MELBOURNE (Reuters) -Australia’s Lynas Rare Earths warned of considerable uncertainty over the future of its heavy rare-earths processing plant in Texas and also reported a steeper-than-expected drop in its annual profit on Thursday.
Lynas, the world’s largest rare-earths producer outside China, said it is in negotiations with the U.S. Department of Defence (DoD) to reach a mutually acceptable offtake agreement for production from the Texas-based Seadrift facility.
“While there can be no certainty that offtake agreements will be agreed, any offtake agreements would need to be on commercial terms acceptable to Lynas,” the miner said.
Lynas has been developing the facility under a contract with the U.S. DoD, with plans to begin operations in fiscal 2026. However, the company indicated that construction of the plant may not move forward.
“We are big supporters of continued investment in development of outside-China’s supply chains,” CEO Amanda Lacaze told an investor call.
“But just remember … Lynas is the lynchpin of (the) outside-China supply chain, and it is important that policy development is done in such a way that continues to protect that, because, as I said before, development of new plants can be long and uncertain,” she said.
Her comments came after the U.S. government last month agreed a multibillion dollar deal to become the top shareholder in Lynas’ biggest rival outside China, MP Materials, provide a floor price for its key rare earth product, and lend it $150 million to expand in heavy rare earths separation.
Lynas also wants to be involved with new rare earth magnet makers in the U.S. and other countries outside China and is open to taking an equity stake.
“There are seven magnet projects coming to market in the U.S., many of which actually have some form of government funding, which de-risks them,” Lacaze said, adding there are probably more magnet projects in the U.S. than in the rest of the world combined.
“We want to be able to participate either on an operational or a supply or an equity basis in this part of the supply chain,” she said.
The miner last month signed an agreement with Korea’s JS Link to develop a magnet facility in Malaysia where it has processing operations.
Lynas’ net profit after tax came in at A$8 million ($5.20 million) for the year ended June 30, a sharp decline from an A$84.5 million reported a year earlier.
The annual figure also missed the Visible Alpha consensus estimate of A$30.4 million.
Lynas attributed the drop in profit to depreciation costs from its Kalgoorlie and Mt. Weld facility expansion, noting that production at Kalgoorlie fell short of nameplate capacity.