Lynas March quarter sales volume down 41 percent in response to low rare earths prices

About Lynas Rare Earths Limited

Lynas Rare Earths Limited (Lynas, or the Group) is the world’s second largest producer of separated Rare Earth materials and the only significant producer of scale of separated Rare Earths outside of China. Rare Earths are known as the ‘vitamins’ of manufacturing and are essential inputs to high growth global manufacturing supply chains and green technologies like electric vehicles and wind turbines. They are key enablers for technologies seeking to lower emissions, reduce energy consumption, and are a key component in technologies that make products lighter and smaller.

March 24 quarterly sales volume down in response to soft prices

In response to lower prices during the March quarter, Lynas decided to hold inventory rather than sell into the low-price environment for its rare earth products Neodymium and Praseodymium (NdPr). These are the key raw materials in ultra-strong permanent magnets that are essential to produce electric motors for electric vehicles and for use in direct drive wind turbines. They also have important military applications.

Sales volume of Rare Earth Oxides (REO) in the March quarter was 2,310 tonnes, down 41 percent from 3,916 tonnes in the December 2023 quarter. The lower sales volume resulted in Group sales revenue for the March 2024 quarter being down 25 percent from $136.2 million in the December 2023 quarter to $101.2 million. The average selling price for NdPr Oxide in the March quarter was USD$47 per kilogram, compared to US$$60 in the December quarter and US$88 in the March 2023 quarter. These lower realised prices are considered to be temporary given that market prices have started to increase in April. Accordingly, holding back processing volumes into better market conditions makes clear sense.

Although sales volumes of REO, including NdPr were down for the March quarter, REO production was a solid 3,545 tonnes, including 1724 tonnes of NdPr. Unsold production currently sits in inventory and is being held for sale at higher prices in the period ahead.

Cash deposits totalled $616 million at 31 March, down from $1.11 billion a year earlier. The decline in cash reflects the significant capital expenditure on the Mt Weld Expansion Project and other production expansion projects including the US Rare Earths Processing Facility and the Kalgoorlie processing plant.

Expansion Projects remain on schedule

Importantly the Mt Weld Expansion Project remains on track with construction activities progressing as planned. A staged commissioning approach reduces commissioning risk with the commissioning of Stage 1 set to commence over the next few months whilst the remainder of the plant is constructed.

Meanwhile, final commissioning and initial production activities continued through the quarter at the Kalgoorlie facility with the first feed of material from Mt Weld in December 2023.

The Group’s Malaysian plant managed a successful production ramp up after the significant upgrade works which were completed in the previous quarter.

Detailed engineering, procurement and approvals activities also continued for the miner’s US Rare Earths Processing Facility.

Looking Ahead

The rare earths market remains of critical importance to many industries, and this should support strong customer demand for Lynas’ products.

The more favourable pricing outlook for rare earths and Lynas’ expanding industrial production footprint and its proven record in managing costs associated with the Group’s capital growth products should generate positive shareholder returns over the long-term.