That Molycorp sell off was nothing more than an overreaction.
The upside potential here is ridiculous.
Just last night, the Fiscal Year 2012 National Defense Authorization bill (HR 1540) was passed by the House Armed Service Committee, which includes rare earth related language.
According to reports:
This provision would require the Defense Logistics Agency Strategic Materials (formerly the Defense National Stockpile Center) to develop a plan to establish an inventory of rare earth oxides, metals, alloys, and magnets for defense purposes. By also identifying “the steps necessary to develop or maintain a competitive, multi-source supply chain to avoid reliance on a single source of supply”, the plan would mitigate our nation’s current overdependence on unreliable foreign sources for critical rare earth materials. It would also encourage U.S. manufacturing capabilities and thus reinvigorate a competitive, multi-source domestic rare earth industry.
Key defense applications, ranging from precision-guided munitions to satellite wave tubes to certain lasers, depend on rare earth materials for functionality. So do increasingly popular green technologies and electronic goods like hybrid cars, wind turbines, and mobile phones. As growing global demand begins to outstrip supply of key elements, this plan will help to ensure that oxides, alloys, metals, and magnets are available for critical defense requirements. Representative Coffman’s provision is a significant step forward in safeguarding U.S. national security, and USMMA commends him for his foresight.
That’s big news… and is the reason we remain ultra-bullish on all rare earth names.
