Has rare earth miner Lynas Corp dug themselves a hole they can't get out of?

Has rare earth miner Lynas Corp dug themselves a hole they can't get out of?

Former market darling Lynas Corp (ASX: LYC), a company with a market capitalisation of $5.5bn back in 2011, is very much a symbol of the irrational exuberance of the resources boom. In response to a massive spike in rare earth prices, LYC went about borrowing a huge amount of money to build a large plant in Malaysia to process its high quality product from its Mount Weld deposit. This is the same story as many in the sector, but LYC followed an even riskier path as its product’s price spiked following fears that China, which controlled the vast majority of rare earth globally, was to lower supply. And with Mount Weld offering such a low production cost, the market scrambled over itself trying to get stock.

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