The Lynas Rare Earths Ltd (ASX: LYC) share price has been red hot this month despite closing lower today.
While it has been a bumpy ride over the course of the last 30 days, the rare earths producer's shares are up 20%.
Nonetheless, the company's shares took a breather on Wednesday to close 1.7% lower at $10.42 each.
What's behind the rise of the Lynas share price?
Following the recent volatility in the Lynas share price, it appears investors are looking to cash in.
The company produced a solid performance for the first half of FY22, with double to triple-digit growth across key financial metrics.
Lynas produces Neodymium-Praseodymium (NdPr) which is a magnetic rare earth alloy used in many modern technologies.
The price of NdPr has mostly soared in the past year as Western countries try to limit China's rare earths dominance.
Lynas is considered to be the world's second-largest producer of NdPr, behind the Asian giant. The latter accounted for 60% of global production of rare earths last year.
Rare earths are a group of 17 metals that are critical to the manufacturing of many electronic products. These include mobile smartphones, electric vehicles, aircraft engines, wind turbines, and even military equipment.
However, with geopolitical tensions heating up between the West and Russia, the supply of rare earths could not be more important.
The United States recently warned China that it too could face hard-hitting sanctions if it decides to provide financial or military support to Russia. If this happens, demand will outstrip supply by a considerable amount which will lead to a surge in NdPr prices, among other commodities.
Lynas is seeking to disrupt China's supply of rare earths and become a vital company for advanced Western economies.
Lynas share price snapshot
Over the past 12 months, the Lynas share price has rocketed almost 70% on the back of positive investor sentiment.
Although, since the start of the year, its shares have recorded wild swings of more than 20% in either direction.
The company's shares are up less than 3% in 2022.
Much has been priced into the Lynas share price, with a price-to-earnings (P/E) ratio of a staggering 698.67.
On valuation grounds, the company commands a market capitalisation of roughly $9.4 billion.
