Well, it’s finally over…
The country has lived through one of the most incredible election cycles probably in its history. Through all the insults and fear-mongering, the candidates attempted to lay out policy positions for the voters.
Kamala Harris seemed to offer little beyond downpayments for first time home buyers, forgivable loans to minority small businesses and price gouging prosecution for retailers behind inflation.
Donald Trump, on the other hand, was somewhat more targeted in his policy promises: dealing with immigration by securing the border, reducing inflation by increasing energy production and using tariffs to rebuild the industry in the US.
But one promise he made in particular should be noted by metals investors.
To strengthen and modernize our military, making it, without question, the strongest and most powerful in the world
Because that promise may bode very well for an obscure, but no less critical, segment of the mining industry. One that could generate serious opportunities for junior miners and investors alike.
Mining For the Military
Let’s not kid ourselves. Any objective look at the geopolitical situation around the world reveals a highly uncertain picture.
Wars are raging in Eastern Europe and the Middle East, not to mention tensions building around China.
And while everyone in the world wishes for peace (at least we hope everyone wishes for peace) our country needs to be prepared for the worst. And that requires military technology of the first order.
But few people know what’s necessary to reach that goal.
The military has developed space-aged levels of technology that employ space-aged materials to build it. Specifically…
There is a collection of metals at the bottom of the periodic table of elements (plus three from the main table) that make up what are commonly called “rare earth elements.”
Caption under the image
The name is a little deceptive because these metals aren’t actually that rare.
For instance… Thulium and lutetium are the two least abundant rare earth elements – but they each have an average crustal abundance that is nearly 200 times greater than the crustal abundance of gold.
So it’s not that their supply is lacking. The problem is they show up in low densities which makes them costly to mine and extract. Hence the name “rare.”
And many of these rare earth elements are absolutely essential for producing a lot of military technology. For instance, one element known as neodymium, is an essential element for producing permanent magnets.
What are permanent magnets? And why are they so critical in military applications?
Permanent magnets are basically magnets that are impervious to extreme temperatures that would otherwise cause a typical magnet to fail. And that specific characteristic is critical for military applications. This is from the Department of Defense:
Rare earth permanent magnets are not only essential components in a range of defense capabilities, including the F-35 Lightning II aircraft, Virginia and Columbia class submarines and unmanned aerial vehicles, but also a critical part of commercial applications in the United States. They are also used to generate electricity for electronic systems in aircraft and focus microwave energy in radar systems.
In addition to the F-35, Virginia and Columbia class submarines, magnets produced from rare earth elements are used in systems such as Tomahawk missiles, a variety of radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs. The F-35, for instance, requires more than 900 pounds of rare earth elements. Each Arleigh Burke DDG-51 destroyer requires 5,200 pounds, and a Virginia class submarine needs 9,200 pounds.
Any serious efforts to rebuild the military are going to ignite an interest in mining and processing these little-known minerals.
The Current Supply is at Risk
Given the critical importance of these minerals in military technology, it’s not a stretch to understand that a solid supply chain for them is equally important. And that’s where the “rebuild our military” scenario runs into trouble.
Between the 1960s and 1980s the US was the world’s leading miner and producer of rare earths. Unfortunately, that’s not the case anymore…
In recent decades China has become the source of 90 to 95 percent of world rare-earth oxides and the producer of a majority of the globe’s strongest rare-earth magnets.
When your top geopolitical rival becomes your main source for mineral products that are essential to your national security, someone should take notice. And they have…
Since 2020, DOD has awarded more than $439 million to establish domestic rare earth element supply chains. This includes separating and refining rare earth elements mined in the U.S., as well as developing downstream stateside processes needed to convert those refined materials into metals and then magnets.
But this may be just the tip of the spear when it comes to the rare earths industry in the US.
Continued growing demand (along with some government funding) could light a fire here and thrust this little known segment into the spotlight.
We’ll keep our eyes on this sector…