Did this just cause the American Rare Earths (ASX:ARR) share price to surge 30% higher?

American Rare Earths shares are on fire today…

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Key points

  • American Rare Earths' shares are rocketing higher today
  • A letter to shareholders may have given its shares a boost
  • Sky high rare earth prices could also be getting investors excited

The American Rare Earths Ltd (ASX: ARR) share price is ending the week in style.

In afternoon trade, the rare earths explorer's shares are up a massive 32% to 37 cents.

Why is the American Rare Earths share price rocketing higher?

There appear to have been a couple of potential catalysts for the rise in the American Rare Earths share price on Friday.

The first is the release of a letter to shareholders this morning. That letter highlights the progress the company has made over the last 12 months, including increasing the size and grades of its La Paz project in Arizona, United States. This puts the project in a position to become one of North America's largest rare earths projects.

The project was also given a boost with the backing of government officials at a national level in March of last year. It even became one of the few projects to be exempted from the Biden Administration's 60-day halt on ground disturbing activity approvals.

Another positive from the letter was the quoting of research from Fortune Business Insights.

It notes that "the global rare earths elements market is projected to grow from US$2.8 billion in 2021 to US$5.5 billion in 2028 at a compound annual growth rate (CAGR) of 10.0% in the forecast period."

This demand is being driven by the move to cleaner energy technology, as well as rising global uptake of digital devices, such as smartphones and laptops, in which rare earth elements are used.

What else?

Also potentially giving the American Rare Earths share price a boost today is the release of an update by industry peer Hastings Technology Metals Ltd (ASX: HAS).

In its quarterly update, the company spoke very positively about the rare earths market and the prices that are being commanded.

It said: "During the quarter, global NdPr oxide prices rose 40% to reach US$134.22/kg oxide EXW China. Post-quarter prices continued to climb with sellers showing no intention of lowering prices at this stage. Demand for rare earths required in permanent magnets remained strong, most likely because of recent changes in China on its energy efficiency standards for electrical motors."

This could bode well for American Rare Earths once its La Paz project is operational.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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