Australia’s Lynas Riding Wave of Surging Rare Earths Demand

Australia’s Lynas Riding Wave of Surging Rare Earths Demand

On July 26, Australia's Lynas, the world's largest producer and processor of rare earths, announced its record quarterly revenue, boosted by robust global demand of permanent magnets applied in power wind turbines and electric vehicles.

The news caused the stock price of this Australian listed company to soar by more than 10% to US$5.21, a record high in more than eight years.

Sales revenue for the fourth quarter for the period ended June 30 reached a record $137 million, more than three times reported in the same period last year.

"This result reflects continued demand for Lynas NdPr products and robust market pricing, as end users and governments continue to recognize the need for a diversified supply of responsible rare earth materials globally," said CEO Amanda Lacaze Said in a statement.

NdPr is the abbreviation for neodymium-praseodymium, which are two light rare earth elements used in permanent magnets. Rare earths are a group of 17 metals that are vital to the manufacture of high-tech products. The company's production level has also improved, producing 1,393 metric tons of NdPr, almost double the 775 metric tons a year ago.

Lynas is optimistic about its market prospects as global demand for its products has recovered from pre-pandemic levels and is expected to continue to be strong, driven by the global transition to electric vehicles and renewable energy to curb carbon emissions increase.

"Although the global semiconductor shortage affects all industries, especially the automotive industry, the neodymium iron boron market is experiencing very strong growth, supporting the demand for neodymium and heavy rare earths produced by the company," Lacaz said in the statement.

China currently dominates the global rare earth industry in upstream mining and midstream processing. For example, according to estimates by financial services company Canaccord Genuity, it holds 83% of NdPr's global market share, and Lynas ranks second with 15%.

Nonetheless, as the Western world, including the United States, Europe, and Australia, hopes to reduce its reliance on China’s strategic metals, the company plays a key role in helping diversify the global supply chain. According to research firm Adamas Intelligence, this task is of particular importance because by 2030, the global demand for NdPr is expected more than double. The company also predicts that by 2030, the NdPr shortage will reach 16,000 metric tons, roughly equivalent to three times the annual output.

Fortunately, Australia's Lynas is not alone in its mission to diversify the rare earth supply chain. The company is cooperating with the United States on rare earth processing capabilities, and the U.S. Department of Defense awarded the company more than $30 million for the construction of a light rare earth separation facility in Texas.

The company has also established a joint venture with Blue Line of the United States to build a heavy rare earth separation plant, and the Pentagon has also provided funds for this.

"In the United States and Europe, the level of understanding of the importance of the entire rare earths supply chain, including downstream ecosystems is indeed improving," Lacaz said on an analyst conference call.

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