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Mining
Bellwether ASX rare earths stock Lynas (ASX:LYC) and mid-tier gold miner Westgold Resources (ASX:WGX) are cutting through the noise today with the rare spot of good news for investors on a day when mining stocks are being hammered.
Lynas has announced a deal for US$120 million in funding from the US Department of Defence to establish a long-mooted heavy rare earths separation plant on the Gulf Coast in Texas.
It is the latest step from the west to grab a foothold in the rare earths supply chain, comprising materials like neodymium and praseodymium that are essential to new energy technology like electric vehicles and wind energy.
Australia’s own government has pumped billions into onshore developments such as the $1.2 billion Eneabba refinery being constructed by Iluka Resources (ASX:ILU) in WA.
Lynas owns a downstream processing plant in Malaysia, but has been looking to reposition some of its processing to other jurisdictions on the back of environmental claims against its activity in the South East Asian nation.
That includes a $500 million investment into a cracking and leaching plant at Kalgoorlie in WA, down the road from its world class Mt Weld mine.
The Texas plant will be co-located with a separate light rare earths separation facility, sponsored and half funding by the DoD, and should be operational by 2025.
“The development of a U.S. Heavy Rare Earths separation facility is an important part of our accelerated growth plan and we look forward to not only meeting the rare earth needs of the U.S. Government but also reinvigorating the local Rare Earths market. This includes working to
develop the Rare Earths supply chain and value added activities,” Lynas boss Amanda Lacaze said.
In what is a very small winner’s circle for resources stocks this morning, Westgold gained more than 2% after announcing record production from its collection of Mid-West gold mines in the month of May.
The $560 million capped producer of precious gold bullion defied an indifference from the market towards gold’s status as a safe haven with news it had produced 25,100oz of gold in May off the back of improved productivity at its historic Big Bell underground mine.
The gold miner says it remains on track for full year production and cost guidance of 270,000oz at $1500-1700/oz after also delivering 23,969oz in April.
“The Westgold team has again risen to the challenge and delivered exceptional results from across our operations in May,” new managing director Wayne Bramwell said.
“Pleasingly Big Bell continues to lift, delivering +95,000t per month for two consecutive months. With stronger outputs from our Bryah and Murchison mines the Company remains on track with full year production and cost guidance.”
It came after Westgold lost the equivalent of 320 shifts in just 30 days during the March quarter due to Covid cases, producing 65,426oz at all in sustaining costs of $1759/oz.
Westgold produced 198,288oz at $1684/oz in the year to March 31.
It wasn’t just the dip in international markets causing chaos for mining stocks today, with the re-emergence of harsh anti-Covid measures in China also weighing on metals demand.
Iron ore prices fell 3.6% on Friday and look like they’ll keep erasing recent gains today with 62% Fe Singapore futures down 0.95% to US$133.90/t this morning.
Coking coal prices have also retreated in recent days, with Fastmarkets MB reporting Australian premium quality stuff up US$13.89/t yesterday to US$368.11/t, but well below recent levels in excess of US$500/t.
Fortescue Metals Group (ASX:FMG) lost almost 10% of its value this morning and was joined by the other Pilbara majors in a major sell off as Materials haemorrhaged 6.09%.
Energy stocks fell 4.44%. Not pretty.
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