Recently, Sen. Mark Kelly (D, AZ) co-sponsored a bi-partisan bill called the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022, which calls for the development of a strategic reserve of rare earth metals by the year 2025, and bans the use of Chinese rare earth metals by the U.S. military by the following year.
What is a Rare Earth Metal?
So what is a rare earth metal? Rare earth metals, also called rare earth elements or REE, are heavy metals used in numerous industrial applications, many of which are critical.
Where are Rare Earth Metals Used?
Such uses include magnets, catalysts, batteries, glass, metallurgy, polishing, pigments, and ceramics, with the primary industry users being military equipment and renewable energy technology.
The 17 Rare Earth Elements
The following are considered to be the rare earth elements:
What Countries Produce Rare Earth Metals?
According to Statista, China produces over 57% of the earths rare-earth elements, with the United States in second place at 15.6%. Myanmar (Burma) is third at 12.3%, followed by Australia and Madagascar.
The Top Rare Earth Elements Stocks
The leading rare earth elements company in the United States is MP Materials (MP) with a market capitalization of $7 billion. The company is in the business of rare earth mining and processing, and owns the mineral rights to the Mountain Pass Mine and surrounding areas in Nevada. It produces neodymium and praseodymium.
The company trades at 59 times trailing earnings. Revenues for the latest reported quarter rose by 36% over the previous quarter, and net income increased by over 57%.
The other big producer of rare earth metals is Lynas Rare Earths (LYSCF) (LYSDY). This Australian based company mines, extracts, and processes rare earth minerals in Australia and Malaysia.
The stock has a trailing price to earnings ratio of 55.5 and the company has a market cap of $6.7 billion. Revenues for the latest reported year jumped by 61% over the previous year. Earnings went from negative $19 million to a positive $157 million during the same time period.
There are actually over two dozen companies involved in rare earth metals, including mining, processing, selling, and recycling. To see the list, click HERE.
You also have one other option, and that is VanEck Vectors Rare Earth/Strategic Metals ETF (REMX). This ETF invests in a diversified portfolio of companies involved in the mining, refining and recycling of rare earth and strategic metals and minerals.
Hopefully, these stocks may provide a rare opportunity for your portfolio.
Disclosure: Author owns MP.
Image and article originally from www.tradinggoddess.com. Read the original article here.