Lynas Rare Earths is now bigger than Qantas

Lynas Rare Earths Ltd. has overtaken Australian blue-chip stalwart Qantas Airways Ltd. by market capitalization, as concerns about China’s dominance of critical minerals lift the miner’s stock.

Both companies are set to report annual results on Thursday, with net income estimates for the airline of A$1.03 billion ($731 million) set to dwarf the A$112 million forecast for Lynas. However, the miner’s shares have surged more than a third this year — compared with a tepid 2% rise for Qantas — to make it the more valuable company.

Lynas produces a small volume, by mining standards, of rare earths used in electric vehicle motors, smartphones and defense technology from a mine in Western Australia, which it refines in Malaysia. The Perth-based company became a beneficiary of trade conflicts that saw China impose controls on critical mineral exports — leaving nations including the US and Japan scrambling to find alternative suppliers.

“Lynas is quite different from your typical mining company,” Reg Spencer, a metals and mining analyst at Canaccord Genuity Australia Ltd., said by telephone. “Lynas is in a very unique sector, it’s one of only two major rare earths producers outside China, it’s the only one that makes any money, and it has the best assets which are integrated, so theoretically that means it gets a premium.”

The price of Lynas’s main products — neodymium and praseodymium used in permanent magnets — has almost doubled over the past year. The firm is beginning to look less like a traditional mining stock, and more like an advanced materials business as it contemplates expanding into high-tech magnet manufacturing, Spencer said.

(By Paul-Alain Hunt)