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Here’s why the Lynas (ASX:LYC) share price has jumped higher

he Lynas Rare Earths Ltd (ASX: LYC) share price has gone up by 7.5% after announcing a $500 million expansion for Mt Weld.

Rare earth materials are used in a wide variety of products such as electric vehicles and other important technology.

Lynas’ expansion plan

The ASX mining share said that global demand for rare earth materials and NdFeB magnets is continuing to accelerate, driven by growth in electric vehicles and wind energy.

NdFeB (neodymium) magnets are used in a number of things like radar technology, satellite communications, remote control telemetry, electronic tracking, and electronic countermeasures. NdFeB magnet forecast is expected to grow from 130,000 tonnes to 265,000 in 2030.

The company has a 2025 plan targeting a 50% increase in NdPr production to 10,500 tonnes per annum by 2025, including significant development of the Mt Weld ore body and beneficiation circuit.

Lynas explained:

Investment in capacity expansion will be required at every production stage. This starts with increasing feedstock availability and Lynas is today announcing [a] project to substantially expand Mt Weld feedstock capacity, which builds on the previously announced Lynas 2025 growth plan for Mt Weld.

The Mt Weld expansion will target feedstock production capacity of 12,000 tonnes per annum NdPr equivalent in 2024.

Further capacity expansion in existing upstream and downstream production together with growth options for 2025 and beyond are being developed. This includes two additional stages at Mt Weld which offer a pathway to an additional 2,400 tonnes NdPr equivalent per annum each.

The initial expansion to 12,000 tonnes per annum of NdPr equivalent has been “fully scoped” and the approximately $500 million investment for this stage is fully funded from cashflow.

Final thoughts

This seems like a good move by Lynas to ramp up things and take advantage of the growing demand.

Lynas is a key non-Chinese player in the rare earth market, so it could generate good cashflow and pay good dividends in the coming years.

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