The Lithium & Rare Earth Frenzy Is On

The frenzy to secure critical metals is on and as usual, the groups that need them the most have been asleep at the wheel.

In a precursor of what’s to come in the uranium space — because the utilities continue to nap — the biggest consumers of critical metals are now scrambling to source lithium, nickel, cobalt, rare earths, copper, and other key resources.

General Motors (NYSE: GM) says it plans to source rare earth magnets for its future electric vehicles from new U.S.-based manufacturing facilities under two separate deals with ​​MP Materials (NYSE: MP) and privately-held Vacuumschmelze.

MP Materials will build a neodymium-iron-boron (NdFeB) magnet facility where I live in Texas that will supply enough magnets for GM to build 500,000 EV motors.

The rare earths for those magnets will come from MP’s California mine.

GM hopes to sell more than one million EVs annually by 2025.

According to Shilpan Amin, GM’s vice president of global purchasing and supply chain:

“The more we can recover natural resources for batteries and EVs from North America, process them here and manufacture them ... the more value we can create. Our strategy is to control our own destiny.”

Good luck with that.

In Europe, the European Commission is planning to unveil a proposal early next year that would allow Brussels to declare emergency powers in an effort to secure critical metals during a crisis. 

The law would include “mid-to-long-term measures to address structural strategic dependencies, diversify sources of supply and increase EU industrial capacities.” 

Europe is well aware that it sources 98% of its rare earth metals from China and magnesium — needed for cars — shortages this year have exposed vulnerabilities in other parts of the supply chains. 

If Europe, the U.S., or anyone outside of China is going to compete in the production of lithium, rare earths, and other electric vehicle inputs... It's going to need to get very aggressive about developing those supply chains or face a future where —  yet again —  everyone is dangerously dependent on one country for a major source.

Those of you positioned in companies with exposure to these metals will do great. 

The commodity supercycle is on to kick-off 2022. 

See how we’re getting positioned here.