Lynas Rare Earths (ASX:LYC) executives used the company’s December-quarter FY26 investor briefing to highlight what CEO and Managing Director Amanda Lacaze described as a “very good quarterly result,” even as power disruptions in Kalgoorlie constrained output and complicated the company’s production ramp-up plans.
Lacaze, who reiterated plans to retire on June 30, said the company is “leaving…in excellent shape” after completing the Lynas 2025 capital program, with a strong balance sheet and a longer-term roadmap outlined in its “Towards 2030” strategy.
Operations: Kalgoorlie outages weighed on NdPr, while DyTb ran ahead of plan
In contrast, production of dysprosium and terbium (DyTb) was “ahead of our plan for the quarter,” though Lacaze noted the company effectively used oxalate inventory produced in the prior quarter. She said Lynas looks at output over six months to better gauge the sustainable operating profile for those circuits.
Lynas also completed substantial maintenance on its kilns during the quarter, including what Lacaze called “10-year maintenance” on two units. She said the kilns restarted in January “in very good order” following that work.
Power reliability remains the key constraint; off-grid options under review
While Lynas has increased engagement with its power supplier and said at least two identified issues have been rectified, Lacaze cautioned that power reliability remains a problem. She said that after a period of more stable supply, the company still experienced “two significant power outages” as recently as the day before the call.
Lacaze said Lynas continues to evaluate off-grid solutions. Diesel generation could provide reliable power quickly, she said, but it is “not the most desirable path forward” given the company’s focus on reducing its environmental footprint.
In response to a question on timelines and accountability, Lacaze said Lynas is actively engaged with both the government and Western Power, describing Western Power as a government-owned enterprise. She cited public commentary suggesting broader infrastructure improvements in Kalgoorlie could take until 2029–2032, which she said does not match Lynas’ needs. Lynas is therefore assessing alternate solutions with a goal of implementation within “the next 12 to 18 months.”
Sales outpaced NdPr production; company uses DyTb strategically
Lacaze said NdPr sales were ahead of NdPr production, implying a drawdown in inventory that the company expects to replenish. She also said Lynas did not sell all of its DyTb output, describing the material as strategically important and in high demand.
The sales team is negotiating new contracts, Lacaze said, with a focus on packaging NdPr agreements alongside DyTb supply for magnet customers. In Q&A, she emphasized that Lynas benefits immediately from movements in the market index (Asian Metal) because it is an established producer of separated NdPr and DyTb. She also said Lynas is working to add contracts that either achieve a premium to benchmarks or incorporate pricing terms aligned with “floor prices” signaled by the U.S. government’s agreement with MP Materials last year.
Asked about the longer-term role of DyTb, Lacaze said heavy rare earth volumes will remain relatively small in tonnage terms, noting magnet makers typically use “about 30 tons of NdPr to one of DyTb.” She framed DyTb less as a volume driver and more as essential to enabling customers to purchase from non-China supply chains, since magnet makers have historically needed to source DyTb from China even when buying NdPr elsewhere.
Costs, cash timing, and the path to 10,500 tons per year
Lacaze addressed early market commentary suggesting higher costs, saying the apparent increase was influenced by lower production volumes spreading fixed costs over fewer units. She also emphasized the company’s quarterly update is a cash report, with cash costs and production typically “about a month apart,” and suggested investors wait for half-year results for a clearer view of achieved costs. Lacaze added that Lynas continues to process final Mount Weld invoices, with more expected in the coming quarter, while maintaining “very substantial and positive bank deposits.”
On production capacity, Lacaze reiterated Lynas has invested to deliver 10,500 tons per annum of NdPr and said the operations team is working toward that run rate, but she declined to provide a specific date. She said achieving that capacity requires reliably producing roughly 30 to 33 tons per day, and she again highlighted Kalgoorlie power reliability as a key external risk.
In a detailed response on project ramp-up, Lacaze said the cracking and leaching process at Kalgoorlie has “proven itself to be working as designed” when conditions are stable. She described the more challenging area as production of mixed rare earth carbonate, which she called “a completely new circuit” in the flowsheet. She said the team has made improvements over the past year, particularly on quality, and is now “pretty confident” in most specifications, though outages have prevented sustained operating runs.
Market backdrop and policy: focus on “functioning” pricing dynamics
Lacaze said market conditions remain supportive and, in some respects, “have even become more positive during January.” She said NdPr prices have continued to strengthen and argued that geopolitical developments have been favorable for Lynas, pointing to policy measures that she said are fostering more functional market dynamics.
While Lynas is still finalizing agreements with multiple governments, Lacaze said the central issue in policy discussions is price stability and “proper functioning” markets rather than governments directly buying Lynas product. She referenced policy concepts such as floor and ceiling pricing, including comments she attributed to Australia’s Resources Minister regarding a critical minerals strategic reserve and remarks she said were made at Davos about similar approaches.
On Japan and China export controls, Lacaze said the most substantive controls were announced in April of last year and that subsequent commentary has not clearly added to those measures. She said administrative systems in China are now being put in place and that exports, particularly of magnets, have resumed flowing, while Lynas continues discussions with Japanese partners about increasing heavy rare earth supply into Japan.
Lacaze also said Lynas is working to increase the share of sales priced independently of the Asian Metal Index, including NdPr agreements incorporating floor and ceiling structures. She characterized some of these newer contracts as low volume initially, with expectations to grow over time.
Separately, Lynas executives said discussions are continuing with JSLink and Noveon regarding magnet-related plans. VP Sales and Market Development Chris Jenny said the company is evaluating the best partnership models amid shifting geopolitics and customer demand for non-China supply chains, and that Lynas is working with multiple magnet and metal maker partners beyond those two.
The company said it expects to provide further updates when it reports half-year results in the coming months.
About Lynas Rare Earths (ASX:LYC)
Lynas Rare Earths Limited, together with its subsidiaries, engages in the exploration, development, mining, extraction, and processing of rare earth minerals in Australia and Malaysia. The company holds an interest in the Mount Weld project, Western Australia; and the Kalgoorlie project. Its products include yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. The company also develops and operates advanced material processing and concentration plants, as well as offers corporate services.
