The Global Scramble for Rare Earths & Battery Metals Creates Bonanza for Investors

• Brazil is offering $815M in financing for projects to boost development of strategic minerals like lithium, rare earths, nickel and graphite.
• China removed a tax rebate on over 5M tons of aluminum exports, causing prices to surge 8.5%.
• Recent moves from major companies include Rio Tinto developing a gallium extraction process at its alumina refinery in Quebec with potential to produce 5-10% of global supply, and Canada Rare Earth signed deals to purchase a 70% stake in a permitted rare earth refinery in Laos and co-develop an ion adsorption clay rare earth mine.
• Governments and companies continues to heavily invest in rare earths, battery metals and other critical minerals to strengthen supply chains outside of China.

The shift towards clean energy technologies like electric vehicles, wind turbines and solar panels is driving unprecedented demand for the critical minerals needed to manufacture them. Chief among these are rare earth elements (REEs) and battery metals like lithium, nickel, cobalt and graphite. However, the world remains heavily reliant on China, which dominates the supply chains for many of these strategic resources.

Recognizing the risks of this dependence, nations and companies are now scrambling to build more diversified and resilient supply chains. Governments are providing hundreds of millions in financing to kick-start mining and processing projects, while major companies are inking deals to lock in long-term supplies. For investors, this global drive to secure critical minerals is creating a generational opportunity.

Governments Backing Strategic Minerals

Governments are playing a pivotal role by providing incentives and funding to derisk and accelerate strategic mineral projects in their countries. Brazil recently announced it is offering about $815 million in financing for projects aimed at boosting development of minerals including lithium, rare earths, nickel and graphite. The support can be used across the supply chain, from mining to manufacturing batteries and other value-added products.

"The call is an important step forward in the mineral sector for achieving the Brazilian government's goals of expanding the industry's production capacity in the context of sustainable and technological development," said BNDES President Aloizio Mercadante. The development bank expects the financing to catalyze $6-12 billion in total investments^[1]

Meanwhile in Canada, the federal and Quebec governments are backing Rio Tinto's efforts to develop a process for extracting gallium, a key ingredient in semiconductors, from the waste stream of its aluminum operations. If successful, Rio's process could eventually supply 5-10% of current world gallium production.

"When it comes to critical minerals, Canada has all it takes to be the global supplier of choice and that's why our government is proud to work with key industry actors like Rio Tinto," said François-Philippe Champagne, Canada's Minister of Innovation, Science and Industry^[2]

Corporate Dealmaking Heats Up

With the writing on the wall, major mining companies and manufacturers are aggressively locking in supplies of key battery and rare earth minerals. Canada Rare Earth recently inked agreements to purchase a 70% stake in a fully permitted rare earth refinery in Laos with 3,000 tpa capacity^[4]. The company is also in discussions for offtake and project financing based on supplying separated rare earth oxides.

"Selecting the right off-take partner and project funders and lenders are critical decisions and must ensure the alignment of both parties' objectives for the relationship to be both a commercial and strategic success," said Canada Rare Earth CEO Peter Shearing. "We are approaching this carefully and selectively to ensure the refinery delivers the most value to the rare earth market."^[4]

In a separate deal, Canada Rare Earth acquired rights to take a 70% JV stake in an advanced rare earth mining project also located in Laos. With ionic clay deposits becoming an important new source of low-cost feedstock, the company is positioning to capture more value across the rare earth supply chain.

China's Shifting Stance

As the rest of the world plays catch-up, China continues flexing its muscles to influence global markets and maintain its dominance. In a surprise move, China recently eliminated a tax rebate that applies to roughly 5.2 million tonnes per year of aluminum exports, causing prices to spike over 8% in London^[3].

While ostensibly aimed at capping pollution and energy usage, the policy change has major implications for the ex-China supply chain.

"In principle the way the market would solve the shortfall is to build up the export arbitrage from China -- so the LME price would rally strongly and that incentivizes Chinese exporters to ship products," - Duncan Hobbs, Concord Resources^[3]

Some analysts believe China's decision was a calculated "strategic move" amid ongoing trade tensions with the U.S. "China might use this as a leverage in trade negotiations, by showing its ability to influence global market dynamics," said ING Bank commodities strategist Ewa Manthey. The move underscores the risks of relying too heavily on China and the difficulty in reining in its market power.

The Case for Tin

While often overshadowed by other energy transition metals, tin is poised to play an increasingly vital role in the coming years. As a critical component in solders for electronics and coatings for solar panels, tin demand is forecast to grow 2-3% annually through 2030 driven by the electrification and clean energy trends.

However, the tin market faces significant supply risks that could lead to a structural deficit of 13,000 tons by 2030 without substantial investment in new mining projects. Indonesia and Myanmar, two of the world's top refined tin producers, are a particular concern due to rising resource nationalism and an emphasis on restricting raw material exports to capture more downstream value.

"We should take Indonesia very seriously in its ambitions to drive its tin sector downstream into value added products. We've seen what it's done in nickel... the political will is there," cautioned Reuters metals columnist Andy Home. Myanmar's recent mining ban is another near-term supply threat.

For companies like Pan Global Resources, which is advancing a copper-tin project in Spain, the geopolitical situation presents a unique opportunity.

