EXTRACT from an article :Tension is brewing and shots are...

EXTRACT from an article :


Tension is brewing and shots are already being fired.

In 2020, China threatened a rare earth embargo against US defence contractor Lockheed Martin as the contractor upgraded Taiwan’s Patriot air defence missiles.

But it was an Australian company that benefited from this political stoush.

Lockheed Martin struck a deal between the US Department of Defense and an Australian producer to construct a rare earth separation facility in Texas.

The Australian company involved was Lynas Rare Earths [ASX:LYC].

And it’s not the only time Lynas benefited from geopolitical tensions with China.

A little over two weeks ago a Tokyo-based company called Sojitz, Japan’s largest metal dealer, signed a $250 million procurement deal with Lynas.

According to Sojitz, China now produces 95% of the world’s rare earths. After the deal was signed, it left a stark warning to global manufacturers:

‘[T]he outlook for stable shipments from the Chinese mainland remain far from certain.’

The comments were made on the back of a Beijing blockade on Japan-bound shipments of the rare earth elements after a dispute over islands controlled by Japan but claimed by China.

This was a stern warning to the world that China was prepared to weaponise its dominance of critical metals.

But there is a silver lining to all of this, and it sits in our very own backyard…

While Australia, alone, won’t be able to meet the enormous supply of critical metals for the future, a handful of local late-stage explorers are set to shift into production just as the issue reaches a tipping point within the next two years.

Companies extracting and processing critical metals outside Chinese borders will have an extremely valuable card to play.

Safe secure supplies will come at a premium.

A massive payout for Australian producers looks imminent on the back of growing tensions.

However, for major manufacturers, the situation will be grim. A matter of life or death.

Tesla, Apple, Toyota, BMW, Hyundai, etc. will put everything on the table as they compete for the raw materials needed to keep their manufacturing plants running.