Below is a chart and brief excerpt from today's Early Look written by Industrials analyst Jay Van Sciver.
Returning to metals, some will say that rare earth elements aren’t rare. They’ll point out that lithium is widely distributed, even if only the 33rd most common element on Earth’s surface. But building mines and processing facilities is different from quoting relative abundances. Again, take iron ore in the 00’s as an example. Iron ore is common and offers high metal content. It is so easy to find and process iron ore that Iron literally had its own Age starting around 1200BC. Lithium hydroxide and NdPr are nowhere near as easy to discover, extract, store, and process.
Won’t marginal cost pricing force down lithium and NdPr margins? Eventually, perhaps. The cure for high prices is often high prices. But we think this short thesis would be a decade early. The only thing worse than missing the “big stuff” would be to bet against it too early.
Doesn’t everyone already believe that EVs are going to take share from internal combustion engines? Some do. But beliefs aren’t supply chains. The emergence of broad, unsubsidized interest in electric vehicles is not consensus. Insofar as valuation is an opinion, neither MP nor ALB share prices suggest the market sees the demand. Getting the multiyear surge in demand right is what is likely to matter. The rest is academic.
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