The Lynas Rare Earths Ltd (ASX: LYC) share price is having a strong session.
In morning trade, the rare earths producer's shares are up 7% to $7.39.
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Why is the Lynas share price charging higher?
Investors have been buying Lynas shares on Tuesday after some big news out of China overnight.
According to Bloomberg, China is banning the export of two crucial metals in an escalation of the trade war on technology with the United States and Europe.
Beijing has announced that from 1 August it will impose curbs on gallium and germanium exports in order to protect Chinese national security.
The report explains that exporters will be forced to apply for licenses from the commerce ministry if they want to start or continue shipping these critical metals out of the country. They will also be required to report details of the overseas buyers and their applications.
While the markets for these markets are relatively small in value, their use in strategic industries means that the restrictions could have a far-reaching impact.
Gallium is used in compound semiconductors used for television and mobile screens, solar panels, and radars. Whereas germanium is used in fibre optic communications, night vision, satellites, and space exploration.
And while Lynas doesn't produce gallium and germanium, investors may believe it has the scope to do so in the future. In addition, the market may be betting on this being only the start of greater curbs on rare earths, which would be good news for Lynas given that its Advanced Materials Plant is the largest rare earth production facility outside of China.
The Lynas share price is down 20% over the last 12 months.
