Why Rare Earths Matter in Our Changing World

By Patricia Miller


In this article

  • Loading...
  • Want to see what you should be buying? Check out our top picks.

Rare earths are seeing rising demand as they’re used in many aspects of the green energy transition and modern life. They’re crucial and without them, many modern technologies taken for granted would simply not exist.

Rare earths consist of 17 obscurely named elements found in the periodic table. They must be mined and are often found clustered in geologic deposits Here, we discuss rising demand for rare earths in relation to Lucid Motors (NASDAQ: LCID), HP (NYSE: HPQ), Toyota Motor Corp (NYSE: TM), Tesla (NASDAQ: TSLA), and Defense Metals Corp. (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D).

Rare earths are seeing rising demand as they’re used in many aspects of the green energy transition and modern life. They’re not as widely recognized as lithium or cobalt, but they’re crucial and without them, many modern technologies taken for granted would simply not exist.

Neodymium and Praseodymium Rule

A quick search through many electric vehicle (EV) company’s quarterly reports will show mention of rare earths such as neodymium (Nd) and praseodymium (Pr). For instance, Lucid Motors’ (NASDAQ: LCID) latest 10-Q, states supply interruption or shortage of any of these elements could materially and adversely impact its business. It’s not alone; similar wording appears in Volvo’s Polestar filings.

Meanwhile, Panasonic uses Neodymium magnets in its wearable immersive gaming speaker system. While HP’s (NYSE: HPQ) HyperX also uses neodymium magnets in several of its products.

Natural resources such as lithium and cobalt have enjoyed a booming run of investment in recent years. Escalating demand with tightness in supply leads to scarcity, causing prices to soar.

Elevated prices also lead to innovative new ways of working, from advanced extraction methods to more efficient use of the resource, encouraging competition. Since EV adoption has increased, innovation in lithium battery production has risen too.

Toyota Motor Corp (NYSE: TM) is leading the way in solid-state battery production with over 1,000 solid-state battery patents in play. That’s more than any other car maker. Solid-state batteries consist of solid electrolytes rather than liquid. Toyota believes this technology is a potential cure-all for many drawbacks facing EVs running on conventional lithium-ion batteries. For instance, the distance traveled on a single charge plus the time it takes to charge.

In contrast, Tesla (NASDAQ: TSLA) remains a fan of the traditional lithium-ion technology but is also making changes in how it commissions batteries. For example, Tesla has said it will start using lithium iron phosphate (LFP) batteries in its standard-range vehicles, also eliminating the need for cobalt.

Rare Earths Have Staying Power

While innovation is evident in the broader lithium and cobalt market, it’s yet to become a problem in rare earths. Indeed, the price of rare earths would have to exponentially rise before explorers and producers would see innovation as a cause for concern.

Defense Metals Corp. (TSXV: DEFN)(OTCQB: DFMTF)(FSE: 35D) is an advanced mineral exploration and development company operating in the rare earths space. The company has a distinct competitive advantage as its Wicheeda deposit has the potential to become a globally significant producer.

A recent Independent Preliminary Economic Assessment (PEA) commissioned by Defense Metals offers significant insight into the untapped potential of Wicheeda.

The PEA is based on 4000 meters of drilling, yet Defense Metals has already surpassed that. The company completed an additional 5,300 meters of drilling and has just begun a further 5,000m drill program.

Defense Metals has envisions approximately 25,000 metric tons per year of production for 16 years (as per PEA). The company expects its production outlook will grow, based on the success of their 2021 drill campaign.

Moreover, the PEA was based on $100/kg Neodymium and Praseodymium (Nd and Pr) long-term prices, which gives Defense Metals a net present value of more than $516 million. However, Nd and Pr are currently already over $150/kg. At $150/kg Nd and Pr, the company is valued at $1.6bn – beyond that, the upside potential is extensive. Current pricing is hovering around the $200 mark.

Defense Metals’ Wicheeda deposit would represent approximately 10% of the current global production of vital rare earths if it were in production today. And Defense Metals plans to get that to production within the near term.

Putting this in perspective, the current production of rare earths Neodymium (Nd) and Praseodymium (Pr) is going to have to grow by 100% in the next 10 years just to accommodate the electric vehicle (EV) production estimates that government EV adoption targets have mandated.

But that’s just the EV numbers. These rare earths are also required to generate renewable energy. So, to meet this mounting demand from several sectors, global production must ramp up much harder and faster if it hopes to keep up.

Conservatively Managed

Defense Metals compares favorably with several significant players currently operating in the rare earths space. That’s because competing companies face higher infrastructure CAPEX for their projects before they even begin building production facilities.

In contrast, Defense Metals is conservatively managing CAPEX while plans for refining processing facilities have been factored into the PEA.

