US President Donald Trump has highlighted the geopolitical importance of Lynas Corp’s rare earth business after signing an executive order aimed at reducing America’s dependence on China for the precious minerals that are vital to the electronics and defence sector.
In 2019, the White House ordered the Defence Department to spur the production of rare-earth magnets amid concerns that China, which controls more than 80 per cent of the world’s rare earth supply, could restrict exports of the products amid heightened trade tensions.
President Trump’s order declares a national emergency in the US mining industry and directs government departments to use the Defense Production Act to accelerate the development of rare earth mines. President Trump used similar orders this year to boost the production of medical supplies for the coronavirus pandemic.
Earlier this year, the US Department of Defence selected Lynas for Phase 1 funding of its proposed rare earths processing operations in Texas.
Rare earths refers to 17 elements crucial to the manufacture of many hi-tech products such as mobile phones, electric cars, wind turbines and defence applications.
Lynas, the only significant rare earth producer outside of China, currently extracts these rare earth ores from a West Australian mine and processes the ore in Malaysia.
Lynas shares rose as much as 6 per cent on Thursday to a high of $2.47.
It is planning to set up processing facilities in Western Australia, as well as the processing facility in Texas which is focused on rare earths used by the defence sector.
“We continue to see China’s dominance of global rare earths production (approximately 85 per cent) and ongoing geopolitical/trade tension as continuing to provide a supportive backdrop to the NdPr market,” said Canaccord Genuity this month referring to a key rare earth element used in magnets.
In July Lynas said it was expecting higher demand for its ores in the current half year after the COVID-related shutdown of its Malaysian operations crippled production for the June quarter and generated its first period of negative operating cash flow since 2014.
The company said sales volumes and revenue more than halved compared to the prior fourth quarter to 1878 tonnes and $38 million respectively.
In addition to the forced shutdowns, Lynas said demand for rare earths had been particularly hard hit in relation to the automotive market which is one of the company’s major sources of demand.
Source: Thanks smh.com