Lynas Rare Earths, an Australian company, announced on Thursday a 66% increase in its first-quarter revenue compared to the previous year.
Despite this growth, the results did not meet market expectations. However, the company noted robust demand for its strategic metals from both current and new customers.
Governments globally, excluding dominant rare earth producer China, are actively seeking to establish alternative supply chains.
This initiative is crucial for sectors like automotive and defense, especially as China intensifies its export restrictions within this industry.
As the leading rare earths producer outside China, Lynas is expanding its customer base and negotiating for increased prices. The company is also boosting its production, particularly of valuable heavy rare earths, in response to growing demand.
For the quarter ending September 30, Lynas reported sales revenue of A$200.2 million ($130.09 million), according to a Reuters report.
This represents an increase from A$120.5 million in the same period last year, though it fell short of the Visible Alpha consensus estimate of A$230 million.
Strong demand anticipated
“Market demand is strong, and we have a great deal of flexibility in choosing to whom we sell and at what price,” CEO Amanda Lacaze said on a results call.
Lacaze stated that Lynas anticipates annual rare earths demand to increase in the high-single to low-double digit percentages.
Barrenjoey, an Australian brokerage, stated that Lynas’s revenue fell short of their projections. This was attributed to customer demand not increasing as much as anticipated, despite concerns about supply.
“It would appear downstream demand was not as strong as we had thought it would be and the ramp in Dy (dysprosium) and Tb (terbium) being available for sale is taking a tad longer,” Barrenjoey analyst Daniel Morgan was quoted in the Reuters report.
Earlier this year, Lynas commenced production of dysprosium and terbium, two of the most valuable rare earth elements.
Due to high demand, Lynas has accelerated its plans to begin samarium production from 2027 to the first half of the next calendar year.
In the first quarter, Lynas produced 3,993 metric tons of rare earth oxide, an increase from 2,722 tons in the previous year. Additionally, the company’s dysprosium and terbium output reached 9 tons.
Lacaze said:
In terms of testing the market we have identified extremely strong demand … And we have identified a preparedness to pay because of the scarcity of the material from outside China sources.
Recovery in prices
This week, Washington and Beijing established a framework for a trade deal, which eased concerns about supply disruptions that had previously boosted the sector.
The agreement could temporarily halt planned US tariffs and postpone Chinese export controls on critical minerals, including rare earths, for a year.
China, which handles over 90% of the world’s rare earths and magnets, recently broadened its export restrictions to include rare earth processing equipment.
Lynas stated that while these restrictions would affect its operations, it has secured alternative suppliers for crucial inputs if export restrictions are implemented.
Governments are still anticipated to support the creation of an alternative supply chain by backing agreements that include price floors.
While Australia has indicated it is considering price floors, no agreements have emerged beyond a US deal with its primary rare earths producer, MP Materials.
Lacaze further highlighted the critical and timely implementation of the deal to address MP’s existential crisis, which stemmed from tariff and trade restrictions between China and the US.
She also expressed anticipation for the policy outcomes of the recent G7 meetings in Canada.
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