Rajasik Mukherjee

(Reuters) - The sharing of Australia's Linas rare earths climbed to its highest point in more than two years on Thursday as automakers warned that China's export restrictions on rare earth materials could lead to delays in production.

As the world's largest rare earth producer outside China, Lynas is expected to benefit from concerns about global supply stability. Analysts believe this could create favorable conditions for Australian listed companies due to geopolitical tensions and rising demand for key minerals.

Lynas shares rose 11.8% to $9.2, hitting their highest level since February 8, 2023. The move also marks the stock's largest intraday percentage increase since October 24, 2023.

“Lynas’ rally … is a strong reflection of today’s dual drivers: escalating geopolitical tensions and sparking demand for green technology,” said Hebe Chen, a market analyst at Vantage Market.

“As China tightens its rare earth export controls, the market prices in supply risks – positioning Lynas as a strategic hedge.”

China, which accounts for about 90% of global rare earth production, imposed export restrictions on strategic minerals in April to deal with tariffs raised by U.S. President Donald Trump.

The move has raised alarms in the industry spanning 17 rare earth elements, which is crucial for defense systems, electric vehicles, clean energy and advanced electronics.

This week, German automakers added urgency to these concerns, warning that China's export restrictions on rare earth materials pose a major threat to its production lines and local economy.

European auto supplier association CLEPA said several production lines had been closed after supply runs out, while Mercedes-Benz said they were talking with top suppliers about building "buffers", such as stock, to prevent potential supply threats.

Although rare elements are relatively common in the Earth's crust, China ruled global supply chains by mastering complex and challenging refining processes.

The United States has only one operating rare earth mine, but most of its output is still being processed in China, highlighting the strategic importance of non-Chinese producers such as Lynas.

(Reported by Rajasik Mukherjee in Bangalore; Editor of Sherry Jacob-Phillips)