US defence Bill puts rocket under American Rare Earths share price

As Washington law-makers seek to block defence contractors using Chinese rare earths, Australian-based American Rare Earths’ share price has more than doubled in the past week thanks to its efforts to build supply of critical minerals within the US market.

In what’s aimed to be a huge shot in the arm for the revival of US rare earths production, bipartisan legislation introduced into the US Senate on Friday would ban contractors for defence programs buying Chinese produced rare earths by 2026.

The proposed legislation has put a rocket under the share price of Australian-based American Rare Earths (ASX:ARR), which last Thursday sat at 18.5 cents per share but closed yesterday at 41 cents.

“We been working hard to develop our projects and establish our profile in the US and this latest demonstration of investor confidence vindicates our diligence,” MD and CEO Chris Gibbs said.

“It’s recognition of the potential of our resources plus the innovative R&D efforts we’re making with some US Government agencies in the crucial area of rare earths supply chain security.

“In addition to last month’s $6 million placement with leading fund manager Fidelity, this momentum in our capital growth will enable us to accelerate our strategy to be not just a mining company but a leading vertically integrated rare earths supplier for the North American market.”

Security act

Titled the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022, the Bill would additionally see the Pentagon building a permanent stockpile of the strategic minerals.

Sponsored by Arkansas Republican Senator Tom Cotton and Arizona Democrat Mark Kelly, the Bill is the latest in a series of US efforts to combat China’s ~90% control of the global rare earths market. Senator Cotton sits on the Senate’s powerful Armed Forces and Intelligence committees.

The 17 elements classified as rare earths are used to make magnets for electric vehicles and electronics, including those in defence technology and clean energy.

The US developed the rare earths industry during World War II, but the sector has been almost completely taken over by China since the 1990s.

Currently the US has only one fully operating rare earths mine and does not process rare earth minerals.

Allied force

American Rare Earths has been taking major strides towards becoming a leading supplier of the critical minerals with the development of its flagship projects, including 890 hectare La Paz in Arizona, and through partnerships with US Government backed R&D programs.

These collaborations include being a team member with a Department of Energy-funded Critical Materials Institute (CMI) project alongside some of North America’s most respected researchers and laboratories.

Joining the CMI project followed the invitation to supply feedstock for the US Defense Advanced Research Projects Agency’s Rare Earth Elements (REE) bioengineering research program.

After being one of the few projects to be exempted from the Biden Administration’s 60-day halt on ground disturbing activity approvals last March, American Rare Earths was able to increase the scale of La Paz to 35.2 million tonnes.

It now has all regulatory approvals in place for La Paz and the 1,257 hectare Halleck Creek in Wyoming.

With last month’s $6 million capital raise with global funds management firm Fidelity completed and this latest demonstration of confidence by investors, American Rare Earths is on the road to realising its vision of becoming a leading supplier of these critical minerals.

This article was developed in collaboration with American Rare Earths, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.