LA Private

Lynas takes revenue hit

Lynas Rare Earths (ASX:LYC) took a significant hit in the June quarter from the slump in world prices for its key products.

The WA-based miner and processor revealed in its June quarterly report that it saw a 47% drop in fourth-quarter revenue on lower prices for its rare earths products.

Lynas is the world’s largest producer of rare earths outside of China and said its sales revenue for the quarter was $157.5 million, compared with $294.5 million a year ago.

It was also well under market forecasts around $216 million.

Rare earth prices have fallen over the past year thanks to weak demand from end users in the west (such as wind farms and carmakers) and higher exports from China.

Lynas said factors “including softer demand for NdFeB [neodymium] magnets in Japan and China’s recent oversupply of La-Ce [lanthanum-cerium]” have ushered in lower rare earths prices.

“Future pricing trends will depend on the economic recovery in China and the Chinese production quota for the second half of 2023,” Lynas said in the quarterly report. The average selling price for the miner’s product range came in at $38.90 per kilogram (kg), compared with $79.20 per kg last year.

The price weakness came as Lynas boosted production of Neodymium-Praseodymium Oxide (NdPr) to a record 1,864 tonnes in the June quarter, compared with 1,579 tonnes a year earlier.

Lynas also revealed in the quarterly report that it was targeting its first production of mixed rare-earths carbonate from its Kalgoorlie facility in September.

“We continue to accumulate inventory as we plan for the start-up of the Kalgoorlie facility. We have secured supply to our key customers and, in the coming months, given low market pricing, we will hold additional inventory directly,” the company said.

Lynas said that full plant commissioning commenced for the Kalgoorlie rare earths processing facility during the quarter, targeting first production of mixed rare-earths carbonate in September 2023, a month later than previously expected.

The company has been pushing to complete construction of the Kalgoorlie facility amid concerns its Malaysian facility would have to be partly wound down after domestic regulators raised concerns about radiation levels from the process of cracking and leaching.

In May, the company’s operating license in Malaysia to import and process rare earths was extended until January 1, 2024, but it is continuing to seek legal review of conditions that threaten its permit.

Lynas ended the quarter (and the financial year) with closing cash and short-term deposits of $1 billion, up around $35 million year on year.