The US recently passed a bill, ‘Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022’. This aims to block defense contractors from using Chinese rare earths, which may prove beneficial to companies based in North America.

The defense industry is a major consumer of the elements, and the US wants to avoid shortages and reduce China’s dominance in the sector.

Lucid Motors (NASDAQ: LCID) is a Californian EV maker. It has set new EV standards for the longest-range, fastest-charging EV on the market in North America. Now it plans to expand in the European market. This includes two versions of its Lucid Air Dream Edition.

HP (NYSE: HPQ) is a personal computing company based in California. Two of its newest additions are business-ready Chromebooks, including one with a smart card reader. Warren Buffett’s Berkshire Hathaway recently purchased 121 million shares of HP.

Toyota Motor Corp (NYSE: TM) manufactures and sells motor vehicles and parts. In May, Toyota rolled out its first mass-produced battery EV in Japan for lease only. This is a strategy it says will help ease driver concerns about battery life and resale value. Toyota aims to lease 5,000 of these SUVs in the current financial year.

Tesla (NASDAQ: TSLA) relies on the continued supply of lithium-ion battery cells for its vehicles and energy storage products. It currently relies on suppliers such as Panasonic and Contemporary Amperex Technology Co. Ltd for its cells. In May, Tesla recalled certain 2021-2022 Model S and Model X vehicles and 2022 Model 3 and Model Y vehicles due to concerns that the infotainment CPU may overheat during fast-charging.


In this article:




This communication is a paid advertisement. ValueTheMarkets is a trading name of Digitonic Ltd, and its owners, directors, officers, employees, affiliates, agents and assigns (collectively the “Publisher”) is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by Defense Metals Corp to conduct investor awareness advertising and marketing and has paid the Publisher the equivalent of one hundred thousand U.S. dollars to produce and disseminate this and other similar articles and certain related banner advertisements. This compensation should be viewed as a major conflict with the Publisher’s ability to provide unbiased information or opinion.


Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to adversely affect share prices. Frequently companies profiled in our articles experience a large increase in share trading volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in share trading volume and share price may likely occur.


This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security.


Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position.

This communication is based on information generally available to the public and on an interview conducted with the company’s CEO, and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher does not guarantee the accuracy or completeness of the information. Further, the information in this communication is not updated after publication and may become inaccurate or outdated. No reliance should be placed on the price or statistics information and no responsibility or liability is accepted for any error or inaccuracy. Any statements made should not be taken as an endorsement of analyst views.


The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser or a financial adviser. The Publisher has no access to non-public information about publicly traded companies. The information provided is general and impersonal, and is not tailored to any particular individual’s financial situation or investment objective(s) and this communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor or a personal recommendation to deal or invest in any particular company or product. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC, SEDAR and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results.


This communication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. Statements in this communication that look forward in time, which include everything other than historical information, are based on assumptions and estimates by our content providers and involve risks and uncertainties that may affect the profiled company’s actual results of operations. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results and performance to differ materially from any future results or performance expressed or implied in the forward-looking statements. These risks, uncertainties and other factors include, among others: the success of the profiled company’s operations; the size and growth of the market for the company’s products and services; the company’s ability to fund its capital requirements in the near term and long term; pricing pressures; changes in business strategy, practices or customer relationships; general worldwide economic and business conditions; currency exchange and interest rate fluctuations; government, statutory, regulatory or administrative initiatives affecting the company’s business.


By reading this communication, you acknowledge that you have read and understand this disclaimer in full, and agree and accept that the Publisher provides no warranty in respect of the communication or the profiled company and accepts no liability whatsoever. You acknowledge and accept this disclaimer and that, to the greatest extent permitted under applicable law, you release and hold harmless the Publisher from any and all liability, damages, injury and adverse consequences arising from your use of this communication. You further agree that you are solely responsible for any financial outcome related to or arising from your investment decisions.


By reading this communication you agree that you have reviewed and fully agree to the Terms of Use found here https://www.valuethemarkets.com/terms-conditions/ and acknowledge that you have reviewed the Disclaimer found here https://www.valuethemarkets.com/disclaimer/. If you do not agree to the Terms of Use, please contact valuethemarkets.com to discontinue receiving future communications.


All trademarks used in this communication are the property of their respective trademark holders. Other than valuethemarkets.com, the Publisher is not affiliated, connected, or associated with, and the communication is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks other than valuethemarkets.com.


valuethemarkets.com and Digitonic Ltd and our affiliates are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above. This article does not provide any financial advice and is not a recommendation to deal in any securities or product. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

ValueTheMarkets do not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above piece. ValueTheMarkets have been paid to produce this piece by the company or companies mentioned above. Digitonic Ltd, the owner of valuethemarkets.com, has been paid for the production of this piece by the company or companies mentioned above.

Sign up for Investing Intel Newsletter