Rare Metals Boost Johnson Matthey

03/01/2018 5:00 am EST

Focus: COMMODITIES

Jim Powell

Principal Analyst, Global Changes & Opportunities

Global economic growth is creating another upturn in demand for commodities and raw materials. Industrial metals are in particularly high demand. The list includes copper, iron, aluminum and nickel, explains Jim Powell, editor of Global Changes & Opportunities Report.

To that group we can add lithium, cobalt, and several other rare earth metals that go into electric cars, cellphones, and dozens of other high tech products.

I’m not expecting to see a repeat of the supercycle in raw materials that we had when the Great Recession turned into a long recovery several years ago — but that’s okay. The growth that seems likely should keep smiles on our faces as the leading suppliers deliver rising profits.

Johnson Matthey (JMPLY) is a familiar name to most precious metal investors. The London-based company — that is traded in the US—– refines and recycles gold, silver, platinum, palladium and other expensive metals that are marketed worldwide.

The company has been business since 1817 and adopted its current name in 1851. No precious metal company can come close to matching Johnson & Matthey’s track record for long-term success.

In addition to providing refined metals for its customers, the company uses them to produce catalysts for the chemical and pollution control industries.

Pharmaceutical ingredients, biochemical agents, coatings, inks, and many other products are also produced. Major operations are located in North America, Europe, China, and elsewhere in Asia.

Johnson Matthey, 10-year chart

chart

One new product is particularly important. The company developed a new lithium nickel-oxide material that should boost the performance of high-density batteries used in electric vehicles.

Analysts at Credit Suisse found that redesigning the Model S from Tesla (TSLA) to use the company’s new battery chemistry would improve efficiency by 13% and by up to 30% for most other electric cars.5 Full-scale production of the company’s new battery materials  should be in place by 2021.

Johnson Matthey should appeal to investors who want precious and rare metal diversification within a single company that has excellent long-term prospects. Note: Johnson Matthey is an OTC stock where prices can swing quite a bit during the day. Please be sure to specify your buy and sell prices when you trade.

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