Why Lynas Corporation Limited shares are soaring today

A sign of things to come?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rare earths producer Lynas Corporation Limited (ASX: LYC) has seen its shares climb more than 8.8% to 14.7 cents in afternoon trade, despite no company news.

By comparison, the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up just 0.4%.

Much of the rise may well be due to an interview with Edison Investment Research's Tom Hayes. Mr Hayes, speaking to The Mining Report, says China's State Reserve Bureau intends to begin stockpiling medium-to-heavy rare earth elements (REEs), and that China will start to strengthen REE export quotes.

That is likely to lead to higher rare earth prices, and a race to get project currently under development into production. Mr Hayes says industry consensus expects annual growth in demand for REEs to grow annually by anything from 3-8% until 2020. There are only 2 rare earths mines in operation globally outside of China, according to mining-technology.com, with Lynas' being one of them. The other is Molycorp's Californian mine.

Mr Hayes has also singled out Alkane Resources Ltd (ASX: ALK), which has a Zirconia project in Dubbo, NSW. Alkane is expected to produce niobium and heavy rare earth oxides as a secondary product.

Mr Hayes says demand for REEs, particularly in green technologies such as wind turbines is growing, as government support for renewable energy sources drives further development of wind farms, and hence the metals used in those projects.

Recently, lithium, graphite, nickel and bauxite (used to make aluminium) miners have been in the spotlight, with shares in graphite miner Syrah Resources Ltd (ASX: SYR) up 50% in the last month alone. Graphite is used heavily in lithium-ion batteries for products such as electric vehicles.

Shareholders in Lynas will be hoping this is a sign of things to come for the embattled rare earths producer.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »