At time of writing the share price of Lynas Corporation Limited [ASX:LYC] is up 5.14%, trading at $2.66.
This is how today’s trading in Lynas shares has gone so far:
You can see a large spike on open…
There was big news for Lynas today on the Malaysian regulatory front, with Prime Minister Mahathir Mohamad confirming that the company won’t have to export low-level radioactive waste from its Kuantan plant. This bodes well for Lynas’ share price in the days and weeks ahead as the crucial 2 September deadline approaches.
Lynas share price up as cloud of uncertainty clears
After posting seven successive losing sessions, the Lynas share price flew up this morning on the news out of Malaysia.
In an announcement released this morning, Lynas welcomed comments made by the Malaysian PM at a press conference yesterday.
The PM indicated that water leach purification (WLP) residue would not be a condition of Lynas’ operating license.
The licence is due to expire on 2 September and Lynas says they are expecting a decision from the Malaysian Cabinet to be made by mid-August.
Lynas is now conducting preliminary work on sites for a Permanent Disposal Facility (PDF) for the WLP residue.
The company has consent from the Pahang State Government to build a PDF that dates back to 2014.
At the same time, it is looking at two sites in WA that will remove radioactivity from its rare earths before they are sent to Malaysia.
So it appears that after months of uncertainty, and a takeover bid from Wesfarmers Limited [ASX:WES], there could be blue skies ahead for the company.
Back in May, The Australian Financial Review reported that Wesfarmer’s retains an interest in Lynas.
After today’s news, if another bid is forthcoming, it would likely have to come in at a significantly higher value than the original offer.
The outlook for Lynas (ASX: LYC)
Rare earths are poised to become increasingly important commodities as they are used for a wide range of purposes.
This includes electric vehicles, electronics and military applications.
Lynas, through its close relationship with Japan Australia Rare Earths (JARE) provides an important counterweight to Chinese dominance of the rare earths sector.
As a result, and especially with the latest news out of the White House, there could be significant further upside to shares in rare earths companies located outside of China.
President Trump has just moved to up the ante in the trade war by slapping an additional tariff of 10% on Chinese goods.
This would be due to come into force on 1 September, just one day before the Lynas license expires.
If this comes to pass, China would likely have to respond.
In previous coverage, we talked about the Pentagon sending out feelers on how to ramp up US production of rare earths.
We also note that China actually increased its exports of rare earths in June.
If you are intrigued by the strategic importance of rare earths (from an investment perspective), we highly recommend you have a read of our free report on the topic. It’s a concise, yet detailed look at the rare earths question and it will give you a clearer picture of demand dynamics as well as the geopolitical factors driving interest in the commodities.
For Money Morning