The Lynas Rare Earths Ltd (ASX: LYC) share price is suffering. It's down around 5%, while the S&P/ASX 200 Index (ASX: XJO) has been hit by a 2.43% loss at the time of writing.
What's causing today's painful selloff?
The key reason is likely that the latest US CPI inflation reading was higher than people were expecting. As reported by various media, including the BBC, inflation was 8.3% over the year to August 2022. This rate was 0.1% higher than July 2022, which showed an increase of 8.2%. A decrease in the price of petrol was offset by increases in other sectors.
If inflation isn't dropping yet, then the US Federal Reserve may need to keep going with hefty interest rate increases. An increase of 75 basis points, or 0.75%, may be the next monthly move.
It's not just Lynas that is seeing a decline in the resources sector today. The Lake Resources N.L. (ASX: LKE) share price is down 14.57%, the Evolution Mining Ltd (ASX: EVN) share price is down 6.2%, and the Syrah Resources Ltd (ASX: SYR) share price is down 2.88%.
What has been happening with the Lynas share price recently?
Over the past month, the rare earths miner has seen a 15% decline in its share price.
Within this time period, the company has reported its FY22 result which showed it generated $920 million of revenue and $540.6 million of earnings before interest and tax (EBIT). Profitability can have an impact on investor sentiment.
The company was able to capitalise on the strong demand for its rare earth materials. It managed these numbers despite problems like shipping delays, input cost increases, water supply issues, and the COVID-19 pandemic.
The Lynas CEO and managing director Amanda Lacaze said:
This excellent full year result is a credit to our teams in Australia and Malaysia, who have focused on serving our customers and growing our business whilst addressing ongoing challenges.
I am pleased to report to our shareholders these strong results and progress made on growth initiatives. Further investment in capacity increases at each stage of production will ensure that Lynas is well positioned to continue to grow with the market as a supplier of choice to 2025 and beyond.
What next?
The company is working on a number of expansion initiatives that will support the further growth and development of outside China supply chains, including the re-establishment of a rare earths supply chain in the United States.
The objectives of the Lynas growth plan are to grow with the market, diversify the company's industrial footprint, and increase the product range for customers. The company is now working to accelerate growth capacity at the Mt Weld site. It has announced a $500 million project to do this, which will result in an increase from the previously announced 10,500 tonnes per annum of finished product, to produce 12,000 tonnes per annum of finished product.
Lynas share price snapshot
Despite the declines, over the past year, Lynas shares have risen by 10%.
