Lynas Rare Earths of Australia announced on Thursday a larger-than-anticipated decline in its annual profit. It also stated that it was uncertain about the future of their heavy rare earths processing facility in Texas.
Reuters reported that Lynas., the largest rare-earth material producer outside of China has confirmed the ongoing discussions with the US Department of Defense.
The discussions will focus on the establishment of a offtake agreement that is mutually agreeable for Lynas’s new processing plant in Seadrift (Texas) which will produce rare-earths.
The strategic partnership demonstrates the efforts of both countries to ensure a stable and diversified supply chain for critical minerals that are vital for advanced technologies including defense.
The miner stated that “there is no guarantee of offtake agreements being agreed. However, offtake agreements must be commercially acceptable to Lynas.”
Investments
Lynas was developing the facility as part of a DoD contract, and operations were scheduled to begin in fiscal year 2026.
The company has suggested, however, that construction of the plant might not go ahead.
Amanda Lacaze, CEO of Amanda Lacaze Holdings Ltd. said in a call with investors that she was a strong supporter of continuing investment to develop supply chains outside of China.
She said:
Remember…Lynas, the keystone of the outside-China chain of supply, is a vital component of policy. This is because new plant development can take a long time and be uncertain.
The US Government then reached an agreement worth billions of dollars last month, to be the largest shareholder outside China in MP Materials.
This deal includes an agreed-upon floor price on MP Materials’ primary rare earths product, as well as a loan of $150 million to help the company expand its heavy rare earths seperation.
Partnerships
Lynas also aims to form partnerships with rare earth magnet producers outside China, such as those in the US. It is willing to acquire equity in these ventures.
Lacaze, quoted by Reuters, said that seven magnets projects are coming to the market in America, and many have government funding. This de-risks the project.
She also noted that there are likely more magnet projects in the US than anywhere else on the planet combined.
This part of the chain is something we would like to have a stake in, either as a supplier or on purely an operational basis.
The miner signed an agreement last month with Korea’s JS Link for the establishment of a magnet plant in Malaysia where it already has processing operations.
Financials
Lynas’ net profit for the fiscal year ended June 30 was A$8.20 ($5.20) million, a substantial drop from A$84.5million recorded in the prior year.
Visible Alpha’s consensus forecast of A$30.4m for the company’s results was also below what it actually achieved.
The decline in Lynas profits was due to the depreciation charges incurred by its expansions at Mt. Weld. The production at Kalgoorlie was not up to its capacity.
The estimated capital expenditures for the fiscal year 2026 are approximately A$160 Million.
Lynas announced a capital raising of A$750m to take advantage of “new growth prospects”. The new shares will be priced at A$13.25, a discount from the closing price for Lynas on August 27, which was A$14.35.
The trading of its shares has been halted ahead of an equity raise.
The post Australia’s Lynas experiences a decline in annual profits, and reassesses the Texas rare earths plants may change as new information becomes available.
