Investors should be wary of rare earths FOMO as next wave of hype looms after Australia-US pact

The mining world’s spivs will be out in force over the next few months with billions of taxpayer dollars up for grabs. Arafura Rare Earths’ wild stock exchange ride on Tuesday exemplified the mania gripping investors in companies aiming to produce some of the 17 metallic elements called rare earths. Shares in the $1.4 billion Arafura surged more than 20 per cent in early trade after its Nolans project was earmarked for at least $US100 million of government funding. No other good or bad news emerged as the day wore on, yet the stock tumbled — ending Tuesday flat. The market is clearly uncertain about how the rare earths landscape will take shape. A plethora of ASX-listed rare earth explorers in recent months have seen their share prices double, triple, and in one case septrigintuple (up 37 times more), purely fuelled by hope they’ll be in the Albo-Trump purple circle. Anthony Albanese and Donald Trump on Tuesday committed to doling out at least $US1 billion ($1.6b) within six months to critical minerals projects (with a focus on rare earths), with many more billions promised to flow. But investors who are feeling a sense of FOMO should be vigilant for the next wave of stock spruiking that is bound emerge with the promises of seemingly endless government support. Most reputable brokers believe rare earths stocks have already run too hot and while it seems there’s enough taxpayer cash to go around, once the dust settles there will be far more losers than winners.