Earlier this morning, the share price of Lynas Corporation Ltd [ASX:LYC] was up another 9.07%, trading at $2.42 per share.
The Lynas share price is now closing in on a one-year high and is beginning to build momentum:
The company has recently come out of a trading halt and provided clarification on its reserves. Meanwhile, there are signs that Lynas could benefit from worsening US–China trade war tensions.
Lynas’ share price quick out of the gates, clarification provided
The Lynas share price continued its rise today with a sharp jump at the commencement of trading.
The company provided an update on their ore reserves and updated slides from yesterday’s investor presentation.
The company noted that the forecast tailings quantities quoted in the investor presentation were described as ‘opportunities’ and should not be read as mineral resource or ore reserve figures.
Lynas also clarified that Sc2O3 in concentrate figures ‘were based on assays of concentrate produced to date and forecast rates of concentrate production.’
The real story is what’s happening with the US and China
It is worth noting that Money Morning’s Murray Dawes actually picked up on the recent action in the rare earths space, well before it happened.
He looked at volumes in some of the major rare earth players in this video last month:
It now appears that interest from investors is returning to the sector.
As Reuters reports:
‘Canada’s Largo Resources Ltd, Lithium Americas and Cobalt 27 Capital Corp all surged by double-digit margins. Brazil’s Cia de Ferro Ligas da Bahia, known as Ferbasa, rose 7.5% in its biggest gain in six months.’
All of this movement was sparked by the visit of Chinese President Xi Jinping to a rare earth firm in southern China.
In the piece, one analyst is quoted as saying:
‘No question it’s saber rattling…I think China would be reluctant to cut off supplies to anyone just yet, but the optics are designed to send a clear message — we know your vulnerabilities.’
China is apparently considering using rare earths as a weapon in the trade war, while the US has spared Chinese exports of rare earths from recent tariffs.
This has the potential to backfire on China though, as companies outside of China may move quickly to develop alternative supplies.
One such company could well be Lynas.
After a rocky spell following the Wesfarmers Ltd [ASX:WES] takeover bid, things are looking up for Lynas.
For Money Morning