Lynas Rare Earths Ltd (ASX: LYC) shares could well be on many market watchers' bucket lists after the company posted more than $900 million of revenue for financial year 2022 – marking an 88% year-on-year increase.
That was driven by rising demand for the rare earths materials produced by the company, which in turn bolstered prices.
The company produced 15,970 tonnes of rare earths in financial year 2022 and boasted an average selling price of $60.30 per kilogram.
But what are rare earths materials actually used for? Let's take a look at where the materials will likely end up.
Right now, Lynas shares are swapping hands for $7.545 apiece.
Image source: Getty Images
What are rare earths used for?
Interested in Lynas shares but unsure of the role that rare earths play? You've come to the right place.
Rare earths are a group of 15 elements including neodymium, lanthanum, cerium, praseodymium, and promethium, plus yttrium.
Many are used to make high-power magnets, while others can be used in electronic, optical, and catalytic applications.
They are, therefore, often used in petroleum catalytic cracking, glass manufacturing, semiconductors, and electronics.
In fact, you're likely to find rare earths in the device you're reading from right now.
And the world will use plenty of rare earths as it works to reach net zero emissions.
The minerals are needed to harness power from wind and to build electric vehicles, according to the International Energy Agency. Rare earths are also found in certain batteries and even fluorescent bulbs.
Under various scenarios analysed by the IEA, demand for rare earths is projected to be four to seven times higher in 2040 than it was in 2020.
Lynas also offers one factor that seemingly makes it more attractive to rare earth consumers.
The company is the largest rare earths producer outside of China, which was responsible for nearly 90% of the world's rare earths refining in 2019.
Therefore, political tensions can play to Lynas' advantage. Indeed, the company noted that outside China demand remained strong in financial year 2022.
Lynas share price snapshot
Despite predictions for soaring demand, the Lynas share price has struggled lately.
The stock has slumped 32% since the start of 2022. Though, it's trading 6% higher than it was this time last year.
For comparison, the S&P/ASX 200 Index (ASX: XJO) has fallen 15% year to date and 12% over the last 12 months.
