AUST Business today: LYNAS MERGER TALKS END QUIETLY Louise...

AUST Business today:
LYNAS MERGER TALKS END QUIETLY
Louise Brannelly
Lynas Rare Earths and New York’s MP Materials Corp have ended potential merger talks but the Australian producer has kept the door open for future deals.
Following market speculation that the world’s two biggest non-China producers of rare earths were in talks, Lynas confirmed over the weekend that the duo had held confidential discussions regarding a potential transaction. “However, these discussions are not ongoing,” Lynas said in a statement. In the absence of merger talks, the Amanda Lacaze-led company said it was implementing a strong organic growth plan.
But it indicated there was scope for future deals.
“In addition, Lynas continues to seek opportunities to use our proven expertise to build scale, improve market functioning and add value for shareholders,” the company said.
Lynas shares have tumbled almost 40 per cent over the past year closing at $5.83 on Friday with brokers recently trimming their price targets for the stock following the release of its December quarter activities report.
Citi cut back its price target by 6.9 per cent to $6.70, while Goldman Sachs reduced its forecast by 3 per cent to $7.50 and Macquarie by 1 per cent to $7.30.
In the quarterly report, Lynas flagged low rare earth oxides pricing to continue for at least three years, until a recovery in China’s economy is in full swing.
Lynas’s Malaysian refinery produced 1566 tonnes of total rare earth oxides in the December quarter, down from 3609 tonnes in the previous period, as the company idled its Malaysian plant briefly to upgrade its production capacity.
Sales revenues for the quarter fell to $112.5m, from $128.1m, as the average price for neodymium and praseodymium (NdPr) fell to an average $US60 a kilogram and down to an average $US56/kg in December.
“The rare earth market price continued to be subdued due to low demand in China, especially in the appliance sector (such as airconditioning), which is affected by the construction downturn,” the company said.
“China’s economic recovery is seen as the main factor that could possibly trigger a change in price trend.”
In its recent report on the stock, Citi said it expected Lynas to be loss-making in the 2025 financial year based on NdPr spot prices of $US50/kg.
“Spot NdPr prices are subdued due to low demand in China,” Citi’s analysts said.
“Weaker-than-expected EV demand and development challenges with wind turbine installation have caused a weaker short-term demand outlook. However, we remain constructive on long-term NdPr pricing with tightening emission targets fuelling EV penetration and wind turbine installations.”
Late last year, CEO Ms Lacaze said Australia needed to take steps to increase the sovereign capability of critical minerals and to ensure that local firms didn’t fall into foreign hands.
Additional reporting: Nick Evans