{australien_flagge}Just a few days ago, the U.S. passed a gigantic infrastructure program that will see investments of $550 billion in the coming years for roads, bridges and rails, but also, for example, charging stations for electric cars. And just recently, U.S. President Joe Biden set a goal that half of all automobiles sold must be electric cars by 2030.
This has, of course, boosted the companies that are focusing on electromobility and, in particular, the companies that supply or will supply the raw materials needed for this. Also the rare earth company American Rare Earths (WKN A2P8A0 / ASX ARR), which among other things develops the already advanced rare earth deposit La Paz in Arizona, has in view of this – and in view of extremely pleasing news from the company – recently gone into steep upwards trajectory!
If these general developments are already giving the e-mobility sector such a strong boost, the question is what will happen if the bill introduced just this week by a Democratic representative in the U.S. House of Representatives, which is specifically aimed at the rare earth sector, is passed?
The bill, which is also supported by a Republican congressman, would give tax breaks to companies that produce rare earth magnets in the U.S. – where China currently dominates.
It is the latest in a series of bills in the U.S. to create a national strategy that will lead to more rare earths, lithium and other so-called “strategic minerals” used to make electric vehicles, weapons and electronics being produced in the U.S. The bill is expected to be signed into law by the U.S. House of Representatives on Wednesday.
So now this includes the Rare Earth Magnet Manufacturing Production Tax Credit Act, which provides $20 per kilogram in tax relief for neodymium-iron-boron magnets manufactured in the United States. This tax credit increases to $30 per kilogram if the magnets were made with rare earths mined in the United States!
Rare earths are not so much rare, but more importantly usually difficult and expensive to mine and also to process. MP Materials’ Mountain Pass mine in California is the only rare earth mine on U.S. soil, but it has to rely on Chinese partners for processing. China, after all, dominates the rare earths market in almost every sector.
There are still no producers of rare earth magnets in the U.S., but MP Materials wants to do so in the future just like other privately held companies. Tax breaks like those now being proposed could help make those plans a reality, industry sources said.
Bottom line: tax breaks for U.S.-made REE magnets, which go up yet again if the rare earths also originate in the United States, sound like they were tailor-made for American Rare Earths (WKN A2P8A0 / ASX ARR), in our view. Not to mention that the U.S. is just throwing money around at the moment anyway to build its own supply chains for “strategic minerals,” which include rare earths. It should be exciting to see what happens next for American Rare Earths and its US subsidiary Western Rare Earths. The company does not only have the advanced rare earth project La Paz project but also projects in Wyoming and Nevada. We will stay tuned in any case!
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According to §34b WpHG and according to paragraph 48f paragraph 5 BörseG (Austria) we would like to point out that partners, authors and/or employees of GOLDINVEST Consulting GmbH may hold shares of American Rare Earths and therefore a conflict of interest could exist. We also cannot exclude that other stock letters, media or research firms discuss the stocks we discuss during the same period. Therefore, symmetrical information and opinion generation may occur during this period. Furthermore, there is a consulting or other service contract between GOLDINVEST Consulting GmbH and a third party, which is in the camp of the issuer (American Rare Earths), whereby a conflict of interest exists, especially since this third party remunerates GOLDINVEST Consulting GmbH for reporting on American Rare Earths. This third party may also hold, sell or buy shares of the issuer and would thus profit from an increase in the price of the shares of American Rare Earths. This is another conflict of interest.
