The share price of Lynas Corporation Ltd [ASX:LYC] closed down 2.48%, trading at $2.75.
Meanwhile, another rare earth company Northern Minerals Limited [ASX:NTU] was also down 1.41% today closing at 7 cents.
The 10-year charts of the two companies look remarkably similar, with a spike in 2011 when rare earth prices went through the roof:
Source: tradingview.com
We look at the current political situation in Malaysia and Northern Minerals’ placement which will allow it to accelerate its Browns Range project.
Free Download: ‘Rare Earth Boom 2.0: An In-Depth Look at the Commodities of the Future’.
Lynas share price down as activist pressure grows
Lynas shares slid throughout the day as investors digested events in Malaysia.
The Age reports in a joint statement coinciding with the launch of new campaign against the company, Greenpeace Malaysia Campaigner Heng Kiah Chun said:
‘The Malaysian government need to hold Lynas accountable for its massive radioactive waste problems.’
Continuing…
‘Lynas has misled Malaysia by giving two undertakings to remove its toxic radioactive waste from Malaysia even though Western Australia had made it clear back in 2011 that its waste would not be accepted back in WA.’
The Malaysian Energy, Science, Technology, Environment Minister Yeo Bee Yin is due to decide next month on Lynas’ appeal against the new conditions imposed on the processing plant.
These conditions would force the company to export its low level radioactive waste from the country.
The company also announced last week that it had achieved one year ‘lost time injury free’ as part of its ‘world-class safety standards’.
Curiously, The Age also reports that Malaysia’s Natural Resource Minister Dr Xavier Jayakumar wants Malaysia to become a rare earths minister in its own right.
Last week, we covered how the Pentagon is asking US rare earth miners to get back to them with plans for developing their resources, and Chinese exports of rare earths had increased.
So interest in the rare earth space is growing and Lynas’ experiences in Malaysia are just part of the picture.
Northern Minerals share price down on placement
Northern Minerals, which is seeking to develop its Browns Range heavy rare earth project announced that it had raised $6.94 million via a non-renounceable entitlement, and had also entered into subscription agreements with ‘Australian and overseas investors to raise a further $30 million.’
The $30 million placement comes in at an issue price of 6.2 cents.
The funds will be used to engineer and design an ore-sorter system (which should be up and running by mid-2020 if all goes according to plan), to conduct test work on product separation and increase exploration.
The company notes that:
‘If the separation technology investigations prove to be successful, incorporation of the technology will position Northern Minerals as a unique rare earth producer in Australia and globally.’
It also highlighted that the dysprosium price was up around 55% in 2019.
With cash now available to progress their project, Northern Minerals could benefit from a flare-up in US-China trade tensions.
It is also possible that if something unforeseen happens to Lynas in Malaysia, investors may turn to Northern Minerals.
We look at Lynas’ operation in this free report, as well as the demand dynamics of rare earths. It is a must read if you are interested in the sector.
Regards,
Lachlann Tierney
