Lynas Corporation’s (ASX:LYC)decision to temporarily cease production at its Malaysianprocessing plant after the government introduced tighter movement controls tolimit the spread of COVID-19 has highlighted the fragility of the rare earthssupply chain.
The world’s largest rareearths producer outside of China noted that its Mt Weld mine would continue tooperate and that the plant retained in-progress inventory for a quick restart.
Rare earths are a basketof minerals that are crucial to the manufacture of high-tech products. Theyinclude neodymium and praseodymium, which are in strong demand for themanufacture of permanent magnets that are essential for electric
motors and wind power generators.
RareX (ASX:REE) executive director Jeremy Robinson told * that while the shut-down would not have an impact on the quoted price of rare earths in the short term, the same would not be true in the case of a prolonged closure.
Moreimportantly, he noted that the shut-down and the impact of the COVID-19outbreak did “shine a light on the need for an industry outside of China”.
READ: Could the coronavirus fuel development of non-Chineserare earth projects?
Hexagon Energy Materials (ASX:HEX) managing director Mike Rosenstreich agreed that this was the key point about the shutdown of Lynas’ plant.
“Thefact that one player that represents 14 or 15 per cent of global output of rareearth oxides is now imperilled and you put that together with the situation inChina when their supply was restricted due to COVID-19, I think that just
exemplifies the very fragile nature of the supply chain,” heexplained.
WhileRosenstreich said there was no doubt that demand for rare earths from electricvehicles and wind turbines would be hampered or delayed by what was happeningaround the world, he was more positive about the longer-term prospects.
“Thatdemand — it’s a timing issue and hopefully a short-term one,” he said. “Thatwill come back and we should learn the lesson of extreme supply concentration.”
