Why did Lynas Corporation’s Share Price Take Off This Morning?

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What happened to the Lynas share price?

Shares of Lynas Corporation Ltd [ASX:LYC] were up over 9% in early trading Wednesday. That takes the stock to a one-year price rise of 62.16%

What’s going on with Lynas’ share price?

A quick glance on the ASX website will reveal…absolutely nothing. There are no company announcements from Lynas. In fact, over the last two weeks the company has been as quiet as a mouse.

Yet since the start of the year the company is up 64%. Is the tide turning on their rare earths producer? Are rare earths once again a huge opportunity for investors to get on board? Or is this simply another false start for an industry which has seen a rise and fall of epic proportions?

What now for Lynas Corp?

Global tensions between China and the US are growing. In fact, tensions between the US and everyone are growing. We might be entering a US Presidency that we will remember as the great trade wars era.

If China does start to make the US pay in the best way they know how — trade — then this could end up being a huge boom for rare earths companies like Lynas.

Lynas explore and now produce rare earths from their Mt Weld deposit in Western Australia.

We use rare earths in everything form our smartphones and TVs to the cars we drive every day. As our world becomes more ‘high-tech’, the demand for rare earths in advanced technologies will grow. As one of the world’s largest consumption economies, the US is a massive market for these kinds of technology.

The US is also home to some of the world’s largest tech companies. If China wanted to hurt the US in trade wars it could simply cut off the production of rare earths and restrict supply to US tech companies.

In that situation, we would see the price of rare earths skyrocket. And as a non-Chinese producer, Lynas could be one of the biggest beneficiaries to a US–China trade war.

We don’t have concrete evidence to understand the huge price spike for Lynas this morning. But we think that investors are waking up to the fact that Lynas is well positioned as a rare earths supplier outside of China, and could profit from an impending trade war.

To find out more about rare earths, mining companies, resources, precious metals, or how to get involved in investing in these kinds of companies, you can download your free report here.

Sam Volkering,
Money Morning


About Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’…

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