Lynas flags Texas rare earths plant uncertainty

Australia’s Lynas Rare Earths (ASX: LYC), the largest rare earths producer outside China, sees “significant uncertainty” around its proposed Texas heavy rare earths plant, pivoting instead to serve U.S. buyers from South Asia.

Lynas planned to build a rare earths separation plant in Seadrift, Texas, about 130 km northeast of Corpus Christi. But the company says it lacks enough funds now to complete the project in addition to the $288 million (C$397 million) it’s received from the Department of Defense (DoD). That’s left Lynas scrambling to fill a DoD offtake with production from the company’s plants in Malaysia and Australia. Their output totalled 3,212 tonnes in the fiscal year to June 30.

“There is significant uncertainty as to whether construction of the Seadrift processing facility will proceed, and if so, in what form,” the company said in its full-year 2025 results presentation released on Aug. 27. “Lynas is working with the U.S. DoD to negotiate a mutually acceptable offtake agreement for production from Lynas’ operating assets.”

Lynas shares closed A4¢ lower on Wednesday at A$14.31 apiece, giving it a market capitalization of A$14.2 billion (C$12.8 billion). The stock has more than doubled this year.

Cash raising

Lynas wasn’t more specific on the Seadrift setbacks such as the total estimated capital cost and how much it’s short. The company raised A$750 million on Tuesday by issuing new shares. It said A$200 million would be used for supply chain deals, up to A$75 million for share buy-backs, and an unstated amount for expanding downstream capacity – which would seem to include the proposed Texas plant.

Lynas said it’s made strides by landing other U.S. buyers of heavy rare earth oxides. The company says it can supply the U.S. market now from its Malaysia hub even if Seadrift is paused. The plant was supposed to start next year.

May startup

Lynas started output from operations in Malaysia in May. The dysprosium and terbium produced there are crucial for making high-temperature permanent magnets used in electric vehicles, missiles and fighter jets. Keeping that capacity available to U.S. customers via offtake helps narrow America’s near-term heavy rare earths bottleneck even if a plant separating rare earths in the U.S. is deferred.

Washington is boosting domestic mining by seeking to create a mine-to-magnet chain. At the same time, the Trump administration is discouraging imports of critical minerals by using tariffs. Lynas points out the DoD’s $110 per kg neodymium-praseodymium oxide deal with MP Materials (NYSE: MP). This signals higher prices outside of China. Such support could improve project economics throughout the supply chain, including a new Lynas-U.S. contract.

Pricing support

MP Materials, the only domestic producer of rare earths, benefits from the DoD pricing backstop, while other U.S. midstream efforts will likely lean on offtake and partnerships until domestic separation capacity scales, Lynas suggested.

The Seadrift project aims to combine heavy and light rare earth separation in plant creating 300 jobs. It would produce 2,500 to 3,000 tonnes of heavy rare earth products each year. It also has a capacity for about 5,000 tonnes of light rare earths annually. That includes about 1,250 tonnes of neodymium-praseodymium.

The U.S. DOD had lifted its funding commitment to an expenditure-based $258 million for the heavy rare earth facility, alongside a $30-million matched grant for the light rare earths component. Lynas bought a 0.6-sq.-km industrial site at Seadrift in 2023.