A rare earth opportunity for investors

China flexes its muscles in a tit-for-tat technology resource tussle as it imposes some sanctions Export of rare earth minerals to the United States. Specifically, they banned the sale of germanium, gallium and antimony, effective immediately from December 3, 2024. These rare earth elements are the main components used for products and applications Computers and technology, AerospaceAnd Auto/Tyre/Truck sector. While China is the largest producer of rare earths in the world, there are other providers. Tech Resources Limited NYSE: TECK is a diversified Canadian mining company focused on zinc and copper production with operations in North and South America and Asia.

Producing by-products such as germanium for fiber optics and solar panels

Teck Resources is a beneficiary of a Chinese ban on the export of certain rare earth elements. In particular, they are the largest producer of germanium in North America. Germanium is a by-product of zinc, making Teck an important producer with the ability to increase its output to meet increasing demand. Germanium is important in the core of fiber optic cables because of its high refractive index, which allows it to efficiently transmit data in the form of light signals over long distances.

Because it is transparent to radiation, germanium is essential for infrared lenses, windows, and detectors for applications such as thermal imaging cameras, infrared spectroscopy, and night vision devices. Germanium is an important element in high-efficiency solar cells due to its ability to convert sunlight into electricity more efficiently than conventional silicon.

Gallium and antimony production

China produces 80% of the world’s gallium. Trace amounts of gallium are found in zinc ore and bauxite, the main ore of aluminum. While Teck does not produce significant quantities of gallium, United States allies and trading partners Germany, Ukraine, and Kazakhstan are minor suppliers. Gallium is a key component in compound semiconductors, optoelectronics, solar cells, and integrated circuits. Neo Performance Materials Inc. OTCMKTS: NOPMF is a Canadian producer of gallium.

Teck produces antimony as a by-product of its lead-zinc smelting operations. Antimony is used as a flame retardant added to materials such as plastics, building materials, electronics and textiles to make them less flammable. It is also used in ammunition and lead-acid batteries.

Despite lower revenue, Q3 beat top and bottom-line consensus estimates

For Q3 2024, Tech Resources reported EPS of 45 cents, beating consensus estimates by 16 cents. Revenue fell 20.6% YoY to $2.12 billion compared to consensus estimates of $2.05 billion. Recording copper production as Quebrada Blanca contributed $986 million to adjusted EBITDA. The company has completed the sale of its remaining 77% interest in the steelmaking coal business. Copper production achieved another record quarter at 114,500 tonnes. The company ended Q3 with $7.8 billion in cash.

For 2024, the company’s production guidance for copper is 420,000 to 455,000 tonnes, zinc 565,000 to 630,000 tonnes, and 240,000 to 250,000 tonnes of refined zinc.

“The third quarter marked a new era for Teck as we successfully transitioned into a pure-play energy transition metals company with copper development,” commented Jonathan Price, CEO of Teck Resources. “We have closed the sale of our remaining interest in the steelmaking coal business and returned more than $1.3 billion to shareholders so far this year while also reducing debt and increasing copper production,” concluded Price. has been increased.”

TECK triggers an MSL buy, but a potential bear flag looms

A bearish flag pattern is formed after a dead cat (temporary) bounce, as it forms parallel upper and lower ascending (rising) trends. A breakdown begins when the stock breaks below the downtrend as the downtrend resumes.

TECK formed a market structure low (MSL) buy trigger at $41.48 after a sharp selloff. The MSL is a reversal pattern consisting of a low, lower low, and higher low, triggered on the breakout from the high of the high low candlestick, which was $41.48. TECK has formed a parallel channel consisting of an ascending upper trendline resistance and an ascending lower trendline support. Daily anchored VWAP support rises to $41.71. The daily RSI is powering on the 54-band.

Fibonacci (Fib) pullback support levels are at $41.48, $39.75, $37.96, and $34.13.

Average of TECK stock Agreed price target At 49.8% is more $64.73And it has the highest analyst price target $80.00. It has six buy ratings and five hold ratings from analysts. The stock has 1.18% short interest.

Actionable alternative strategies: Bullish investors may consider using Cash-secured put Fib pullback at support levels to buy the dip. If shares are specified, writing covered calls at fib levels a Wheel strategy For income on top of its 0.81% dividend yield.

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