Lynas posts 90% profit plunge, flags uncertainty in US plant

Lynas Rare Earths (ASX: LYC) net profit after tax fell to $8m for FY25, a sharp decline from $84.5m in FY24.

The miner has cited depreciation on plant and equipment at its Kalgoorlie facility and Mt Weld coupled with lower than nameplate production at the Kalgoorlie facility as contributing factors.

Lynas has also noted its significant uncertainty as to whether the construction of its heavy rare earth processing facility at Seadrift, Texas in the US will proceed and if so, in what form.

Lynas has an expenditure-based contract with the US Department of Defence (DoD) for the processing facility.

A mutually acceptable offtake agreement is being negotiated for production from Lynas’ operating assets.

“While there can be no certainty that offtake agreements will be agreed, any offtake agreements would need to be on commercial terms acceptable to Lynas,” the company said.

The miner is actively engaged with numerous US rare earth buyers, including net metal and magnet projects, and has achieved the first US heavy rare earth oxide sales.

Lynas reports 2025 capital projects are largely complete as the miner announces its Towards 2030 strategy.

Lynas Rare Earths chief executive and managing director Amanda Lacaze comments on the company’s FY25 results.

“It is exciting to see the investments made over the past five years as part of our Lynas 2025 growth plan come to fruition this year,” she said.

“In Australia, the includes the Mt Weld expansion project and fully integrating the Kalgoorlie processing facility into Lynas’ global operations.

“In Malaysia, significant upgrades have delivered new processes and products, including our first separated heavy rare earth oxides, establishing Lynas as the only commercial producer of these products outside China.

“As the various projects were brought into operation, production of neodymium-praseodymium increased and record production was achieved in the June quarter.”

The company’s Towards 2030 strategy is aimed at accelerating Lynas’ next phase of growth.

This includes optimising performance from the Lynas 2025 capital investments to deliver returns for shareholders, including ramping up assets in line with customer demand and market growth.

Additionally, this strategy is focused on growing the business through adding resource and scale, increasing downstream capacity and expanding into the outside China metal and magnet supply chain.

Ms Lacaze says the FY25 results provide an excellent foundation for the company’s Towards 2030 strategy.

“Towards 2030 sets out our plan to optimize performance from the Lynas 2025 capital investments and to pursue new growth opportunities,” she said.

Lynas has announced a $750m fully underwritten equity raising to support the new strategy.

Ms Lacaze says the equity raising provides Lynas with the balance sheet to pursue a strong growth agenda.

“With the conclusion of our Lynas 2025 growth projects and the launch of our Towards 2030 strategy including the balance sheet strength provided by the equity raising, Lynas is ideally positioned to benefit from the significant increase in demand from current magnet makers, magnet buyers and new magnet maker projects,” she said.

“We remain focused on continuing to build the Lynas strategic customer base by providing customers with reliable and independent supply chains for their critical applications.

“As we progress Towards 2030, we are ambitious to capitalise on the rapidly evolving rare earths market outside China, to ensure we continue to deliver value for our customer’s, shareholder and other important stakeholders.”

Lynas, now the world’s largest rare earths producer outside China, says it is seeking to partner with companies who have proven expertise in rare earth metal and magnet production and accelerate participation via partnership, joint venture, equity investment or direct investment models under its Towards 2030 strategy.

“The importance of rare earths has been emphasised in recent trade negotiations,” Ms Lacaze said.

“Customers and governments are actively seeking and implementing strategies to address current unhelpful market dynamics and uncertain supply.

“We expect industry shaping government interventions will lead to a larger ‘rest of world’ rare earths industry.

“Recent action by the US administration represents the most significant government action since Japan’s investment in Lynas in 2011 and highlights the increased understanding by customers of the risks posed by concentrated supply chains.”

This comment follows the US Government’s recent announcement of a multibillion-dollar deal with MP Materials, another rare earths producer outside China.

The deal saw MP Materials enter a public-private partnership with the US DoD aimed at accelerating the build-out of an end-to-end US rare earth magnet supply chain and reduce foreign dependency.

Notably, the package included the establishment of a price floor.

The 10-year agreement establishes a price floor commitment of US$110/kg for MP Materials’ neodymium-praseodymium products stockpiled or sold with the goal of reducing vulnerability to non-market forces.