When the Canadian prime minister or US president visits an auto plant, people are reassured that the government understands the importance of the auto sector for jobs and exports. When the Chinese president recently toured a rare earth company on home soil, it invoked fear among China’s trading partners, so critical are these metals for the supply chains of North American high-technology firms.
The presidential visit sent a very clear signal that rare earths could soon become bargaining chips in the trade war that is heating up between the US and China.
Consider that the United States relies on China, the dominant global supplier, for about 80% of its rare earth elements.
While the US-China trade war is negative for many people on many fronts, rare earths companies are not among them. In fact, if China goes forward and restricts its exports of rare earth elements to the United States, prices of REEs will definitely rise. That is good news for rare earth explorers. The prices of REEs have already climbed this year due to slashed production quotas in China; higher export restrictions will only fan the flames of a hotter rare earths market.
Rainbow Rare Earths Ltd (LON:RBW) is a mining company focussed on production from, and expansion of, the high grade Gakara Rare Earth Project in Burundi, East Africa. With in-situ grades in the range of 47-67% Total Rare Earth Oxide (TREO), Gakara is one of the world’s richest rare earth deposits.