Today, Lynas Corporation Ltd [ASX:LYC] is set to reach more multi-year highs, as the Malaysian Prime Minster gave his strongest indication to date that the company will be allowed to continue operating its controversial processing plant.
At the time of writing Lynas’ share price is trading at $3.04, up 10.95%.
Trade war helping Lynas’ share price
Dr Mahathir told reporters at a news conference in Tokyo:
‘We will allow Lynas to carry on, because otherwise we will lose a big investment from Australia.’
But this doesn’t come without incident. According to The Sydney Morning Herald, the Malaysian government ministry has put forth conditions on Lynas’ licence to operate, which is set to expire this September. This could force LYC to get rid of 450,000 tonnes of low level radioactive waste before the expiry date.
He said operations can continue in Malaysia if it or another rare earth explorer like Wesfarmers Ltd [ASX:WES] takes care of the radioactive waste before it reached the shores.
Dr Mahathir’s statement on Thursday is the first time he has said that the Lynas plant can continue to operate.
‘We welcome the Prime Minister’s comments and we will update the market when there are further developments.’
Yesterday, shares of Lynas climbed their highest in over five years of trading, and was in tandem with Chinese newspapers reporting China is to hit back at the Trump administration using rare earth in the trade war.
China produces most of the world’s rare earths, and is set to restrict its supply to the United States instead of the usual tit for tat tariff increases. Lynas is the only major producer outside of that.
Lynas’ 2019 share price outlook
Global markets have been falling as nervous investors look to China for retaliation from the US, amidst the ongoing trade war.
Since heading into 2019, Lynas’ share price has skyrocketed over 80%.
It seems the trade war is only solidifying the company’s geopolitical importance.
More to come.
For Money Morning
PS: Ready for a rare earth come back? Take a look at this surprising mining stock set to surge alongside rare earths. Read more about it here (for free).