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Breakingviews – Rare earths

RARE OPPORTUNITIES. Australian rare-earth producer Lynas enjoyed a recovery in the first quarter of fiscal 2021, despite and because of the virus. Easing Covid-19 restrictions Down Under and in Malaysia finally allowed production to rev up: the company pointed to a 73% quarter-on-quarter increase in its output of neodymium and praseodymium, vital ingredients for magnets, iPhones and electric cars. Chief Executive Amanda Lacaze also argued in her results review that the pandemic’s squeeze on supplies might push buyers to diversify their sources of rare earths beyond China.

That’s talking her own book, but it holds an element of truth. Washington is keen to lessen its dependence on the People’s Republic, the world’s largest producer of rare earths. Investors seem to buy the thesis, pushing Lynas shares up 4% in Sydney on Wednesday. But the coronavirus is still a wild card. Another outbreak could crimp operations and demand.

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