Lynas boss flags slower expansion amid rare earth price pressure

Boss Amanda Lacaze has flagged a slower ramp up in production amid ‘stubbornly low’ rare earth prices that are weighing on the company’s earnings.

Lynas managing director Amanda Lacaze. Picture: Carla Gottgens/Bloomberg

Lynas Rare Earths boss Amanda Lacaze has flagged a slower production ramp up for its rare earth products amid “stubbornly low” market prices that have weighed on the company’s full-year results.

Lynas – the largest producer of rare earths outside of China – has had a long-held ambition to reach 10,500 tonnes of NdPr (neodymium and praseodymium) production by 2024-25, up from 5655 tonnes in the year to June.

Ms Lacaze told analysts that while the goal was still on track, the company would closely manage the production uplift in line with wider dynamics currently playing out in global markets.

“Looking into the market at present, we don’t feel it’s necessary to jump to that number right now,” Ms Lacaze said after handing down the company’s full-year results on Wednesday.

“I think the market is adjusting to slightly more moderate production levels, and the Chinese quotas assist us with that.

“By the end of the year, our objective would be to be able to demonstrate our ability to sustainably produce at the number that we have targeted now for quite some time.

“However, that’s not going to be what we do, particularly in the first six months of the year. We think that it’s quite important not to provide any more supply side pressure into the market as it readjusts and as the price starts to improve.”

Lynas’s processing facility near Kalgoorlie.

NdPr is used to create high-strength magnets in products including hybrid and electric vehicles and wind turbines.

Lynas’s NdPr production fell 8 per cent to 5655 tonnes in the year to June following a six-week shutdown at the company’s Malaysian processing facility where it expects to reach a 10,500 tonne capacity in the latter half of 2024-25.

The company’s newly built cracking and leaching plant in Kalgoorlie will eventually be used to expand the company’s production further, with Lynas working on expansions at its Mt Weld mine in WA that will eventually supply enough raw material to produce up to 12,000 tonnes of NdPr.

Falling prices and production levels weighed on Lynas’ full-year results, with revenue down 37 per cent to $463.3m, and net profit after tax slipping 73 per cent to $84.5m.

The average selling price for Lynas’s rare earth oxides during the year to June fell to $38.10kg, down from $46.20kg in the previous year.

China, the world’s dominant producer of rare earths, keeps close control over mining and production volumes in the country, and therefore has significant influence over global prices.

A wave of Chinese production quotas at the end of 2023 created an oversupply as demand softened, sending prices spiralling.

However, Ms Lacaze said the release of moderated quotas by Chinese authorities last week would provide further support to prices that were already showing signs of a recovery in the first weeks of the new fiscal year.

“We operate in a volatile market, and we cannot drop our heads just because we have low prices,” she said.

“We’ve got some signposts at present that give us a bit more confidence coming into this financial year, and not just the firming of the price over the last month or so, but the new Chinese quotas.

“It certainly gives us more confidence that there’s a drive also within China to really improve value in the market, and we are seeing an improvement in demand and a reduction in inventories at the same time.

“We remain convicted on the underlying growth in this market.”

Lynas’s full-year earnings came in slightly ahead of consensus estimates due to lower than expected costs of production.

The company’s shares were trading 3.2 per cent higher on Wednesday at $7.01.

Originally published as Lynas boss flags slower expansion amid rare earth price pressure