Lynas Rare Earths is celebrating a bumper quarter defined by a leap in production, but has warned the Federal Government’s critical minerals reserve plan could jeopardise future success.
Lynas’ production of neodymium and praseodymium (NdPr) was up 16.7 per cent from its flagship Mt Weld rare earths processing facility in Kalgoorlie in the three months to March 31, and total rare earths oxide (REO) production reached 1911 tonnes (t).
With Mt Weld operating as the only facility of its kind currently online in Australia, Lynas enjoyed a quarter buoyed by the highest sell prices since December 2022 at $50.50/kg.
Sales revenue equalled $123 million and sales receipts reached $124.6 million.
With such a successful quarter under its belt and the prospect of another coming to fruition, Lynas chief executive officer Amanda Lacaze expressed concern over the Federal Government’s recent announcement of a $1.2 billion critical minerals strategic reserve, which will see voluntary national offtake agreements and selective stockpiling for minerals like rare earths.
“It seems to me that the [Federal Government], if re-elected, proposes to buy rare earth products at uneconomic prices,” Lacaze told The Australian Financial Review. “Am I going to meet a representative from the critical minerals office in our customers’ foyers? At what price will they be selling? Will they undercut us?
“From our perspective, the proposed policy will not suddenly transform uneconomic projects into economic projects … it will not underwrite sustained success.”
According to Lacaze, there is a risk that unviable commercial rare earths projects will be supported by Federal Government funding to the detriment of the wider industry.
“It’s important that these businesses have a long-term competitive advantage and pathway to be self-sustaining to avoid creating a class of businesses that rely on government subsidies,” Lacaze said.
“I can’t see that this is going to do anything other than prop up projects which would otherwise not be economic.”
The initiative has received mixed reviews from industry players, with many key mining association welcoming the reserve.
“It will provide support to the private sector and assist international investors and partners with the upfront capital costs of new projects,” Association of Mining and Exploration Companies chief executive officer (CEO) Warren Pearce said.
“In the geopolitical context of today, critical minerals are more important than ever. This policy setting will help Australia leverage our position as a major critical minerals player in the global market.”
Minerals Council of Australia CEO Tania Constable welcomed the announcement but emphasised it would require a deft hand.
“We must focus on the fundamentals that will give Australia back the edge over other mining nations,” Constable said.
“These changes would make it easier for companies to invest in Australia, without the need for taxpayer-funded incentives and government intervention in markets.”