"Having a tin project in Europe is somewhat unique and advantageous. Europe relies on importing tin, apart from its recycling industry which is an important component, but has to import just about all of its tin," said Pan Global CEO Tim Moody.

Andy Home, Reuters Senior Metals Correspondent

While tin substitution, especially by aluminum, is a perennial threat, the steady trend towards electronics miniaturization is making tin increasingly difficult to replace in its core solder applications. Advanced soldering materials with high tin content are needed to pack more computing power into smaller footprints.

Building the Rare Earth & Battery Portfolio

Nano One Materials

Nano One's patented one-pot process for producing LFP cathode materials aligns perfectly with the urgent global need to diversify battery supply chains outside of China. With 99% of LFP currently produced in China, Nano One's cleaner, lower-cost technology provides a critical alternative for localizing production. China's recent export restrictions on LFP processing technology serve as a wake-up call on supply chain risks and actually favor Nano One's licensing strategy. The company has the government support, strategic partnerships, and proven technology to be a key player in the race to secure domestic LFP production.

Near-term, the market disruption could enable higher margins for early movers licensing Nano One's process. Longer-term, the company's sustainable cost and environmental advantages make them highly competitive as a global LFP solution. For investors, Nano One offers a compelling way to gain exposure to exponential LFP battery demand growth while sidestepping the geopolitical risks around Chinese supply.

Searchlight Resources

Searchlight Resources provides investors an early-stage opportunity in an emerging North American rare earth district. The company's Kulyk Lake project in Saskatchewan hosts a large, 12km radiometric anomaly with initial surface sampling confirming exceptional grades up to 50% TREO. Trenching results suggest potential for a high-grade, open-pit deposit that could be developed rapidly given nearby infrastructure, including Saskatchewan's recently opened REE processing facility.

With the US and Canada seeking to reduce reliance on China's REE monopoly, Searchlight's Kulyk Lake is a strategically significant project in a very attractive jurisdiction. The company's additional drill-ready uranium and gold projects provide important portfolio diversification and could attract larger partners to fund development. Searchlight's experienced team and prospect generator model give investors multiple paths to value creation while minimizing dilution. As the global competition for REE supplies intensifies, Searchlight Resources offers investors a ground-floor entry into a potential world-class North American asset.

Frontier Energy

Frontier Energy's Waroona project provides direct exposure to the rapid transformation taking place in Australia's energy market as the country pursues ambitious renewable targets. With Western Australia aiming to reach 82% renewable energy by 2030, up from just 37% currently, there is a significant market opportunity for developers like Frontier. The Waroona project's strategic location, expansion potential and recently updated DFS highlighting lower costs and higher returns make it an attractive asset.

Frontier is prudently pursuing multiple financing options, including vendor financing, credit markets and PPAs, to fund the project in 2025. The company is also well positioned to potentially attract strategic investment from larger players seeking scale in Australia's fast-growing renewable sector. With peak energy prices in Western Australia soaring 110% in the past two years, Frontier has a project tailored to capitalize on the region's strong renewable energy thematic while also contributing much needed new generation to a power-hungry market.

The Investment Thesis for Battery Metals

For investors looking to gain exposure to the energy transition megatrend, the battery and rare earth mineral supply chain offers many compelling opportunities:

• Rising EV adoption and renewable energy deployment is driving robust demand growth for lithium, nickel, cobalt, graphite, rare earths and other key minerals
• Ongoing supply deficits and a lack of quality development projects is putting upward pressure on prices and should boost margins for established producers
• Geopolitical tensions and resource nationalism is spurring government support and investment to build regional supply chains and processing capacity outside China
• Major automakers and battery companies are signing long-term offtake contracts to secure supplies directly from miners, often with prepayments or investments to help derisk projects
• M&A activity is accelerating as larger mining companies seek to build or expand their battery mineral portfolios, creating opportunities for investors in junior miners with quality assets

To gain broad exposure, investors can consider the growing number of battery metal and rare earth focused ETFs. For those willing to stomach more risk, taking stakes in individual miners or processors offers the potential for more outsized returns if their projects prove successful. In either case, the key is identifying companies with experienced management teams, high-quality resources, and the right partnerships or financing to bring their plans to fruition.

The global race to secure supplies of rare earths, battery metals and other critical minerals is only just beginning. With demand poised to soar over the coming decades and ongoing risks around the concentration of supply chains, the investment thesis remains compelling. By providing capital to help build a more diversified and resilient supply base, investors can both benefit from and enable the transition to a cleaner energy future.

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_References:

1. _{Durao, M. (January 2025). Bloomberg News. Brazil Offers $815 Million to Back Strategic Minerals Projects}
2. _{RioTinto (December 2024). Rio Tinto Progresses the Development of a Gallium Extraction Process in Quebec}
3. _{Mining.com (November 2024). Aluminum Price Soars as China Cancels Tax incentive on Exports}
4. _{Mining.com (Janiary 2025). Canada Rare Earth Signs Deals to Buy Permitted Refinery, Co-Develop Mine Project in Laos}
5. _{Crux Investor (January 2025). Tin Market Faces Supply Challenges Amid Growing Energy Transition Demand}