Lynas falls following the Trump-Labor Govt’s historic critical minerals agreement.
Lynas Rare Earths (LYC) fell ~8% into the close on Thursday following the news that the Trump administration and Federal Labor government have negotiated a historic critical minerals deal. The stock gapped higher on the opening before reversing more than 12% from its early high as the sellers took control despite the deal being described as a “shot in the arm” for the industry.
- The US and Australia will each spend $1 billion over the next six months on projects with additional outlays after that toward a $8.5 billion pipeline of critical minerals projects.
Finalised on Monday during Albanese’s trip to Washington, the pact signals a new way for miners to approach capital raising. It also underscores the heightened geopolitical strains between the US and China as Beijing imposes export controls of rare earths, which are key to advanced tech, batteries, chips and defense equipment. The US and Australia will each spend $1 billion over the next six months on projects with additional outlays after that toward a $8.5 billion pipeline of critical minerals projects. LYC is not a beneficiary of the funds at this stage but is the only producer of so-called rare earths outside of Australia.
- With many rare earths projects years away from operation we believe LYC will find support into further weakness although we’re conscious that Xi and Trumps meeting next week could change the short term outlook dramatically.
