Critical minerals have certainly been a hot topic over the past month or so, amid heightening trade tensions and the announcement of new trade agreements, particularly in the rare earths space.
Both Australia and Japan have struck framework agreements with the US in past weeks, which aim to reduce the reliance of all three nations on minerals from China, which dominates global trade in rare earths.
The recent interest in rare earths, and hence rare earths company shares, came about after China added another five rare earth elements to the list of commodities covered by export controls, bringing the total number to 12.
But the critical minerals space is much wider than just rare earths, extending to commodities such as gallium, zircon and even aluminium.
Image source: Getty Images
Where to invest is the question
With companies at various stages of development and share prices bouncing around as the news cycle continues to generate interest, it's worthwhile considering what the experts over at Macquarie think about investing in the critical minerals sector.
In a research note released to their clients this week, Macquarie has tipped three companies to outperform, which are St George Mining Ltd (ASX: SGQ), Meteoric Resources Ltd (ASX: MEI) and Image Resources (ASX: IMA).
On St George, a key differentiating factor, the Macquarie analysts said, was its "dual critical mineral exposure".
As they said:
St George's Araxá project could be the next niobium producer given it is located next to the world's largest niobium producer, CBMM. Its speed to market is enabled by the access to infrastructure, operational know-how, and a skilled workforce in a stable regulatory regime.
St George also has a suite of Western Australian assets where it is looking to develop lithium, cobalt and nickel operations.
Macquarie has a 12-month price target of 20 cents on St George shares, 82% higher than the closing price on Tuesday of 11 cents.
The Macquarie team like Meteoric Resources following the company ticking off several milestones over the September quarter, including a prefeasibility study, a $42.5 million capital raise and the start of their pilot plant production in Brazil, where commissioning is expected to start late this calendar year.
The company's managing director, Stuart Gale, said recently the company was "in an excellent position to capitalise on the significant momentum in the rare earth industry''.
Macquarie has a 12-month price target of 39 cents on Meteoric Resources shares, 95% higher than the closing price on Tuesday of 20 cents.
And on Image Resources, the Macquarie team said the mineral sands company's zircon interests were in the spotlight.
The company recently achieved first production at its Atlas project, and it had, "multiple development projects which could produce heavy mineral concentrate that contains zircon and titanium dioxide feedstock''.
Macquarie has a 12-month price target of 13 cents on Image Resources shares, 63% higher than the closing price on Tuesday of 8 cents.
