Lynas profits surge on rare earths boom, CEO dismisses rivals as 'pretenders'

Lynas Rare Earths released financial results this week that told a story of disciplined execution meeting favorable market conditions. The company's half-year revenue climbed to $202.5 million, a gain of 12.4 percent from the prior year period, while net profit surged from $3.9 million to $40.6 million. The jump was particularly striking given that the company's Malaysian processing plant operated at only 75 percent of capacity during the period. Earnings before interest, taxes, depreciation, and amortization rose 82 percent to $80.6 million.

The backdrop was a dramatic shift in rare earth prices. Neodymium-praseodymium, a critical material for magnets used in electric vehicles and renewable energy systems, nearly doubled in price over the preceding twelve months. The average China domestic price climbed from $35.9 per kilogram to $55.5 per kilogram, even as the COVID-19 pandemic disrupted global supply chains. Lynas benefited directly from this price movement, which reflected tightening supply and rising demand for materials outside China's control.

CEO Amanda Lacaze used the results announcement to take a swipe at competitors and would-be entrants to the market. When asked about criticism that Lynas had presented a sparse set of slides alongside its financial disclosure, she responded with pointed confidence. She noted that the company had a proven track record of delivering projects on time and on budget—a distinction she said had eluded most producers outside China. "We make money without any fancy adjustments to our P & L," she said, suggesting that rivals relied on accounting maneuvers to mask operational weakness. She also flagged that Lynas appeared cheaper on fundamental valuation metrics than some competitors. The remarks came as Hastings Technology Metals, an emerging producer, had just raised $100 million toward its $449 million Yangibana project in Western Australia, which would include both a mine and processing plant on the Pilbara coast.

Lynas returned government support it had received during the pandemic, paying back approximately $1 million in JobKeeper funds and a similar wage subsidy from Malaysia. The decision reflected the company's improved financial position and signaled confidence in its near-term outlook.

The company remains on a path to reshape the global rare earth supply chain. It is building a cracking and leaching plant at Kalgoorlie to process ore from its Mt Weld mine near Laverton, Western Australia. That facility must be operational by mid-2023 under a deadline imposed by Malaysian authorities, who have required the company to cease processing and storing low-level radioactive waste in the country. The eventual supply chain will span three countries: Australia for mining and initial processing, Malaysia for intermediate processing serving East Asian customers, and the United States, where the Department of Defense is backing construction of a heavy and light rare earths separation plant in Texas.

Lacaze emphasized that the Malaysian plant remained ideally positioned to serve customers in East Asia, particularly Japan, where Lynas has substantial financial backing. However, the company continues to face opposition from environmental groups in Malaysia over its plans for permanent storage of waste stockpiled near its Kuantan facility. Lacaze expressed confidence that the government would make a science-based decision on the suitability of a multi-user industrial waste site for that purpose. The outcome of that decision will shape not only Lynas's timeline but the broader viability of building a rare earth supply chain independent of Chinese dominance.