The Lynas Rare Earths Ltd (ASX: LYC) share price is flying, up over 6% after announcing a multi-million government grant.
Modern manufacturing initiative grant
Lynas said that it has been awarded a $14.8 million grant as part of the Australian government’s ‘modern manufacturing initiative’.
The company said that it will use the grant to commercialise a rare earth carbonate refining process, which is an “industry first”. The refining process was developed by Lynas’ inhouse research and development team.
The grant was awarded after a competition selection process as part of ’round 1′ of the modern manufacturing initiative’s ‘manufacturing translation stream’ for resources technology and critical minerals processing. This initiative supports turning research and ideas into commercial real-world outcomes.
New carbonate refining process
The new refining process has been successful at producing a higher purity rate earth carbonate and Lynas will use this for the Malaysia plant as well as the proposed U.S rare earth processing facility.
The company said that it is committed to sustainable and responsible rare earths production. The new process will contribute to reducing chemical consumption and processing costs.
Lynas said that it will implement the process into its rare earth processing facility in Kalgoorlie during the facility’s construction. The grant is expected to contribute around 50% of the implementation costs.
Kalgoorlie rare earth processing facility
The Kalgoorlie rare earth processing facility is a $500 million project (which includes associated upgrades at the Lynas Malaysia plant).
The Kalgoorlie project will increase employment by around 290 jobs during construction, with around 120 ongoing jobs once the facility is operational.
Management reiterated that the strategic significance of this project has been recognised with ‘major project status’ by the Australian government. The government of Western Australia has also recognised the project with ‘lead agency status’.
Management comments
CEO and Managing Director Amanda Lacaze said: “In keeping with our commitment to the efficient use of industry capital, this process has been designed to treat our own Mt Weld concentrate and concentrate from third party feedstock as other projects come on line in the future.”
Final thoughts on the Lynas share price
With the West wanting to increase the supply of rare earths outside of China, it seems like Lynas is going to play an important part in that.
The Lynas share price has performed strongly and is up over 200% over the last year. I’m not sure if today’s price represents good value. It’s hard to say if Lynas’ potential profit growth outlook has already been priced in or not.
I’m not typically a fan of commodity stocks and the cyclical nature. If I were looking for more ASX growth shares ideas, the information accessible with a free Rask account would be one of the first places I would look.
