Investors are rushing to get exposure to natural gas stocks as the Russia factor drives strong demand and prices for the commodity. However, some are also quietly accumulating rare-earth stocks. How can you invest in rare-earth metals?
Rare-earth minerals, also called rare-earth elements, are a group of metals that have a broad industrial application. They’re actually abundant (not rare, as the name suggests)—the rareness refers to the complexity of their extraction and processing. More than a dozen minerals belong in the rare-earth metals category.
What are rare-earth metals used for?
Rare-earth metals are seeing growing demand. They’re used to make components that go into smartphones, laptops, fluorescent bulbs, military equipment, auto parts, and wind turbines.
How to invest in rare-earth metals
You can get exposure to the rare-earth industry in several ways. You could buy them physically, but because businesses that build products with rare-earth metals prefer to buy them directly from producers in long-term contracts, you may struggle to buy small quantities.
Therefore, the best way to invest in rare-earth metals is through the companies that produce them. You may purchase stocks of individual companies or buy shares in a fund that invests in rare-earth stocks.
What are the best rare-earth stocks to buy now?
MP Materials (MP) – The company has become a national champion in America’s efforts to break China’s dominance of the rare-earth metal supply chain. The White House has given the company money to support its mineral processing operations at its Mountain Pass site in California.
Texas Mineral Resources (TMRC) – This company is also working to make the U.S. self-reliant on rare-earth metals. The U.S. currently relies on China for about 90 percent of its demand for the minerals. TMRC plans to mine and process the metals from its Round Top Mountain site in Texas.
Lynas Rare Earths (LYSCF) – This Australian company has received Pentagon funding of $120 million to build a rare-earth mineral processing facility in the U.S. The company is already among the world’s top suppliers of rare-earth metals outside China.
What's the best rare-earth stock ETF?
If you aren’t for picking individual stocks, you could get exposure to the rare-earth minerals industry through an ETF. The VanEck Rare Earth/Strategic Metals ETF (REMX) is popular. Its top holdings include Lynas Rare Earths (LYSCF) and MP Materials (MP), and it charges an expense ratio of 0.53 percent.