Why is the Lynas share price ripping 7% higher on Tuesday?

This mining share is making its shareholders smile on Tuesday.

| More on:
a man in a hard hat and overalls raises his arms and holds them out wide as he smiles widely in an optimistic and welcoming gesture.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A woman jumps for joy with a rocket drawn on the wall behind her.
Materials Shares

Why this ASX battery materials stock could rocket 60%

Bell Potter is tipping this stock to have a bright future.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Why today is a good day to own Rio Tinto shares

This miner's shareholders have reason to smile this morning.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP share price charges higher following Q3 update

How did the Big Australian perform during the last quarter?

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

Is Core Lithium stock a good long-term investment?

Is this lithium dog a buy-the-dip opportunity today?

Read more »

Man in mining hat with fists raised and eyes closed looking happy and excited about the Newcrest share price
Materials Shares

Guess which ASX small-cap mining stock is rocketing 32% today

This mining stock is being given a major cash injection from the government.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

Here's why this ASX lithium stock is in a trading halt

Bad news or good news. What is the dealio with government permitting?

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Materials Shares

Lynas shares leap as Rinehart ramps up $332 million stake

Gina Rinehart is gradually growing a rare earths empire.

Read more »

Two miners standing together with a smile on their faces.
Materials Shares

Rio Tinto share price drops after Q1 update falls short of expectations

How did the miner perform compared to expectations?

Read more »