In the quiet but consequential world of critical minerals, Goldman Sachs has drawn a line between two Australian rare earths companies that, on the surface, appear to share the same destiny. Iluka Resources, the smaller and faster-moving of the two, has been named the preferred investment over the more established Lynas Rare Earths — a judgment rooted not in past performance, but in where each company's infrastructure is heading. The broker's call is a reminder that in resource markets, as in much of human endeavour, the future being built often matters more than the history already written.
Goldman Sachs picks Iluka over Lynas in ASX rare earths showdown
Iluka's integrated refinery offers more compelling growth potential
Mark
So Goldman Sachs is saying Iluka is the better buy. But Lynas has tripled over five years while Iluka only doubled. Why would the broker prefer the underperformer?
Mimi
Because past performance doesn't predict future returns. Goldman Sachs is looking at what each company is building now. Iluka's integrated refinery at Eneabba is a major asset in development—that's future production capacity. Lynas is larger, but the broker sees more upside in Iluka's growth trajectory.
Luke
But we should be careful here. A 9.5% price target on Iluka and 9.2% downside on Lynas are both pretty modest moves. These aren't bold calls. And the Malaysian government just gave Lynas more time to operate—that's a real positive that Goldman acknowledged. So why isn't that enough to make Lynas attractive?
Mimi
Fair point. The Malaysian extension does help Lynas, and Goldman did raise its target. But neutral versus buy suggests the broker thinks Iluka's structural position is stronger. Iluka's refinery is fully integrated—they control more of the supply chain.
Mark
What does "fully integrated" actually mean for an investor?
Mimi
It means Iluka can mine, process, and refine rare earths in-house. That gives them more control over costs and margins. Lynas relies on Malaysia for processing, which creates regulatory and geopolitical risk—as the Malaysian deadline showed.
Luke
Right, but we don't know how much that integration will actually improve Iluka's returns once the refinery is operational. That's still a development project. And Lynas's Malaysian facility is already running and generating cash. So Goldman is betting on a future asset versus current production. That's a real choice, not an obvious one.
Mark
So the broker is essentially saying Iluka's potential outweighs Lynas's current position?
Mimi
Yes. And given that Iluka has underperformed over five years, Goldman may also see it as cheaper relative to its prospects. But Luke's right—we're betting on execution.
Luke
Exactly. Both price targets are modest, and both companies face commodity price risk that neither target really captures. This is a relative call, not an absolute one.
The Pulse
- Goldman Sachs has issued a clear verdict in the ASX rare earths rivalry, rating Iluka a buy with 9.5% upside while downgrading Lynas to neutral with 9.2% downside risk.
- Despite Lynas holding a larger market cap and a five-year track record that triples Iluka's gains, the smaller company has surged 24% year-to-date while Lynas has barely moved.
- A Malaysian government extension giving Lynas more time to import lanthanide concentrate offered temporary relief, but was not enough to shift Goldman Sachs from neutral to buy.
- The decisive factor appears to be Iluka's fully integrated rare earths refinery under construction at Eneabba, Western Australia — a strategic asset the broker views as superior to Lynas's current operational setup.
- For investors navigating the critical minerals space, Goldman Sachs is signalling that Iluka's development trajectory, not Lynas's historical dominance, represents the more compelling entry point right now.
In the quiet but consequential world of critical minerals, Goldman Sachs has drawn a line between two Australian rare earths companies that, on the surface, appear to share the same destiny. Iluka Resources, the smaller and faster-moving of the two, has been named the preferred investment over the more established Lynas Rare Earths — a judgment rooted not in past performance, but in where each company's infrastructure is heading. The broker's call is a reminder that in resource markets, as in much of human endeavour, the future being built often matters more than the history already written.
