Lynas says rare earths buyers banging down the door

Lynas says it is being inundated with interest from rare earths buyers amid a global scramble to secure supply of “critical materials” used in electric vehicles and other technologies, resulting in a record quarter for the company.

Australia’s biggest rare earths miner is the latest player in the battery metals supply chain highlighting the demand and supply imbalance that has sent the price of “critical minerals” through the roof. Lithium miners such as Pilbara Minerals recently said automakers would have to “pay through the nose” for battery raw materials for some time after being “asleep at the wheel” in recent years and failing to secure supply.

In a quarterly update, Lynas said demand for its products remained strong and it “continues to receive many approaches from end users seeking to secure their raw material sourcing over the longer term”.

Lynas CEO Amanda Lacaze says demand for rare earths remains strong, particularly from the automotive industry. AFR

“[We’re} engaged in productive discussions with a number of these end users,” the company said.

“The NdFeB market continued to record robust growth, despite many downstream industries dealing with a reduced workforce due to the COVID-19 pandemic and the global shortage of semi-conductors during the period.”

Neodymium magnets, or NdFeBs, are the most common ones used in several industries, including in cars, wind turbines and defence products.

In the three months ended March 31, revenue rose to a record $327.2 million from $202.7 million in the year-earlier period. Its average sales price lifted to $64.70 a kilogram, almost double the $35.50 a kilogram received a year ago.

Total rare earth oxides production lifted to 4945 tonnes, including a record 1687 tonnes of “NdPr”, or neodymium and praseodymium, which are used in magnets and make up a large part of the rare earths market of 17 different metals. Lynas is the biggest rare earths producer outside China, which dominates global supply.

Barrenjoey analyst Daniel Morgan said Lynas’ quarterly numbers beat expectations in terms of production and revenue, but its average price missed.

“We suspect this is indicative of sales mix being slightly skewed toward lower value products of La (lanthanum)/Ce (cerium) rather than NdPr,” he said. “NdPr drives about 90 per cent of revenue by value but about 30 per cent of production by volume.”

At 1.30pm AEST, Lynas shares traded 3 per cent lower at $9.54.

Chief executive Amanda Lacaze said the price of NdPr has further strengthened and “our customers continue to advise that demand for rare earths remains strong, particularly in the automotive industry”.

“We are focused on developing initiatives to increase supply to support continued market growth,” she said.

Ms Lacaze called out its recent receival of all approvals for its Kalgoorlie processing facility under construction and that it remains “closely engaged with a number of governments” as they focus on their critical mineral supply chains.

Several governments, including Australia’s, are increasing debt and equity funding in various critical minerals, with Iluka last week saying it had secured a $1.05 billion federal loan to build the country’s first fully integrated, rare earths separation facility in Western Australia.