Alcara Resources Inc is a 2025 Favorite because it is best positioned to fast track deliver a meaningful supply of non-Chinese rare earths that includes the magnet heavy rare earths dysprosium and terbium. In 2009 after the financial crisis I correctly predicted Rare Earth Mania which played out in 2009-2011 when China decided to curtail rare earth exports to the rest of the world, sending rare earth prices to the moon. Picks like Avalon, Rare Element, Quest and Tasman did extremely well, especially when Wall Street floated Molycorp to revive the mothballed Mountain Pass Mine in California. China eventually eased restrictions and rare earth prices collapsed. But in the decade since then global production has tripled thanks to demand for the magnet rare earths which are a small portion of a typical rare earth deposit. There has not been a corresponding demand boost for the more abundant rare earths such as cerium and lanthanum which has clobbered the prices of most non-magnet rare earths. This means that typically 80%-90% of a rare earth deposit's rock value resides in the magnet rare earths neodymium, praseodymium, dysprosium and terbium. Officially China supplies only 68% of global rare earth production but the number is actually 80% because the 12% mined in the United States has to be shipped to China for cracking. This is a ticking time bomb for the Global West.
Aclara Resources Inc, which is backed by a member of the Hochschild family after being spun out from the mining company, is advancing the Carina deposit in Brazil. Carina is an ion adsorption clay deposit similar to those mined in China for the heavy rare earths, except that the Brazilian versions have not undergone the extra weathering that depleted the cerium in the Chinese ionic clay deposits. Carina, although lower grade than other ionic clay Brazilian deposits such as Verde Agritech's Man of War deposit, stands out because 28% of its rare earth distribution is represented by the heavy rare earths which are very low in carbonatite style deposits. Aclara has a Bottom-Fish Spec Value rating because at current spot prices development of Carina is not going to make much money. But if the geopolitical conflict between China and the United States escalates, and China once again curtails rare earth supply, the price of rare earths outside of China will go through the roof, not as crazily as it did in Rare Earth Mania 1.0, but still enough to make Aclara's Carina deposit very lucrative. So the missing piece is China expanding its critical mineral export restrictions to include rare earths. The flow-sheets for ionic clay deposits are simpler than for hardrock deposits, mining is basically strip mining the weathered clay horizon similar to laterite deposits, and Brazil is a good jurisdiction to rapidly develop a mine. What is a bonus with Aclara is that the company has formed an alliance with a Chilean conglomerate to develop magnet making capacity outside of China, a major missing piece in the United States. If China imposes rare earth export restrictions in retaliation for Trump tariffs or as a consequence of annexing Taiwan, and "export" rare earth prices soar, Aclara will be the go to proxy for the market. |
