February 08, 2023

The top billionaires are now chasing the critical magnet rare earths – Part 1 of 2

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In this two part series we look at a growing trend where billionaires have started investing or taken a strong interest in rare earths companies, mines, and/or projects around the world. The significance is that these billionaires are very well known and followed. Plus it now appears they have their targets set on the ‘magnet’ rare earths sector, which many analysts forecast to go into deficit this decade, driven by the shift to renewable energy and electric vehicles. The magnet rare earths mostly refers to neodymium and praseodymium (NdPr), the world’s most sought after rare earths. Dysprosium (Dy) is the third key rare earth used in magnets. It is also used in control rods for nuclear reactors.

One can argue that this trend all started back when, now billionaire, James Litinsky bought a mine in California from bankrupt Molycorp and subsequently turned the mine into USA’s largest producing rare earths mine, with the company MP Materials Corp. (NYSE: MP) now valued at US$5.48 billion. As Wikipedia states: “In June 2017, the Mountain Pass mine was purchased at auction for $20.5 million by a new entity called MP Mine Operations LLC (MPMO). MPMO was a consortium formed principally by JHL Capital Group, a Chicago-based investment firm led by James Litinsky.” Litinsky recognized, well before others, that the most powerful magnetic electric motors need rare earths, and that these motors would become essential to modern life technology, especially in the green revolution. Litinsky and his partner’s move buying a mine for just US$20.5m that is now worth 200X or more today was pure genius!

The world’s most powerful electric motors are used today in wind turbines and electric vehicles. They rely on the critical and valuable magnet rare earths (Nd, Pr, Dy)

Source: iStock photo

Jeff Bezos, Michael Bloomberg, Bill Gates & others are looking towards Greenland for rare earths

As reported by InvestorIntel in September 2022, Jeff Bezos, Michael Bloomberg, Bill Gates & others (via their company KoBold Metals) are looking towards Greenland as a source of rare earths and other critical metals. KoBold Metals is partnered with Bluejay Mining PLC to find the rare and precious metals in Greenland. An August 2022 article by CNN quoted: “Billionaires are funding a massive treasure hunt in Greenland as ice vanishes……Greenland could be a hot spot for coal, copper, gold, rare-earth elements and zinc, according to the Geological Survey of Denmark and Greenland.” While there are challenges in Greenland the fact that billionaires who made their money in online shopping, financial services/media, and software are now scouring the globe for rare earths speaks to their importance and value in modern society.

Gina Rinehart buys into Arafura Rare Earths Limited

Gina Rinehart, the world’s richest woman, recently bought A$60 million worth of Arafura Rare Earths Limited (ASX: ARU) shares via her private company Hancock Prospecting, as part of an A$121 million capital raising by Arafura. Arafura’s news release on December 5, stated: “Hancock Prospecting Pty Ltd acted as a cornerstone investor, committing to invest $60 million which will result in a post-completion interest of ~10%…..Funds raised will be applied towards orders for long lead items, commencement of fabrication in readiness for main plant construction and early works.”

Europe and the global auto manufacturers are also chasing the critical magnet rare earths

In September 2022 The European Commission stated: “Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. […] We must avoid becoming dependent again, as we did with oil and gas.” The European Critical Raw Materials Act is due for release in Q1, 2023.

European Critical Raw Materials Act – securing the new gas & oil at the heart of our economy (red underline by the author)

Source: Blog of Commissioner Thierry Breton

2023 will likely see more urgency from countries and EV and wind turbine companies regarding sourcing the magnet rare earths.

Part 2 of this series will take a look at Andrew ‘Twiggy” Forrest’s rare earths foray, as well as some other companies and billionaire’s rare earths dependency and challenges to secure enough supply, including Tesla’s CEO Elon Musk.

Disclaimer: The author of this post may or may not be a shareholder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review their public documents to conduct your own due diligence. To access the InvestorIntel.com disclaimer and other important legal notices, click here.

One response

  1. Rare Earths Investor Avatar
    Rare Earths Investor

    Thanks for writing. I look forward to your analysis of Twiggy’s move into Hastings (or is it really NEO?). MP was certainly a good stock move by Litinsky in terms of garnering the initial SPAC stock price run-up. We shall see re., MP becoming more than a US feedstock miner. Reinhart sensibly waited for the AUS gov’ to back Arafura (I hold) along with Hyundai (possibly also GE Renewable). Nobody can accuse your citations of buying RE fly-by-nights. Again thanks. GLTA – REI

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