Lynas (LYC), US/China Rare Earths and Governments playing in public markets

Hi Guys,

Valuing Lynas (LYC) is a tricky proposition albeit with the stock enjoying the strong government support. LYC currently has a market cap of $14.5bn yet it only generated a small profit on just over $550mn revenue in FY25, with $1.1bn forecast for FY26 – the growth being attractive.

The key for LYC is rare earths have become a political hot potato as global electrification gathers momentum:

• China controls approximately 70% of global rare earths production and over 85% of rare earths refining and processing capacity.
• China is tightening its control over rare earths by expanding export restrictions to include not just refined products but also raw material imports and processing technologies, reinforcing its dominance across the entire supply chain.
• The US is defending its position by investing heavily in domestic rare earth mining and processing, through companies like MP Materials (MP US) with strategic funding from the Department of Defense to reduce the reliance on Chinese supply chains.
• Australia’s Albanese government has committed significant public funding, over $1 billion via the Critical Minerals Facility to support projects like Arafura’s Nolans project (N.T.) and Iluka’s Eneabba rare earth refinery (WA), aiming to establish integrated mining and processing capacity domestically.

The sceptic would argue that selling into a government bid is the smart move, but we think it’s a touch early.

• We can see LYC testing above $16 in 2025, at least 10% higher.
• With the stock trading ~$14.70 on Thursday not surprisingly we like the SPP capital raise at $13.25.

chart

Lynas Rare Earths Ltd (LYC)

LAST UPDATED 04/09/2025 11:14

Close

chart

Lynas Rare Earths Ltd (LYC)

LAST UPDATED 04/09/2025 11:14