This article first appeared on GuruFocus.
Lynas Rare Earths Ltd (LYSDY) is engaged in discussions with the US Department of Defense over a potential framework that could introduce government-backed price floors for its rare earths supplies, a mechanism similar to one extended to a US producer last year. Chief executive Amanda Lacaze said talks were slowed by the US government shutdown in the prior quarter, with price support remaining a central focus. The company’s objective, she said, is not direct government payments but policy settings that could help foster a more stable, properly functioning market for rare earths.
Investor attention has increasingly turned to comparisons with MP Materials (NYSE:MP), which last year reached a deal with the Pentagon and private investors following Chinese export curbs. That agreement included a guaranteed price floor, an equity investment, and an offtake arrangement designed to cushion the company from potential price pressure driven by cheaper Chinese supply. Lynas is the only other major non-Chinese producer and is viewed as strategically important as it ramps up production of heavy rare earths used in defense applications, materials that were placed under Beijing’s export controls last year. Lacaze said the company’s non-US status has complicated efforts to secure a comparable arrangement, despite Australia’s position as a US ally.
Lynas has said it is not seeking funding support and instead wants access to a market that rewards reliable, on-spec production. Heavy rare earth output from its Malaysian processing facilities reached 26 tons last quarter, with some material delivered to long-standing customers in Japan, where manufacturers remain attentive to any potential interference with Chinese supply amid heightened tensions. Lacaze said there have been no signs so far of major disruptions to Chinese exports, even after Beijing warned earlier this month that export applications would face increased scrutiny, suggesting uncertainty may persist rather than translate immediately into supply shocks.