Lynas Rare Earths flags risk of higher costs stemming from Middle East conflict

Shares in Lynas Rare Earths have slipped despite the critical minerals miner more than doubling sales in the past three months and revealing it is yet to feel the disruption of the global fuel shock reverberating from the Middle East conflict.

The Amanda Lacaze-led company said it was monitoring its supply chains — including fuel supply and other raw materials affected by geopolitics and global fuel markets — but warned investors that price increases “are expected for a number of materials”.

“It is difficult to forecast the magnitude and duration of these price increases,” it said.

“Our supply chain team is monitoring this closely and accelerating projects which should deliver greater efficiency.”

Lynas shares were off 2.6 per cent in early trade to $19.86.

The miner’s sales of its neodymium and praseodymium product hit $265 million in the three months to the end of March, marking the highest quarterly revenue since the end of FY22.

The result was up 115 per cent on the same time a year ago and more than $60m higher that the previous three-month period.

Total rare earths oxide production reached 3233 tonnes, up from 2382t in the second quarter.

“The average selling price across all rare earth products during the period was $84.60/kg, in line with the prior quarter,” Lynas said.

“We achieved a 25 per cent increase in average NdPr selling price compared to the prior quarter. The stable average selling price reflected product mix with higher volume sales of some lower value products during the quarter.”

Outside of China, Lynas is one of only two big suppliers of rare earths which are used to make magnets that power high-tech weaponry, medical equipment, wind turbines and smartphones.

It has the Mt Weld mine in the northern Goldfields and a processing plant in Kalgoorlie. Another facility in Malaysia was recently given approval from the government to operate for a further 10 years.

Lynas said market demand was strong, with “a renewed and urgent focus by customers on securing sustainable, outside China supply chains due to ongoing disruptions to previous supply chains”.

“This focus is supported by strategic actions by governments around the world to secure rare earth volumes to support critical industries,” it said.

Lynas last month announced it had received a binding letter of intent from the Pentagon in the US to supply light and heavy rare earth oxide over a four-year period.

The near $140m deal locks in a minimum price of $US110/kg for NdPr.