The Top 10 Rare Earth Stocks To Buy: Learn To Invest in Critical Minerals

Rare earths are a group of 17 strategic metals that are essential to the clean energy transition. Learn if it makes sense to invest.

Ben Carson   Updated January 17th, 2022

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What are rare earth metals?

Rare earth metals are the 17 elements that occur next to each other in a periodic table and are key to the clean energy transition. The metals are often mined together and used to make electronics more efficient. You can find rare earths in electric car batteries and motors, wind turbines, cell phones, TVs, speakers, camera lenses, planes, magnets, and headphones.

China dominates rare earth production

Rare earths are not actually very rare, but they are a pain to extract and refine because they are found mixed with other minerals. The mines that contain enough rare earths to make extraction profitable are less common.

Although the U.S. had a lead in rare earths in the 1950s, today, China is the world’s largest producer and consumer of rare earth minerals. About 80% of the global rare earth supply comes from China, according to the U.S. Geological Survey. In late 2021, China has decided to create a new rare earths giant, China Rare Earth Group, to improve the country’s position in rare earths even more.

But China may not be a reliable source of supply for foreign companies. There is a risk that China could restrict exports, for example, during a trade war or as a strategic weapon. In fact, China has already been fined by the World Trade Organization for restricting rare earth exports. That would not be good for industries that rely on rare earths, like EV manufacturers, though export restrictions would benefit rare earth miners outside China.

The U.S. is investing in rare earths

Concerned about relying on China for critical minerals, the U.S. government is embracing alternatives. A White House review published in 2021 said that the U.S. must diversify the supply chain for critical minerals to reduce reliance on China.

Rare earth supply is tied to national security, too. In 2021, the U.S. Defense Department agreed to invest in Australia’s Lynas Rare Earths, the largest rare earth company outside China. MP Materials, the only U.S. rare earth supplier, has also received funding.

What are the best rare earth stocks?

Most rare earth stocks are listed in Hong Kong or mainland China, which makes it hard for U.S.-based investors to access. Examples include China Rare Earth Holdings, China Northern Rare Earth Group, and Shenghe Resources Holding Co Ltd. But most popular U.S. brokers won’t let you invest in Chinese shares. Even so, there are alternatives outside China, though many of them are small-cap exploration-stage miners.

Rare earth stock list

  • MP Materials (MP)
  • Lynas Rare Earths (LYSCF)
  • Australian Strategic Materials Ltd (ASMMF)
  • Neo Performance Materials Inc (NOPMF)
  • Texas Mineral Resources (TMRC)
  • Hastings Technology Metals (HSRMF)
  • Arafura Resources (ARAFF)
  • NioCorp Developments (NIOBF)
  • Rare Element Resources (REEMF)
  • Northern Minerals Ltd (NOURF)

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Read more about each company:

1. MP Materials (MP)

  • Market capitalization: $8.3 billion
  • 1-year return: +31%

The only U.S. rare earth producer, MP Materials operates a rare earth mine and processing facility in Mountain Pass, California. The Las Vegas-based company went public in November 2020 after merging with a SPAC. MP’s predecessor, Molycorp, reopened the Mountain Pass mine in the early 2000s only to go bankrupt in 2015, allowing MP Materials to scoop up the assets and restart production in 2017.

According to MP, the Mountain Pass mine delivers around 15% of the global rare earth supply, focusing on Neodymium-Praseodymium. These two elements are a critical input for clean energy applications.
As evidence of that, MP has just signed an EV supply agreement with General Motors.

The Mountain Pass mine has a much higher rare earth content than an average global deposit, around 7% vs. 0.1%-4.0%, resulting in lower extraction costs.

However, MP continues to sell to China’s Shenghe Resources, relying on them for processing, too. But, with the expansion of the Mountain Pass Facility, they expect to move processing in-house. The goal is to create a solid rare earth supply chain in the U.S.

MP Materials reported $134 million in revenue and $42.6 million in EBITDA in 2020; 2021 results are looking to be much better.

2. Lynas Rare Earths (LYSCF)

  • Market capitalization: 10 billion AUD
  • 1-year return: 161%

The top producer of rare earth metals outside China, Australia-based Lynas Rare Earths mines the Lynas Mt Weld deposit. Located in Western Australia, it is one of the world’s largest rare earth deposits. The company also runs the world’s biggest rare earth processing plant in Gebeng, Malaysia. And Lynas is adding another processing plant in Western Australia.

Australia is a “friendlier” supplier of strategic minerals to the U.S. than China. So Lynas received an investment from the U.S. Department of Defense, which will fund a new Texas facility.

