The Lynas (ASX:LYC) share price jumped out the blocks today. Here's why

An update after the market close yesterday has fired up the rare earths specialist's shares

| More on:
Runner jumps out of the starting blocks on a race track.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Lynas Rare Earths Ltd (ASX: LYC) share price is gaining today. It jumped from the open to $10.40 and is now up 0.78% at $10.35.

Investors are responding well to a company announcement out of the rare earths specialist after the market close yesterday.

In the release, the company gave an update on its Malaysian permanent disposal facility (PDF) for Water Leach Purification (WLP) residue. Here are the details.

What's moving the Lynas share price?

The Lynas share price is on the rise after the company advised the Malaysian PDF for WLP residue has received environmental approval from the relevant Malaysian regulatory authorities.

The company says detailed assessments have been undertaken for the proposed PDF in the Gebeng Industrial Estate.

These include an environmental impact assessment, a social impact assessment including community consultation, and a radiological impact assessment.

Lynas also explains the PDF design complies with national and international standards. It says it builds on "Lynas Malaysia's 9 years of safe operation and management of residue storage facilities".

The update is a major de-risking move for the company, as the overhang from the Malaysian regulators has been a roadblock to ramping up the project.

What else is at play?

Aside from that, Lynas is trading in an ascending channel that's been in situ over the past 3 months or so. The Lynas share price has crawled out of a sluggish period in October and jumped from a low of $6.25 back then.

Part of the rally has been spurred on by strengths in the underlying commodities Lynas has exposure to – rare earths, and indirectly, lithium.

Firstly, rare earths such as neodymium saw an explosion in upward pricing back in mid-October. Prices on neodymium spot and futures contracts have spiked 34% to 5-year highs since then and have held that level since.

Lithium has been on an extended run and players in adjacent markets are set to benefit from the same. While Lynas isn't a lithium miner or producer, rare earths and lithium are both integral components of lithium-type batteries.

Demand for battery metals has exploded in the past 2 years alongside a shift in the demand curve for electric vehicles (EVs) and other forms of electromobility.

Hence the buoyant demand for EVs and batteries and the likes is a net positive for rare earths players, as we've observed this year.

The Lynas share price has gained around 160% in the last 12 months. It is also up 21% over the past month.

The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Avita Medical, GenusPlus, Mesoblast, and Polynovo shares are storming higher

These shares are having a better day than most today. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why EOS, News Corp, Polynovo, and Pro Medicus shares are roaring higher today

These shares are starting the week positively. But why?

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX 200 stocks marching higher this week even as the market sinks

These five ASX 200 companies are shrugging off the broader selling to march higher this week.

Read more »

Rising share price chart.
Share Gainers

Why Novonix, HMC, Karoon Energy, and Ventia shares are pushing higher

These shares are ending the week on a positive note. But why?

Read more »

A young woman smiles as she rides a zip line high above the trees.
Share Gainers

3 top ASX 200 stocks I wish I'd owned in 2024

These three top ASX 200 stocks are racing higher in 2024.

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Champion Iron, EBR Systems, Mesoblast, and Patriot Battery Metals shares are surging today

These shares are avoiding the market selloff on Thursday. But why?

Read more »

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors ended up snatching defeat from the jaws of victory today.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Share Gainers

Why Clarity, Omni Bridgeway, Santana Minerals, and Vulcan shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »