Highlights
- Lynas successfully produced the first commercially separated dysprosium oxide outside of China, breaking the country’s monopoly on heavy rare earth elements.
- The company’s Malaysian facility can process up to 1,500 tonnes annually.
- Lynas receives strategic support from the U.S. Department of Defense.
- Despite financial challenges, Lynas is positioning itself as a key player in diversifying critical minerals supply for defense and green energy technologies.
Lynas Rare Earths Ltd (opens in a new tab). (ASX: LYC) has announced a significant breakthrough in the rare earths industry by successfully producing separated dysprosiumoxide at its Malaysian facility. This achievement marks the first timeheavy rare earths have been commercially produced outside of China, a country that has long dominated the global supply chain for these critical materials.
Dysprosium is essential for manufacturing high-performance magnets used in electric vehicles, wind turbines, and defense technologies. The production comes at a pivotal time, as China has recently tightened export controls on rare earth elements, including dysprosium and terbium, highlighting the vulnerability of global supply chains.
Lynas’ new heavy rare earths separation circuit in Malaysia is designed to process up to 1,500 tonnes annually, with terbium production slated to commence in June. The company sources its ore from the Mt Weld mine inWestern Australia and is also developing a rare earths processing plantin Texas, supported by the U.S. Department of Defense.
All things being equal, this development certainly appears to position Lynas as a key player in diversifying the global supply of critical minerals, offering alternative sources for countries seeking to reduce dependence on Chinese exports. The company’s shares surged on Friday May 16th to the news, reflecting investor confidence in Lynas’ strategic direction and its role in strengthening supply chain resilience.
What about the company’s financials and stock performance?
Australia’s Lynas Rare Earths currently the top-ranked entity in the Rare Earth Exchanges (REEx) Projects Database, as noted above announced a historic operational milestone—becoming the first company outside China to produce commercial quantities of separated dysprosium at its Malaysian facility. This advances Lynas’ longstanding ambition to diversify the global supply of heavy rare earth elements (HREEs), which are critical for defense and green energy applications. With terbium production set to follow in June, this development solidifies Lynas as the Western world’s flagship rare earth processor.
From a strategic resilience perspective, this is a breakthrough. China currently controls pretty much all dysprosium and terbium output. Lynas’ achievement raises the possibility of directly challenging this dominance over time, especially as Beijing tightens export controls on magnet materials. The move aligns with parallel U.S. initiatives, such as the Department of Defense–backed Texas processing facility, positioning Lynas as the key node in a multi-continental allied rare earth supply chain. However, questions remain about ore source diversification beyond Mt Weld and the geopolitical fragility of Malaysian processing. As REEx has chronicled, too, China has a lot of leverage in Malaysia.
Financially**,** investors face a mixed outlook. Despite a strong market cap of AUD 7.17B and a 2.68% share price bump on May 16, Lynas trades at a high trailing P/E of 141.6 and forward P/E of 69.4—valuation multiples that imply long-term growth and strategic premium pricing, not current profitability. Operating margin (5.21%) and ROE (2.24%) remain thin, with quarterly earnings down 85.2% year-over-year.
The AUD 512M in negative levered free cash flow underscores capital intensity amid global plant expansions. Lynas is strategically critical but less operationally efficient compared to MP Materials Corp. (NYSE: MP), which boasts consistent U.S. government backing. The company REEx has picked up some ongoing issues with permitting at the Texas plant.
For governments and institutional partners**,** the breakthrough justifies further subsidy and offtake support—but with oversight. Lynas is delivering where others have struggled: separated HREEs with potential for scale, outside China. However, its high capex burden, modest profitability, and dependency on a single ore body raise long-term questions. To ensure resilience, stakeholders must press for diversification, downstream integration, and transparent metrics around throughput and recovery efficiency. As global industrial policy turns inward, Lynas’s success now represents both a geopolitical asset and a cautionary tale of execution risk in strategic mineral independence.
Comparison of MP Materials and Lynas
REEx took a hard look at the latest quarterly results from Lynas and MP Materials (opens in a new tab) (MP), and there is certainly a contrast. In Q1 2025, the two companies continue down very different tracks but perhaps toward the same final destination—Lynas building real geopolitical and financial momentum, MP ramping up. Again, part of this is the very different points in company history.
Lynas pulled in A$123 million in revenue on 1,911 tonnes of REO production—most of it high-value NdPr. MP, by comparison, produced more than six times the tonnage (12,213 tonnes), but only 563 tonnes of that was separated NdPr—and generated $60.8 million in revenue. MP posted a $22.6 million net loss and negative adjusted EBITDA. Lynas? Profitable again, and still the only company outside China operating a commercial-scale heavy rare earth separation plant. The Australian company attributed this to creased NdPr sales volume, despite a decline in the average China domestic price of NdPr.
MP’s touted midstream build requires a lot of cash. Refining costs are high, margins may be thin, and with NdPr prices down 16% year-over-year, there’s no relief on the revenue side, at least not in the short run. Government support and a major customer like GM help, but the company’s separate product line is still in the early stages—this is the reality, and investors would need to be patient. In contrast, Lynas is leveraging its near-monopoly on ex-China Dy and Tb, pulling in A$50.5/kg average selling prices and shipping to strategic buyers. Despite A$71.3 million in growth capex, it’s still sitting on nearly A$269 million in cash. MP? Operating cash burn of $63 million and debt north of $900 million should be watched, but along with the hitting of key milestones as part of its ramp-up.
Food for Thought
One important point here: cash on hand or burn rate alone isn’t a great performance indicator—both Lynas and MP Materials are deep in capex phases, which skews the picture. But there’s more. Lynas isn’t just producing less—REO output dropped from 2,617 to 1,911 tonnes last quarter—they’re also stockpiling, not selling into the market. That raises a red flag. Does their entire strategy hinge on an ex-China surge? If the market doesn’t come through, especially with strong support from private and government players, Lynas could be overextended and exposed. But the odds of the ex-China market not happening are exceedingly slim.
REEx rightly credits Lynas’ strategic positioning but skips over these complicating factors. Meanwhile, MP Materials posted a 330% year-over-year jump in NdPr output. Yes, the base is smaller, but the ramp is real and signals their midstream buildout is finally starting to click. It’s also worth remembering MP is earlier in its journey—some financial strain is expected as it transitions from raw concentrate to separated oxides and, eventually, magnets. That shift naturally pressures margins and distorts comparisons. But we stand by the statement that MP Materials represents a national treasure trove.
A thought—what is Lynas Rare Earths and MP Materials would merge, as part of a Western alliance to take on China’s state-backed conglomerates?
Tracking Strategic Minerals. Exposing the Financial Games.
www.rareearthexchanges.com (opens in a new tab) See the REEx Forum (opens in a new tab) for discussions.
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