at www.cnbc.com