Lynas Faces Setbacks in U.S. Expansion Amid Operational Gains

Lynas Rare Earths, the largest producer of rare earths outside China, is confronting significant headwinds with its planned facility in Texas. Regulatory obstacles and a shifting U.S. industrial policy are creating uncertainty for the project, contributing to notable volatility in the company's share price. This pressure persists despite the firm achieving key operational milestones at its Malaysian and Australian sites.

The company's equity has experienced substantial swings throughout the year. After reaching a 52-week peak of A$21.96 on October 14, 2025, the shares entered a pronounced corrective phase. They currently trade around A$12.93, representing a decline of approximately 41% from that high. Nevertheless, the stock remains firmly positive on a year-to-date basis, with gains reported between 95% and 101% since January. The 12-month range, from a low of A$6.16 in January to the October peak, underscores the extreme volatility.

Ownership is dominated by institutional investors, who hold about 58% of the shares. Major stakeholders include AustralianSuper (8.4%), Hancock Prospecting (7.6%), and State Street Global Advisors (6.9%). The nine largest investors collectively control roughly 53% of the register.

U.S. Project in Jeopardy

The future of Lynas's proposed rare earths processing plant in Seadrift, Texas, is now in serious doubt. Recent reports indicate the project has "most likely been put on ice" due to unresolved permitting issues concerning wastewater discharge.

The venture was originally slated to receive up to $258 million from the U.S. Department of Defense under a 2023 agreement. However, Lynas flagged problems with water treatment in April 2025, warning of rising project costs. By October, management cited "significant uncertainty" regarding progress. CEO Amanda Lacaze clarified in August that construction might not proceed unless economically viable off-take terms could be finalized with the Pentagon. The plan involved further processing material from Malaysia for delivery under a commercial contract to the U.S. defense department.

Shifting U.S. Policy Landscape Benefits Domestic Rival

Compounding the permitting difficulties, the policy environment in the United States has evolved to favor domestic suppliers. The U.S. government has notably bolstered support for MP Materials, Lynas's primary American competitor.

In July 2025, the U.S. sealed a billion-dollar deal with MP Materials. The state became its largest shareholder, guaranteed a price floor for key rare earth products, and provided a $150 million loan to expand production of heavy rare earths. This "America First" approach weakens Lynas's strategic position in the U.S. market.

Operational Advances in Malaysia and Australia

Heavy Rare Earths Business Ramps Up

On the operational front, Lynas hit significant milestones in 2025. Mid-year, it commenced commercial production of separated heavy rare earths like dysprosium and terbium at its Malaysian facility. This achievement makes Lynas the only non-Chinese producer capable of separating both light and heavy rare earth oxides on an industrial scale.

In late October, the company announced another major project in Malaysia: a new A$180 million (approximately $117 million) plant for separating heavy rare earths. Designed to process up to 5,000 tonnes of feedstock annually, the facility responds to robust demand. CEO Lacaze stated that demand is so strong the company can be selective with customers and pricing.

Should investors sell immediately? Or is it worth buying Lynas?

Kalgoorlie Integration and Disruption

In Kalgoorlie, Western Australia, the new cracking and leaching plant has been integrated into the global production network. This asset increases upstream processing capacity and is a central element of the value chain. However, production was temporarily impacted by power disruptions at the site in late November, contributing to recent share price weakness.

Geopolitics, Demand, and Price Forecasts

Western Quest for Alternatives to China

The rare earths market remains geopolitically charged. In October 2025, the U.S. and Australia signed a "Critical Minerals and Rare Earths Framework," with each country committing at least $1 billion to secure and expand supply chains for critical raw materials.

China's export restrictions on dysprosium, imposed since April 2025, have further highlighted the need for alternative suppliers. Reports suggest Western buyers are sometimes paying quadruple the Chinese domestic price to secure committed volumes. However, a recent easing in trade tensions provided a headwind for the sector: the postponement of certain Chinese export controls by one year triggered a broad correction across rare earth equities starting in October.

Revenue and Price Projections for 2026

Despite the current share price correction, analysts anticipate strong growth beginning in the next fiscal year. A study by S&P Global from early December 2025 suggests Lynas could roughly double its revenue in FY2026, driven by higher production volumes and rising prices.

Consensus estimates from Visible Alpha project:
- Total rare earth oxide production of 16,100 tonnes in 2026, a 53% year-on-year increase.
- An average realized price of A$72.50 per kilogram, up 47% from the prior year.

For its key product, neodymium-praseodymium (NdPr) oxide—which constitutes 91% of revenue—estimates foresee:
- An average price rising to A$118 per kilogram, a 48% year-on-year gain.
- Volume growing to 8,800 tonnes, a 35% increase.

Strategic Outlook and Upcoming Catalysts

Focus on Reports and Guidance

The next critical event is the half-year report scheduled for February 2026. Management is expected to provide updated commentary on production ramp-ups, market conditions, and the financial and strategic implications of the U.S. project situation. The subsequent quarterly report is announced for March 4, 2026.

"Towards 2030" Strategy

Lynas's "Towards 2030" strategy focuses on extracting higher returns from existing assets and pursuing growth through further processing steps and partnerships along non-Chinese metal and magnet value chains. This includes an agreement with Korea's JS Link to establish a magnet factory in Malaysia and the evaluation of additional magnet projects worldwide.

The average analyst price target sits around A$15.77, above the current trading level but reflecting the uncertainty surrounding the Texas project and fluctuating rare earths market conditions.