Key facts
- Lynas Rare Earths has increased the estimated cost of its heavy rare earth facility in Malaysia by $114 million.
- The total estimated cost for the expansion project is now $294 million, up from $180 million.
- The company cited additional equipment requirements, higher costs for sourcing equipment outside China, and geopolitical factors for the cost overrun.
- Lynas reported record average selling prices for rare earth products in the June quarter.
- Quarterly gross sales revenue was $288.9 million, up 70% year-on-year but below analyst expectations.
Australian rare earth producer Lynas has announced an $114 million increase in the estimated cost for its heavy rare earth facility expansion in Malaysia, bringing the total projected cost to $294 million. The company attributes the cost overrun to the need for additional equipment to meet specific customer requirements, higher costs associated with sourcing equipment outside of China, and general cost escalation influenced by the current geopolitical environment. This situation is exacerbated by China's export curbs on equipment for rare earth production.
Despite the cost challenges, Lynas reported a record average selling price for its rare earth products in the June quarter. Quarterly gross sales revenue reached $288.9 million, marking a 70% increase compared to the previous year, although this figure fell short of analyst expectations. Total rare earth oxide production saw an increase to 3,481 metric tons, but production of Neodymium-Praseodymium (NdPr) decreased. However, production of Dysprosium and Terbium rose to 19 tonnes.
Lynas noted that customers are increasingly focused on securing supply chains outside of China due to geopolitical concerns and export restrictions. The company's interim CEO, Pol Le Roux, highlighted that the quarter focused on ramping up the expanded Mt Weld processing plant and addressing bottlenecks at the Kalgoorlie Rare Earths Processing Facility. The next phase for the Malaysian project involves the initial production of gadolinium in early fiscal 2028, followed by yttrium in early calendar year 2028.