End of the (Production) Line: Rare Earths | Australian Markets
According to geologist James Cooper, safeguarding provide chains is no longer a matter of sustaining earnings or avoiding manufacturing delays; that is a race for survival for family names like Toyota or Mitsubishi.
Donald Trump, China, tariffs, ending the struggle in Ukraine, Greenland and Russia. 2025 is the yr of headlines.
Yet all of them have one COMMON theme embedded in all of them…
Rare Earths.
We’ve coated this matter for years at our paid investment advisory, Diggers & Drillers.
In truth, the first stock we tipped was a uncommon earth play, back in 2022.
We assumed trade wars would flare up and put uncommon earth stocks below the highlight.
As it seems, markets don’t reward you for being too early. That advice turned out to be a flop!
So, we shifted to more fast alternatives, and I’m glad we did.
Yet, every thing we detailed three years in the past is NOW enjoying out exactly as we outlined in our first-ever report at Diggers & Drillers.
So, is the alternative now?
No doubt, you’ve heard a lot of noise from governments trumpeting the need to secure uncommon earth provide chains.
But what about those that truly use this commodity?
In different phrases, producers?
Until now, these working at the coal face have been silent on the uncommon earth conundrum, maybe fearing that it’d influence their stocks’ outlook.
Which is why this development caught my consideration final week…
It’s been revealed that a world group of auto executives wrote a joint personal letter to the White House final month explaining their predicament if provide chains for uncommon earths had been abruptly closed.
General Motors, Toyota, Volkswagen, and Hyundai had been some of the manufacturing titans who feared entry to uncommon earth magnets was in grave hazard.
Presumably, it is because of Trump’s tariff struggle and China’s potential to reply by slicing the whole uncommon earth provide chain.
This is what the executives stated in a later assertion to the media:
“Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras.”
And this:
“In severe cases, this could include the need for reduced production volumes or even a shutdown of vehicle assembly lines”
Company executives not often speculate that their multi-billion firms might face an imminent ‘shutdown.’
All as a result of of the loss of some uncooked supplies in the uncommon earth package deal of components.
Perhaps Henry Ford, the authentic titan of car manufacturing, was onto one thing right here…
Ford was obsessive about securing the uncooked ingredients to make his T-Model Fords.
Going so far as shopping for up rubber plantations in Brazil to construct tyres for these autos. And skirt the monopoly held by the British Empire in the world rubber trade.
That’s why phrases like provide fragmentation and trade wars keep these distinguished manufacturing CEOs up at night time.
Think about it…
Thousands of components made with uncooked supplies scattered throughout dozens of international locations.
De-globalisation is the terrifying nightmare come true for the world’s largest producers.
That means safeguarding provide chains is no longer a matter of sustaining earnings or avoiding manufacturing delays; that is a race for survival for family names like Toyota or Mitsubishi.
As an investor taking a look at useful resource stocks, it’s important to recognise that offer chain security will come at a price for these producers.
Think direct offers with miners who can offer provide chain certainty.
That’s exactly what our latest advice is doing… But at the proper price, of course!
In its latest quarterly report, the company divulged that it charged its prospects (producers) a premium WELL ABOVE Chinese quoted costs for its uncooked materials.
So, yes, provide chain security is already demanding a premium; that is REAL.
And that’s delivering fatter margins for sure Aussie miners.
This is the time so as to add these ‘strategic miners’ to your portfolio.
You can discover the title of our latest advice right here.
Until subsequent time.
Regards,
James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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All advice is basic advice and has not taken into consideration your personal circumstances.
Please search unbiased financial advice relating to your own scenario, or if unsure about the suitability of an investment.
James Cooper has been a working geologist in mines throughout Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers by way of to very large producer outfits. He’s seen booms and busts firsthand and he additionally understands the cyclical nature of particular person commodities. For instance, James was proper there when Barrick Gold launched an huge $7.5 billion takeover bid for Equinox. That was the peak of the final cycle.
With his background as a geo and finance skilled, he brings a distinctive insight and expertise to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.
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