The Lynas Corporation Ltd (ASX: LYC) share price is the best performer on the ASX 200 on Thursday.
In early afternoon trade the rare earths producer’s shares are up over 9% to $2.36.
Why is the Lynas share price charging higher?
Today’s gain appears to be in relation to news that the U.S. Army is looking to fund the construction of a rare earths plant for weapons development.
According to Reuters, the U.S. Army will make its first financial investment into commercial-scale rare earths production since World War Two.
The move is part of an urgent push to secure domestic supply of the minerals which are used to make military weapons and electronics. This follows threats by China to use its dominance in rare earths as geopolitical leverage.
How does this benefit Lynas?
Lynas is the largest rare earths producer outside China. Investors appear to believe this puts the company in a good position to work with the U.S. Army on this project.
And with the military offering to fund up to two-thirds of a refiner’s cost, this could be a good opportunity for Lynas. Reuters believes that a joint venture between the company and Blue Line Corp is in the works and is expected to make a proposal. Though, it will face competition from both UCore and Texas Mineral Resources Corp.
Lynas selects Kalgoorlie.
This isn’t the only news relating to Lynas this week.
At the start of the week the company announced that it has selected Kalgoorlie, Western Australia, as the location for its new cracking and leaching plant. This is the first step in establishing a critical minerals hub in the Goldfields region.
The company advised that Kalgoorlie was selected from the two shortlisted locations following extensive due diligence. It was chosen as it provides close proximity to the Lynas mine at Mt Weld, as well as a skilled workforce and a rich history in the mining and processing industries.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.