Lynas shares jumped more than 15% yesterday on talk from offshore than China could restrict exports of rare earths to the US and other users as part of its retaliation over Donald Trump’s trade war.
Lynas did not release any statement yesterday the news flow from offshore seems to have been the trigger for the surge as offshore investors realised the company could be in a strong position being the only significant producer of rare earths (used in all sort of new technologies such as electric vehicles, mobile phones and other devices) outside of China from its Mount Weld mine in WA.
The shares ended a bullish day up 15.5% at $2.76. That’s the highest they have been since late April 2018.
Earlier this month the company revealed plans to build a processing plant in the US via a joint venture with an American company and a processing operation in WA, as well as addressing Malaysian concerns about its processing plant and rising stock of waste material (which the Malaysians wanted to be moved from their country ASAP).
Yesterday’s reports from China suggested that Beijing is gearing up to use its dominance of rare earths as a counter in its trade battle with Washington, with some stories suggesting that the idea came from the country’s top planning group, the NRDC.
The People’s Daily, the Communist party’s main newspaper said the US shouldn’t underestimate China’s ability to fight the trade war, saying it isn’t hard to answer the question whether China will use rare earths as a weapon as retaliation in the trade war, the paper said.
Reuters reported that “While China has so far not explicitly said it will restrict rare earths sales to the United States, Chinese media has strongly implied this will happen, including remarks from the editor of influential paper the Global Times on Twitter late on Tuesday.”
“In a commentary headlined “United States, don’t underestimate China’s ability to strike back”, the ruling Communist Party’s official People’s Daily noted the United States’ “uncomfortable” dependence on rare earths from China.”
China controls 80% of the world’s rare earths production, with Lynas accounting for the rest.
China has already used rare earths supplies as a weapon in a dispute with Japan a decade ago. It was forced to rescind the ban after losing a case in the World Trade Organisation.
