Rare Earths Prices Weighed Down by Trade Tensions, Says Lynas

Lynas (ASX:LYC,OTC Pink:LYSCF) is citing the ongoing trade dispute between Beijing and Washington as a key factor weighing on rare earth price growth during the latest quarter.

The company, which is a major player in the rare earths sector, was still able to achieve a handful of milestones in the period even though the group of technology metals are not fetching top dollar.

The Australia-listed producer says in its report for the most recent quarter that while demand outside of China for neodymium (Nd) and praseodymium (Pr) continues to increase, it is strategically holding these metals for its core customers, a great deal of which are based in Japan.

Nd and Pr are needed for high-strength magnets, and the Japanese magnet market is poised to undergo significant growth in the year to come. Lynas believes this bodes well for the company, which is the primary supplier of Nd and Pr to Japan.

For now, however, Lynas is waiting for a correction in the rare earths space. As mentioned, the trade war has weighed on the value of the strategic metals.

According to the company, prices for the metals declined from AU$20.10 per kilogram in its third 2019 fiscal quarter to AU$18.50 in its fourth fiscal quarter of the year.

Against that backdrop, the rare earths miner continues to position itself for the bright future it foresees for the sector. In addition to recently renewing its operating license with the Malaysian government, the company is in the midst of two new projects.

“Lynas has announced its intention to build a heavy rare earth separation facility, which would be the only facility of its type outside China,” notes a Monday (October 21) release. “This reflects increasing customer interest, as heavy rare earths are critical elements to secure automotive electrification.”

One of the potential separation facilities may be in Texas, as Lynas and Blue Line entered into a memorandum of understanding (MOU) earlier this year.

Lynas has also entered into a MOU with the Australian city of Kalgoorlie-Boulder for a proposed cracking and leaching plant.

“Our strategic objective beyond securing long term contracts is to stimulate further development of downstream industry in the USA and Europe, in magnet making and motor manufacturing,” notes the company in its release.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.