The commodity trade is fundamentally driven by supply and demand. In the past, commodities like copper, steel, cobalt and lithium have been considered cyclical, fluctuating in and out of popularity. But the green revolution is changing that. Here we discuss in reference to Intel (NASDAQ: INTC), General Motors (NYSE: GM), Vale (NYSE: VALE), and Defense Metals Corp. (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D).
Traditionally subject to cyclical pricing trends, now structural shortages are forcing commodity prices to stay elevated. This is leading many companies to look at how best to prepare for the future.
Intel (NASDAQ: INTC) is building at least two of its own semiconductor fabrication plants in the United States. Tesla CEO, Elon Musk, has hinted at Tesla mining its own lithium. And legacy carmakers like General Motors (NYSE: GM) are securing their commodity supplies directly, without relying on third-party middlemen.
This illustrates the level of fear and uncertainty in the market, driving companies to take drastic action to secure their vital supplies.
One underappreciated commodity in this area is rare earths. These are elements often found with other precious metals and they also have critical importance to the technical revolution.
In 2020, COVID-19 led the rare earths industry to endure a supply chain shock. However, the rare earths industry enjoyed a rapid rise in demand as this wore off. According to Fortune Business Insight, the market is expected to grow from $2.8bn in 2021 to $5.5bn in 2028 at a CAGR of 10%.
Indeed, rare earths still represent an undiscovered commodity trade because many people remain blind to their importance.
There’s added risk to the security of rare earth supplies because the majority of rare earths are mined and processed in China. This presents a national security issue for western nations and a supply concern for businesses.
This is something Defense Metals Corp. (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) is hoping to change. Defense Metals is an advanced rare earths mineral exploration and development company with western promise. Its Wicheeda deposit in Canada has the potential to become a globally significant producer as demand for these crucial commodities ramps up.
CRUCIAL TO DISRUPTIVE INNOVATION
Rare-earth elements are used in the electric power market, defense industry and in the production of green energy technologies. These include rare earth magnets used in wind turbines and permanent magnet motors for electric vehicles.
The current production of rare earths Neodymium (Nd) and Praseodymium (Pr) is going to have to grow by 100% in the next 10 years to accommodate the electric vehicle (EV) production estimates that are based on government EV adoption targets.
But that’s just the EV numbers. With all the other innovations rare earths are used in, global production must ramp much harder and faster if it hopes to keep up.
Strategically positioned along a major forestry service road, the Wicheeda property sports excellent infrastructure, including a major hydroelectric power line, a major gas pipeline, and a nearby Canadian National Railway and major highways.
Here, at its Wicheeda Rare Earth Element (REE) deposit, Defense Metals has commenced diamond drilling.
The 2022 Wicheeda REE diamond drill campaign is expected to include up to 1,500 meters of pit geotechnical and hydrogeological drilling, 1,500 meters of further resource delineation and near resource exploration drilling, and up to 2,000 meters of 8.5 cm diameter PQ core for continued metallurgical testing. A unique advantage of the Wicheeda REE Project is the production of a saleable high-grade flotation concentrate.
Defense Metals boasts a dream leadership team in the rare earths space sporting experts with significant metals and mining experience in both a professional and academic capacity. It also has strategic advisors with links to Tesla, the CIA, and the defense industry.
SIGNIFICANT PRODUCTION POTENTIAL
Demand for rare earths is mounting, igniting reason to believe Defense Metals’ cache of rare earths will be increasingly sought after in the coming years.
As demand soars, the price is likely to stay elevated and may climb much higher. Considering Defense Metals’ current preliminary economic assessment (PEA) bases its future profitability on Nd and Pr prices of $100/kg, there’s serious upside potential for patient investors who get in early.
Additionally, the company is well funded to de-risk and advance its Wicheeda property. In just two months, after gaining 100% ownership of Wicheeda and publishing its PEA, the company privately raised a whopping $4.5m to further de-risk and advance the project.
Ultimately, Defense Metals is an undervalued stock with the unparalleled potential to grow. It has macro tailwinds at its back and an exceptional team leading it on this lucrative journey.
The Wicheeda deposit has enormous scope for significant production expansion and is near all the necessary and desired infrastructure.
Moreover, when it comes to ESG, Defense Metals wants to ensure it aligns its objectives favorably. Defense Metals stock trades competitively to peers with strong advantages in grades, mineral concentrate and near-term production potential.
Tesla recently struck a deal with Vale (NYSE: VALE) for low carbon nickel. This agreement reflects a shared commitment to sustainability. Vale’s target is to deliver 30% to 40% of Class 1 nickel sales into the fast-growing electric vehicle industry. Meanwhile, Tesla disclosed that nearly half of its vehicles in the first quarter were equipped with lithium iron phosphate (LFP) batteries.
Intel (NASDAQ: INTC) has selected a diverse Ohio-based team to manage the early excavation work for its two new leading-edge chip factories in Ohio. The factories, known in the industry as fabs, will help boost chip production to meet the surging demand for advanced semiconductors, powering a new generation of innovative products from Intel and serving the needs of foundry customers as part of the company's IDM 2.0 strategy.
General Motors (NYSE: GM) is invested alongside industry leaders and start-ups alike and is sourcing as much as possible from North America and strong trading partners like Australia. This includes rare earth materials, permanent magnets, cathode active material and lithium, as well as the cobalt agreement announced with Glencore.