LYC to HAS: ASX stocks tapping opportunities in rare earths space

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LYC to HAS: ASX stocks tapping opportunities in rare earths space

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 LYC to HAS: ASX stocks tapping opportunities in rare earths space
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Highlights

  • Rare earth elements or REEs find major applications in almost all green technologies.
  • REEs are difficult to extract due to their similar physical and chemical nature.
  • These elements are expected to play an important role in achieving the net zero emission goal by 2050.
  • Many ASX players are advancing their projects to make a mark in the growing REE market.

The peculiar magnetic, electric, catalytic, and luminescent properties of rare earth elements (REEs) make them perfect for their application in turbine magnets, electric vehicle cells, solar cells, LEDs, computer hard drives, among others. All these applications are related to the technologies responsible for generating clean and renewable energy

Considering the extensive use of REEs in the production of green energy, it is not wrong to say that they are the building blocks of the mediums which can transform economies into greener economies and help them meet their goal of net zero emissions. This important utility of REEs makes them one of the most sought-after commodities in today's world.

REEs refer to the group of seventeen elements, including fifteen lanthanides, scandium and yttrium. They are grouped under this category because of their similar physical and chemical properties, making them very difficult to extract and separate from their ores. As a result, an additional stage of separating REEs from each other is required during their extraction from ores. This issue of extraction, along with their low concentration in their ores, is what coined the name of rare earths.  

As per data from the Government of Canada for the year 2020, China produced approximately 58% of the world's rare earths, also the highest in the world. Australia's production stood at 7% of total production after China, United States and Burma (Myanmar).  

With this backdrop, we at Kalkine Media® will be discussing a few of the Australian rare earth elements (REEs) stocks as mentioned below:

Lynas Rare Earths Limited (ASX:LYC): The Western Australia-based rare earth elements player has one of the premier REE deposits in its Lynas Mt Weld mine.

The company’s high-quality products include cerium, lanthanum, mixed heavy rare earths, and neodymium and praseodymium used in magnets.

The company fulfils the demand for its high-quality separated rare earth materials from the manufacturing markets in Asia, Europe, and the United States through its processing plant in Malaysia. It is the largest single rare earths processing plant in the world.  

During FY22, the company registered a record result with revenue at AU$920 million and net profit after tax of AU$540.8 million, up 88.1% and 244% year-on-year respectively. EBITDA stood at AU$601.2 million, 155.5% higher from FY21 value.

One of the major highlights of the quarter was a contract award to construct a commercial Heavy Rare Earths separation facility. The company secured the contract worth US$120 million from the US defence department.

Moreover, construction work for a rare earths processing facility in Kalgoorlie advanced during the year. The period saw completion of nearly 40% of the facility construction work. The company has obtained all the required greenlights for the project.  

Iluka Resources Limited (ASX:ILU): Seven decades of experience and expertise in exploration, development, mining, processing, marketing and rehabilitation make Iluka a significant mineral sands player.

In an important step towards its REE diversification, in the first half, the company awarded a contract to Fluor Australia for FEED and EPCM services for its Eneabba rare earths refinery. The construction activities are scheduled to commence later this year, and the first production is planned for 2025.

During the half year to 30 June 2022, the company also highlighted:  

  • Revenue from mineral sands grew by 30%, reflecting higher prices across all its products
  • EBITDA from mineral sands up 69% to AU$505 million
  • Net profit after tax went up 186% to AU$369 million
  • Fully franked interim dividend of 25 cps

Arafura Resources Limited (ASX:ARU): Exploration and development company is committed to advancing its Nolans project, a shovel-ready, world-class neodymium-praseodymium (NdPr) project. The project can help the Australian economy benefit from two global revolutions of today's time: digitalisation and decarbonisation.

The project aims to supply ~5% of global demand for NdPr 99.99% pure oxide.

Hastings Technology Metals Limited (ASX:HAS): The company is striving hard to become a leading Australian REE company, catering to the growing demand for permanent magnets from its Neodymium (Nd) and Praseodymium (Pr) supply. The company’s rare earth projects, namely Brockman and Yangibana, sit within the prolific region of Western Australia.  

Previously Hastings had a 70% interest in the Yangibana project, and the remaining 30% was owned by Cadence Minerals Plc. However, the company acquired the remaining 30% stake for AU$9 million in mid-2022.   

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