The Lynas Rare Earths Ltd (ASX: LYC) share price is gaining today. It jumped from the open to $10.40 and is now up 0.78% at $10.35.
Investors are responding well to a company announcement out of the rare earths specialist after the market close yesterday.
In the release, the company gave an update on its Malaysian permanent disposal facility (PDF) for Water Leach Purification (WLP) residue. Here are the details.
What’s moving the Lynas share price?
The Lynas share price is on the rise after the company advised the Malaysian PDF for WLP residue has received environmental approval from the relevant Malaysian regulatory authorities.
The company says detailed assessments have been undertaken for the proposed PDF in the Gebeng Industrial Estate.
These include an environmental impact assessment, a social impact assessment including community consultation, and a radiological impact assessment.
Lynas also explains the PDF design complies with national and international standards. It says it builds on “Lynas Malaysia’s 9 years of safe operation and management of residue storage facilities”.
The update is a major de-risking move for the company, as the overhang from the Malaysian regulators has been a roadblock to ramping up the project.
What else is at play?
Aside from that, Lynas is trading in an ascending channel that’s been in situ over the past 3 months or so. The Lynas share price has crawled out of a sluggish period in October and jumped from a low of $6.25 back then.
Part of the rally has been spurred on by strengths in the underlying commodities Lynas has exposure to – rare earths, and indirectly, lithium.
Firstly, rare earths such as neodymium saw an explosion in upward pricing back in mid-October. Prices on neodymium spot and futures contracts have spiked 34% to 5-year highs since then and have held that level since.
Lithium has been on an extended run and players in adjacent markets are set to benefit from the same. While Lynas isn’t a lithium miner or producer, rare earths and lithium are both integral components of lithium-type batteries.
Demand for battery metals has exploded in the past 2 years alongside a shift in the demand curve for electric vehicles (EVs) and other forms of electromobility.
Hence the buoyant demand for EVs and batteries and the likes is a net positive for rare earths players, as we’ve observed this year.
The Lynas share price has gained around 160% in the last 12 months. It is also up 21% over the past month.