Lynas Rare Earths H1 Earnings Call Highlights
by Scott Moore · The Cerbat GemLynas Rare Earths (ASX:LYC) used its investor briefing for the half year ended 31 December 2025 to outline progress on its Lynas 2025 capital program, discuss operational ramp-ups in Australia and Malaysia, and highlight a strengthening rare earths price environment that management said is improving market conditions and customer demand.
Commissioning milestones and ramp-up progress
CEO and Managing Director Amanda Lacaze said the first half of FY2026 was “very busy,” with multiple milestones achieved across the company’s major capital projects.
At Mount Weld, Lacaze said the expansion project has been largely commissioned, with the new flotation circuit operating at about 70% of nameplate capacity. She emphasized the scale and complexity of the work, noting the project included commissioning three new mills, new processes, and significant investments including water recycling infrastructure.
Lacaze also reported that the company’s 65 megawatt hybrid renewable power station at Mount Weld is now operational. She said the facility includes wind turbines, solar panels, gas turbines for baseload support, and batteries. While she noted the upfront capital cost is significant, she said variable electricity costs are now meaningfully lower than the prior diesel power station. In December, she said 92% of power came from renewable electricity, exceeding an initial target of 70%, with wind generation at night performing better than expected.
On water management, Lacaze said new water treatment facilities are intended to recycle 90% of tailings water. She said Lynas has demonstrated that level but is not yet delivering it reliably, adding that management is confident it will reach consistent performance.
At Kalgoorlie, Lacaze said the ramp-up continues and the company has undertaken process modifications to improve performance. She cited challenges tied to unreliable external power supply and said the plant’s cracking and leaching operations are running “pretty well,” while bottlenecks have shifted as ramp-up proceeds, including issues around the carbonation circuit. She characterized the improvement work as “managed and measured,” comparing it to the company’s earlier ramp-up experience at its Malaysian operations.
Malaysia performance and heavy rare earths expansion
Lacaze said Lynas Malaysia is operating “extraordinarily well,” adding that major maintenance on the cracking plant late in the second quarter improved performance and that it is “running better than it has ever run in its life.” She said the new separation circuits are stable and producing, with feedstock availability the key operational focus.
She noted the company has now had its first full six months of dysprosium (Dy) and terbium (Tb) separation, and said additional products are expected to follow. Lacaze said Lynas expects to begin producing samarium before the end of the financial year, followed later by gadolinium and yttrium as additional capabilities come online.
In Q&A, VP Strategy and Investor Relations Daniel Havas said the current heavy rare earth circuit has a capacity of 1,500 tonnes of throughput and that the planned new facility in Malaysia would increase throughput capacity to 5,000 tonnes. Lacaze said the larger heavy rare earth separation facility is expected to come online toward the end of calendar year 2027, and that the company is working with several parties in Malaysia on developing ionic clay feedstock to align with that timing.
Responding to a question about potential China-linked restrictions on leaching reagents or solvent extraction chemicals, Lacaze said Lynas has already put contingency plans in place for reagents and equipment required in Malaysia, and has identified alternate sources for previously critical-path items.
Pricing environment and market conditions
Lacaze said the rare earths market is “very constructive” and cited a sharp increase in NdPr pricing. She said NdPr was about $74 per kilogram in December 2025 versus $49 per kilogram in December 2024, and added that pricing had continued to firm, with NdPr exceeding $110 per kilogram “yesterday” during the period discussed.
She attributed the improved environment in part to government actions that she said are reshaping the market, pointing to measures in Australia, Japan, the European Union and the United States aimed at creating what she described as a “functional market.” Lacaze said Lynas continues to engage with relevant governments and suggested other governments may adopt additional policy measures.
Lacaze also cited demand signals including Japanese magnet makers winning new business, growing efforts by ex-China magnet buyers to secure direct supply, and customer interest in bundled supply of light and heavy rare earth products. She said Lynas’ ability to sell bundles of NdPr with Dy and/or Tb in customer-required ratios is a competitive advantage that helps it capture value.
Financial and cost items discussed
While specific figures were not detailed in the prepared remarks included in the transcript beyond general commentary, Lacaze described the half-year financial result as “excellent,” referencing higher sales revenue, net profit after tax, EBITDA, and a significant increase in cash and short-term deposits following an earlier capital raise intended to support the company’s “Towards 2030” growth initiatives.
In response to a cost question, CFO Gaudenz Sturzenegger said part of the increase in general and administrative costs related to “not absorbed depreciation and employment cost charges” associated with Kalgoorlie, as the facility is not yet operating at planned run rates. He estimated that impact at approximately AUD 20 million to AUD 25 million.
On depreciation, Sturzenegger said the effect reflects major projects moving into operation, referencing approximately AUD 800+ million at Kalgoorlie and about AUD 550 million for the Mount Weld expansion. He said a smaller portion of Mount Weld expansion capital—about AUD 100 million to AUD 200 million—remained to be capitalized and should occur in the current quarter discussed on the call. When asked whether depreciation could be higher in the second half, he said it would likely increase further as remaining capitalization occurs.
Offtake, U.S. discussions, and capital allocation
Lacaze said Lynas’ objective is to have 100% of offtake contracted to the highest-value customers over time, and reiterated that long-term contracts are preferred over short-term arrangements. She also said Lynas expects that as downstream capabilities outside China come online over the next three years, the company should be able to place all of its material outside China, while still viewing China as an important market.
Regarding the United States, Lacaze said the company remains in discussions with the U.S. government about an offtake agreement that would be acceptable to Lynas. She added that engagement with U.S. defense industries is “really strong,” and said Lynas is selling material into U.S. defense applications at “very pleasing prices.”
On the balance sheet and use of capital raised, Lacaze said management separates cash generated from operations from capital-raise proceeds earmarked for growth. She said Lynas had announced AUD 180 million for the new heavy rare earths plant in Malaysia and indicated further investments could relate to downstream initiatives such as the JS Link magnet factory in Malaysia and additional resource development work, particularly in Malaysia. She said the company would consider returning capital to shareholders, but noted Lynas remains a growth business.
In a separate treasury-related response, Sturzenegger said term deposits should be viewed as part of a dynamic approach focused on optimizing interest income, rather than as funds explicitly allocated to particular future projects.
Separately, Lacaze said Lynas would provide an update within a few days regarding the renewal of its Malaysian operating license, which was due to expire shortly after the call. She said new legislation gazetted in early December should support a more normalized licensing environment and noted that the Atomic Energy Department had audited the operation and provided what she described as the highest available rating.
About Lynas Rare Earths (ASX:LYC)
Lynas Rare Earths Limited, together with its subsidiaries, engages in the exploration, development, mining, extraction, and processing of rare earth minerals in Australia and Malaysia. The company holds an interest in the Mount Weld project, Western Australia; and the Kalgoorlie project. Its products include yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. The company also develops and operates advanced material processing and concentration plants, as well as offers corporate services.