Australia’s Lynas Rare Earths Ltd., one of the few suppliers of the critical minerals outside China, unveiled a A$750 million ($488 million) share sale to fund its expansion as western firms respond to Beijing’s supply shock earlier this year.
The company - backed by Australia’s richest person, Gina Rinehart - will use the funds to streamline existing operations, modify an Australian mine and expand Malaysian processing plants. Lynas also wants partnerships with downstream metal or magnet projects, in the US or elsewhere.
The global rare earths industry is in the midst of upheaval after China launched export controls in April, weaponising its grip on production to fight US President Donald Trump’s trade onslaught. There’s now a push to further develop supply chains that don’t run through China.
"We need to take this opportunity where the market is really evolving rapidly,” Chief Executive Officer Amanda Lacaze said on a conference call with investors Thursday. Billionaire shareholder Rinehart "often exhorts us to maintain our focus on developing the industry outside China because of the importance globally for industry and governments,” she added.
Rinehart’s privately held Hancock Prospecting Ltd. currently has a 8.2% stake in Lynas, making it the second-largest shareholder. She has also amassed holdings in US-backed MP Materials Corp., Arafura Rare Earths Ltd. and Brazilian Rare Earths Ltd., along with several lithium producers.
Lynas plans to issue shares at A$13.25 apiece, representing a 10% discount to the last traded price on Aug. 27. In addition to this fully underwritten placement, there will also be a non-underwritten share offering to raise up to a further A$75 million, it said.
The miner’s stock has more than doubled this year, and closed Wednesday at A$14.73 a share before a trading halt on Thursday.
But the announcement and investor briefing also pointed to challenges facing Lynas in a new era for the rare earths industry, particularly in America. The US Department of Defense agreed to a landmark deal last month backing supplier MP Materials, casting doubt over Lynas’ own Seadrift project in Texas, and over the US approach beyond its borders.
"There is significant uncertainty that the Seadrift plant will proceed as has been conceived previously,” Lacaze said on the call. There is an existing rare earths supply chain outside China, Lacaze said, and "it’s important that policy development is done in such a way that continues to protect that, because development of new plants can be long and uncertain.”
Supply Hub
The Australian firm outlined a strategy up to 2030 that focuses on producing more "heavy” rare earths - the type targeted by Chinese export controls - rather than adding to its existing output goals in Australia and Malaysia. It also envisages participation in downstream joint ventures or other partnerships to produce metals or rare-earth magnets. Malaysia could potentially become a supply hub for "all” parts of the supply chain, Lacaze said.
Lynas is in discussions with the US, Japanese and Australian governments about the possibility of agreeing to guaranteed floor prices for rare earths sales, Lacaze said. Minimum prices were part of the Pentagon’s deal with MP Materials, as part of bid to guarantee supply viability over the long term, regardless of Chinese actions.
China produces more than 90% of the world’s rare-earth magnets, the vital industrial components used in electric vehicles, dishwashers and fighter jets. Supplies from the Asian powerhouse have recovered somewhat since the slump, with shipments jumping in July to their highest since January.
The Perth-based company on Thursday posted A$8 million in net income for the year to June 30, below the A$23.5 million analyst consensus. - Bloomberg
