Few companies come back from a 99% plunge in their share price, but that’s what an Australian rare-earths miner and chemical processor has done–thanks to the electric-car revolution and an environmental cleanup in China.
Lynas Corp. was a highflier six years ago as strong demand and tight supplies lifted prices for the unusual metals it produces, such as praseodymium and neodymium–they’re used to make high-strength magnets and other products essential for a range of technologies. But from a market capitalization on the Australian stock exchange of $3 billion in 2011, Lynas’ value plunged to $3 million in 2015.
It was only a penny stock, worth just 2.3 Australian cents a share. High debt, problems building its processing plant in Malaysia and tumbling prices for rare earths had driven the company to the brink of collapse.
Tightly controlled rare-earths production in China, the world’s major source of the odd elements, coupled with export restrictions, had driven prices sharply higher in 2011. But after the price boom came a rare-earths flood and a price crash.
The only U.S. rare-earths company, Molycorp, went bankrupt in 2015. Lynas, a former gold miner, somehow survived, and today it’s enjoying a rerun of the rare-earths shortage as China’s tougher pollution laws and the growing popularity of electric cars are boosting prices.