Goldman Sachs has entered the rare earths debate on the ASX with a clear preference: Iluka Resources over Lynas Rare Earths. Both companies mine and process critical minerals in Australia, both trade on the ASX 200, and both occupy a sector the world increasingly depends on. Yet when the broker ran the numbers, the verdict was unambiguous — Iluka receives a buy rating with a $12.80 price target implying 9.5% upside, while Lynas is downgraded to neutral at $6.90, suggesting 9.2% downside ahead.
The two companies differ in scale and footprint. Lynas, valued at $7.15 billion, operates the Mt Weld mine and what it claims is the world's largest rare earths processing facility outside China, based in Malaysia, with a Kalgoorlie facility also in development. Iluka, at $4.98 billion, controls the world's largest zircon mine in South Australia and is building a fully integrated rare earths refinery at Eneabba, around 300 kilometres north of Perth — a project Goldman Sachs appears to view as strategically superior.
Share price performance adds nuance to the picture. Iluka has climbed 24% year-to-date while Lynas has flatlined, though over five years Lynas has tripled in value compared to Iluka's doubling. That longer arc of Lynas outperformance makes the recent divergence more striking, and may explain why Goldman Sachs now sees more value in the smaller company.
A recent Malaysian government extension — allowing Lynas to continue importing lanthanide concentrate — prompted the broker to lift its Lynas price target last month, yet still fell short of earning a buy rating. The implication is clear: the reprieve helps, but does not override Goldman Sachs' conviction that Iluka's integrated refinery development offers the more compelling growth story for investors choosing between the two.
Goldman Sachs has waded into the rare earths debate on the Australian Securities Exchange, and the verdict is unambiguous: Iluka Resources is the better bet.
Both Lynas Rare Earths and Iluka Resources operate in the same space—mining and processing critical minerals that the world increasingly depends on. Both trade on the ASX 200. Both have substantial operations anchored in Australia. On the surface, they look like natural competitors, two players in a sector that matters. But when Goldman Sachs ran the numbers, it found a clear preference. The broker assigned Iluka a buy rating with a price target of $12.80, implying 9.5% upside from recent levels. Lynas, by contrast, received a neutral rating and a $6.90 price target, suggesting 9.2% downside ahead.
The two companies operate at different scales and with different footprints. Lynas, valued at $7.15 billion, runs the Mt Weld mine and operates what it claims is the world's largest rare earths processing facility outside China, located in Malaysia. The company is also preparing to bring its Kalgoorlie Rare Earths Processing Facility online. Iluka, with a market capitalisation of $4.98 billion, controls the world's largest zircon mine in South Australia and operates the Cataby mine and a processing hub in Western Australia. More significantly, Iluka is building a fully integrated rare earths refinery at Eneabba, roughly 300 kilometres north of Perth—a project that Goldman Sachs appears to view as strategically superior.
The share price performance tells a mixed story depending on the timeframe. Year to date, Iluka has surged 24% while Lynas has essentially flatlined. Over five years, however, Lynas has tripled in value compared to Iluka's doubling. That longer-term outperformance by Lynas makes the recent divergence more striking—and perhaps explains why Goldman Sachs sees value in Iluka now rather than continuing to chase Lynas's historical gains.
One factor that may have influenced Goldman Sachs' thinking on Lynas is a recent development in Malaysia. The Malaysian government extended the deadline by which Lynas must cease importing lanthanide concentrate into the country, a move the broker acknowledged by raising its price target on the stock last month. Yet even with that reprieve, Goldman Sachs still rates the company neutral rather than buy. The implication is that the Malaysian extension, while helpful, does not overcome the broker's preference for Iluka's trajectory and asset base.
What Goldman Sachs appears to be signalling is that Iluka's path forward—anchored in building out a fully integrated refinery operation in Western Australia—offers more compelling growth potential than Lynas's current setup, even accounting for Lynas's larger market capitalisation and longer track record of appreciation. For investors trying to pick between the two, the broker's call suggests that the smaller, faster-growing stock with a major processing facility under development is the more attractive entry point.
Notable Quotes
Goldman Sachs believed Iluka was undervalued and offered attractive growth potential— Goldman Sachs analysis
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