Rare Earth Minerals, Where to Look.
In Part One, we looked at how rare earth minerals have been overshadowed by the AI and chip craze. We showed returns and statistics to reinforce the importance of this industry. Now we will explore the U.S. government’s new Ukrainian Minerals Deal and some stocks best positioned in the market.
Ukrainian Mineral Deal
The Ukraine mineral deal created a 50-50 fund between the United States and Ukraine. The fund’s goal is to spur investments and rebuild infrastructure inside Ukraine. For the USA, aid in the form of money or defense equipment is counted in this fund’s total. On the Ukrainian side, 50% of any revenue earned from newly developed Ukrainian minerals will go toward the fund. U.S. firms will be given a “wink and nod” for priority for the contracts created from the fund.
In reality, the mineral deal under-delivered on its expectations that it would benefit Americans. Currently, no contracts have been given out. I believe post-war is where benefits of this deal will finally be brought to the surface. Western money will always be hesitant to enter Ukraine while they are fighting Russia to its west.
Nevertheless, we can peek into the future and look at firms inside the United States that the government has begun to support in its quest to compete with China in rare earth minerals.
MP Materials Corp – MP
MP Materials owns and operates the Mountain Pass rare earth mine, which is the only fully integrated rare-earth mining and processing facility. As discussed earlier, processing takes 22 times more energy than mining and is something every country other than China is struggling with. MP is also opening a new facility, with the government granting them $400 million. The government is one of the largest shareholders, so they get privy to contracts in the future. Recently, the stock had a pullback away from its 52-week high, so it is in a great position to enter.
Energy Fuels Inc – UUUU
Energy Fuels is America’s leading uranium producer. It has a competitive advantage by being one of the only mines in the Western Hemisphere able to turn monazite sand into rare earth minerals. The U.S. Department of Energy is pushing for the company to expand further into rare earth minerals. If this continues, investors will gain exposure to both uranium and rare earth minerals. The stock has gained over 100% year-to-date.
Fluor Corporation – FLR
Fluor is one of the largest publicly traded U.S. engineering and construction firms. Post-war, after contracts begin to be granted, I believe it is well positioned in the market. Fluor specializes in infrastructure, plant construction, and industrial facilities. FLR has been bearish throughout the year and this is a speculative play, but there is room for growth and potential for a huge upside.