For its 2021 fiscal year, Lynas reported 489 million AUD in sales and 235 million AUD in EBITDA. Production volumes increased despite COVID, helped by the tailwinds from EVs and wind energy.

3. Australian Strategic Materials Ltd (ASMMF)

  • Market capitalization: 1.3 billion AUD
  • 1-year return: 64%

Australian Strategic Materials (ASM) is an emerging producer of titanium, zirconium, and 15 rare earths. The company has recently launched a processing plant in South Korea. Following a successful pilot phase, ASM will construct a larger commercial plant.

ASM currently buys rare earths in the market, but it plans to eventually source them from its Dubbo Project in New South Wales, Australia. The Project contains deposits of rare earths, zirconium, niobium, and hafnium, and has the major approvals and licenses in place. But, as an emerging producer, ASM doesn’t yet have much revenue.

4. Neo Performance Materials Inc (NOPMF)

  • Market capitalization: 746 million CAD
  • 1-year return: 16%

Unlike the rare earth miners listed here, the Toronto, Canada-based Neo is best-known for processing rare earths.

Neo makes advanced materials such as magnetic powders, magnets, specialty chemicals, and alloys. They have supply chains both inside and outside China, operating Europe’s only commercial rare earth separating facility. Along with Energy Fuels (UUUU), a uranium producer, Neo plans to supply U.S. and European markets with rare earths mined in the U.S.

Neo’s products ship globally to blue-chip customers like LG, Bosch, Panasonic, and Samsung. The company cites electric vehicles and energy-efficient homes as the key growth drivers.

Besides, Neo is not a startup. The company brought in $385 million in sales and $62 million in EBITDA during the first nine months of 2021.

5. Texas Mineral Resources (TMRC)

  • Market capitalization: $170 million
  • 1-year return: 47%

TMRC is a startup looking to develop a rare earths deposit in Texas. The site, Round Top Mountain, contains a diversified mix of rare earths and has an expected 20-year life. TMRC believes that the project has a $1.56 billion net present value and expects a payback on its investment in just 1.4 years. However, commercial production is not expected to start until 2023. Timelines often slip, so this investment is very speculative.

Make an impact with your money

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Fees

0.25%

Minimum

$10


Get a green credit card

Fees

$60/year

Minimum

$0

Build custom portfolios for free

Fees

$0

$125 for M1 Plus

Minimum

$100

Save and invest spare change

Fees

$3-$5 / month

Minimum

$5

Work with human advisors

Fees

0.49%-0.89%

Minimum

$100,000

6. Hastings Technology Metals (HSRMF)

  • Market capitalization: 469 million AUD
  • 1-year return: 21%

An Australian rare earth exploration company, Hastings is developing two major projects in Western Australia, the Yangibana Project and the Brockman Project. Yangibana contains large resources of Neodymium and Praseodymium, used in technology applications. HAS doesn’t make money today, though: works on Yangibana commenced in Q3 2021, and production should only start in 2024.

7. Arafura Resources (ARAFF)

  • Market capitalization: 349 million AUD
  • 1-year return: -10%

Arafura Resources is an Australian rare earth exploration company. It is developing the Nolans Project, which has a 38-year expected life and a net present value of roughly $1 billion. The project is shovel-ready, and Arafura is targeting production in late 2024.

8. NioCorp Developments (NIOBF)

  • Market capitalization: 325 million CAD
  • 1-year return: 76%

NioCorp is an exploration company developing a rare earth mine in Nebraska. The Elk Creek deposit is rich in niobium and scandium, two critical rare earth metals. The project has already secured all major federal permits needed for construction. NioCorp expects the mine will have a 36-year life with a net present value of $2.56 billion and a roughly three-year payback. However, construction hasn’t started yet.

9. Rare Element Resources (REEMF)

  • Market capitalization: $176 million
  • 1-year return: 45%

A rare earth exploration company, Rare Element Resources is developing the Bear Lodge Project. The deposit contains rare earth elements used in permanent magnets, electric cars, solar panels, and wind turbines. In October 2021, the company received a $22 million award from the Department of Energy to fund a rare earth separation plant. However, production from Bear Lodge is over three years away.

10. Northern Minerals Ltd (NOURF)

  • Market capitalization: 278 million AUD
  • 1-year return: -20%

Australia-based Northern Minerals is developing its 100%-owned Browns Range Project in Western Australia. Although commercial production of rare earths is years away, the company is focusing on completing the feasibility study for the project in 2022.

Rare Earth ETFs

What if you don’t want to pick individual stocks? You can still invest in rare earth stocks, including Chinese ones, through an ETF like the VanEck Rare Earth/Strategic Metals ETF (REMX).

🔔 Looking for other “green metals” to invest in? Learn about investing in lithium, nickel, copper, and cobalt.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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