Fin review

Lynas’ technical chief still confident in rare earths demand
Tom Richardson Markets reporter and Commentator

Mar 10, 2023 –

The chief operating officer of rare earths miner Lynas has hosed down investor worries over Tesla’s ambition to eliminate the use of the permanent magnet components in its next-generation electric vehicles.This week, Pol Le Roux, said he is confident in demand for rare earths as the electric vehicle shift accelerates and neodymium-based (NdFeB) rare earth magnets are the most energy efficient to create the lightest motors.Tesla said it plans to eliminate rare earths from next-gen vehicles in part to to save on costs. Rhett Wyman“Different technologies provide different behaviours and performance options for the vehicle, and there is room for different options to grow in the market,” Mr Le Roux told AFR Weekend. “We remain confident in the overall advantage of NdFeB magnets, provided end users select responsible suppliers in their supply chain.”On March 2, after Tesla unveiled plans to eliminate expensive rare earths materials, Lynas shares slumped 6.8 per cent to close at $7.80, with the sell-off extending this week as the stock hit $7.14 on Friday – its lowest since October 2021.Analysts put the falls down to worries about Tesla’s plans, an amended license for Lynas in Malaysia, and a retreat in the spot price of neodymium in a market dominated by Chinese buyers and sellers.
At its investor day, Tesla said its Model 3 vehicle’s powertrain used 25 per cent less rare earths between 2017 and 2022. However, Mr Le Roux suggested rare-earth based green electronics components will remain popular for the energy transition. “An NdFeB [rare earth] is known as the most energy-efficient technology, as it creates the lightest electric motors,” he said.Business intelligence group Adamas Intelligence said Tesla may replace rare earths with ferrite-powered motors to save costs.
While UK research group IDTechEx said Tesla could replace them by developments in magnetic alloys to “improve field strength and increase motor size to provide similar outputs while taking a power density hit, as drivers won’t notice unless it impacts performance or cargo space.”

Last April, Lynas boasted an $11.5 billion market cap at a share price of $11.59 as investors backed its strategic importance, with its Malaysia-based refinery still the only rare earths separation plant outside China. In June 2022, it snared a $US120 million contract with the US Department of Defence to establish a refinery in the southern US. Lynas had about 2.1 per cent of its stock shorted as at March 6, ASIC data shows.