Another record profit for Lynas as rare earth prices soar to 11-year high

Lynas (ASX: LYC) has achieved yet another record profit in the first-half of FY22 as rare earth prices double from last year. 

Financials at a glance

• Revenue of $314.8m, up 55%

• Net profit of $156.9m, up 286% 

• Cost of sales of $140.3m, down -7% 

• Cash and short-term deposits of $674.2m, up 31.5%

Parabolic demand for rare earths 

Strong customer demand for rare earths helped supercharge Lynas earnings during a period where production was relatively flat compared to a year ago.

In the first-half, Lynas produced 7,375 tonnes of rare earth oxides (REO) and 2,614 tonnes of NdPr, down -2% and -3.5% respectively.

For the uninitiated, neodymium and praseodymium (NdPr) is a type of rare earth magnet with applications in automotive and energy generation industries.

The average selling price for REO was $48.6/kg, up 105% from last year. 

“Our customers remain optimistic about demand growth and market conditions are robust, as shown by the NdPr market price which exceeded US$100/kg in November 2021 for the first time since 2011,” CEO Amanda Lacaze said in a statement. 

Lynas 2025 growth plan 

Lynas is progressing a rare earths processing facility in Kalgoorlie WA. The processing plant is part of the company’s deal with the Malaysian government to ensure a cracking and leaching plant outside Malaysia before July 2023. 

Encouragingly, Lynas said that all necessary approvals for the project have now been received and construction activities have accelerated. 

Outlook 

“Our customers expect demand will grow strongly as we move further into FY22, and we are positioning the business to meet accelerating demand through our Lynas 2025 growth projects,” said Lacaze.

Lynas 12-month share price chart