Lynas investors face a trio of worries to start 2023

Nick Sundich Nick Sundich, March 6, 2023

Lynas (ASX:LYC) hasn’t had a good start to 2023. The NdPR (Neodymium and praseodymium) price has been volatile, the company is facing competition and its investors fear that electric vehicle manufacturers such as Elon Musk’s Tesla might not need rare earths after all. 

 

 

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Lynas is at the forefront of the rare earths industry 

Lynas is one of the biggest non-China players in the rare earths industry with its Mt Weld mine in Western Australia and a processing plant in Malaysia. 

Its shares have more than tripled in the last five years as rare earths prices rocketed in conjunction with other battery minerals. 

However, shares are down 20% in the last six months. 

 

Lynas (ASX:LYC) share price chart, log scale (Source: TradingView)

 

A trio of worries

There are three worries on the mind of Lynas investors. The first is the volatile NdPr price in recent months. Prices tumbled by over 50% late in 2022 and retreated another 11% in February despite the re-opening of China. 

Second, Lynas is facing competition with Arafura (ASX:ARA) commencing construction on its Nolans project in the NT. 

And third, there are fears that electric vehicle makers such as Tesla will need less rare earths.

At last week’s investor day, Telsa boss Elon Musk revealed that Model 3 vehicles manufactured today use 25% less rare earths than it did five years ago. He also said rare earths may not be required in future batteries, keen to simplify supply chains. 

Broker Macquarie released a report at the end of last week, rating the company neutral and placing a share price target of $7.80. 

 

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