Australian Rare Earth Producer Braces to Take on Rival China With Help From Trump

Hindustan Times

2 days ago

Lynas Rare Earths reported a jump in fourth-quarter production and revenue, and sounded optimistic about benefiting from President Trump's efforts to loosen China's chokehold on critical minerals needed for cars, smartphones and missile systems.
Earlier this month, the U.S. Defense Department agreed to invest in rival producer MP Materials in a deal that included a guaranteed price floor at nearly double recent rare-earth prices.
Lynas Chief Executive Amanda Lacaze said Thursday that the unusual deal sent a clear message that the U.S. is determined to rebuild a rare-earth supply chain outside China, which currently refines around 90% of the world's rare earths.
That should ease concerns among manufacturers about the availability of future supplies, and result in a much larger and more dynamic industry elsewhere in the world, Lacaze told analysts on a call.
'On balance, our view is that developing a vibrant outside-China industry will be good for everyone,' she said. 'But it will be best for us,' she added. Lynas is the largest producer of separated rare earths outside of China.
Western companies have long complained that China uses its control over rare earths to suppress competition, sometimes flooding the market to drive out rivals and at other times imposing restrictive export policies that disrupt manufacturers.
Lacaze's remarks followed Lynas's fourth-quarter production results, in which the Perth, Australia-based miner said rare-earth output rose 68% from the prior quarter.
The company produced 3,212 metric tons of rare earth oxide in the three months ended June 30, including 2,080 tons of neodymium and praseodymium, up 38% from the previous quarter.
Sales revenue rose by 38% to 170.2 million Australian dollars, around US$112 million.
It is the first time Lynas has produced more than 2,000 tons of neodymium and praseodymium, used in permanent magnets for electric vehicles and consumer electronics, in a single quarter.
The rise in output reflects recent investments in its plant, Lynas said, adding that it aims to stabilize production at higher levels while also ensuring output aligns with market demand.
'We continue to be very focused on how we deliver growth in what is an excellent market in which to be participating, and which we expect will continue to be a significant growth market,' said Lacaze.
Lynas said it is experiencing a significant increase in demand from customers and new magnet manufacturing projects. 'We continue to sell pretty much everything that we produce,' Lacaze said.
According to Lynas, its average sales price rose to the highest level since mid-2022. That reflects an ongoing focus on building strategic customer relationships and some pricing agreements independent to the market index, it said.
Lynas also announced a memorandum of understanding with South Korean permanent-magnet maker JS Link to collaborate on a new magnet manufacturing facility in Malaysia. Shares in the company rose more than 3% by mid-afternoon in Sydney.
Lynas recently began producing some heavy rare earths, the first time those critical minerals have been commercially produced outside China in decades. It began producing dysprosium in May and terbium in June.
The company said it has received strong interest from customers for those products. 'Our heavy rare earth production is key to our competitive advantage,' said Lacaze.
She said that the industry has been on 'a rollercoaster' in recent months as rare earths became a key battleground in the U.S.-China trade war. As U.S.-China tensions escalated in early April, Beijing said it would begin requiring licenses for the export of certain rare earths, including dysprosium and terbium.
China's exports of rare-earth magnets last month increased nearly threefold from the previous month after the country lifted some export controls following a truce with the U.S.
Lacaze said that it is unclear how the price floor in the Pentagon's deal with MP Materials will affect the industry's benchmark price index, but she believes a dynamic market should generally support higher prices for the critical minerals.
Lynas, which is developing a rare-earth processing facility in Seadrift, Texas, continues to maintain a very positive relationship with the U.S. government, Lacaze said when asked whether the Australian company is now at a disadvantage to MP Materials.
Under MP Materials's deal with the Pentagon, the U.S. government is committing to spend billions of dollars investing in that company and purchasing its output. The price floor protects the company if China fully lifts its restrictive export policies, which could tank global prices.
A White House spokesman earlier said the deal marked 'a major step in rebuilding America's domestic rare earth industry.'
Lynas is well positioned to sign new supply deals to take advantage of market strength following that agreement, Jefferies analyst Mitch Ryan said in a client note.
'We are today the only scale producer of light rare earth and heavy rare earth,' Lacaze said. 'And I think, as we have seen at times over the past decade in particular, having our assets in place as operational when the cycle turns—and we are looking at some very positive moves in terms of price right now—means that we can take full advantage of that upswing.'
Write to Rhiannon Hoyle at [e-mail]