Lynas Battles Profit Slump but Claims the West Can’t Do Without Its Rare Earths

Lynas Rare Earths (F:LYI), the largest rare earths producer outside China, remains a crucial supplier for the West, according to CEO Amanda Lacaze. She emphasized that leveraging Lynas’ existing resources is far more efficient than developing new supply chains elsewhere.

Lacaze’s remarks come amid reports of a draft deal for Ukraine to supply critical minerals to the U.S. as part of efforts to end the war with Russia. Ukraine holds deposits of 22 of the 34 minerals classified as critical by the European Union.

Despite its strategic position, Lynas reported a sharp drop in first-half profits due to weak rare earth prices and rising costs. The company posted a net profit of A$5.9 million ($3.7 million) for the six months ending December, significantly below market expectations of A$36.2 million and last year’s A$39.5 million. Shares dropped 4% in response.

A 29% surge in sales costs to A$205.3 million, driven by higher neodymium and praseodymium (NdPr) sales volumes and inventory provisions, impacted profitability. Additional costs arose from new facilities at Mt Weld, Kalgoorlie, and Malaysia. Meanwhile, net sales revenue increased 8% to A$254.3 million, though lower Chinese NdPr prices restricted growth.

Rare earth markets have struggled with oversupply, but recent signs of stabilization emerged after China proposed industry reforms. Lacaze remains confident in Lynas' long-term role, stating that for secure supply in the West, "buying from Lynas is the best option."

Analysts warn that market conditions remain volatile, and Lynas must balance expansion with financial discipline to sustain growth.