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What: Shares of rare earth element miner Molycorp
So what: The Pentagon released a report to Congress highlighting the military’s critical dependence on rare earth metals, most of which come from China. The military as well as industry’s reliance on rare earth elements and metals have driven the price of these products sky high along with Molycorp’s stock price in the last year.
Now what: The report isn’t exactly breaking any new ground so I’m a little baffled by the reaction. Recently the prices for rare earth elements have started to fall after Lynas Corporation opened production on a new rare earth facility. When Molycorp opens its facility next year it is likely the price pressure will continue.
I see this as a great selling opportunity because supply in this market is only going to increase, meaning the profits projected based on current prices likely won’t come to fruition.
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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.
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