By Rhiannon Hoyle

Lynas Rare Earths said it is in talks with customers to develop new sales agreements as a U.S.-China trade war derails the flow of rare-earth materials between the world's two biggest economies.

The company, which runs operations in Australia and Malaysia, said recent policy changes have affected trading in the China-dominated market for rare earths, critical minerals needed for everything from smartphones to jet fighters. China is responsible for around 85% of the world's rare-earth refining.

"The [two]-way flow of rare earth materials between the U.S. and China has ceased as a result of the tariffs levied in each jurisdiction," Lynas said Monday. New measures also require Chinese exporters of certain rare earths, like dysprosium, to apply for permission first, giving Beijing the ability to hold up or block sales.

Lynas, the largest producer of separated rare earths outside of China, said it is "ideally positioned" to help diversify the world's rare-earth supply chain, and to benefit from favorable market conditions.

"We expect it will take some time for customers to reorganize supply chains and agreements, however, this presents an opportunity for a sustained market restructure," Lynas said.

The company has started commissioning a new heavy rare earth separation circuit that would make it the only commercial producer of separated heavy rare earth products, including dysprosium, outside of China.

A small amount of holmium concentrate was recently produced by the circuit, and separation of dysprosium has begun, it said. Lynas expects first output of dysprosium in May and to be producing terbium in June.

Dysprosium and terbium are often added to magnets to help them run more efficiently at higher temperatures. Each also has other uses, spanning defense technologies to nuclear reactors to lighting. They are listed as critical minerals in a number of countries, including in the U.S.

Lynas last year announced it would begin separating those products at its plant in Malaysia. China essentially refines all the world's heavy rare earths today.

Those rare earths have to date been sold by Lynas to Chinese separators as part of a mixed compound that includes other heavy rare-earth oxides. Lynas produces light rare earths including neodymium and praseodymium, which are used in magnets as well.

The company said it has offered potential customers of its heavy rare earths prices that reflect "the high demand for these products outside China rather than the market index which is based on inside China transactions."

Lynas has been challenged by ongoing low prices for the rare earths it sells.

It has recently sought to focus on its highest value strategic customers. As a result, the average price it fetched across its rare-earth products rose to its highest level in more than two years last quarter, the company said.

"Key strategies include increasing the number of direct end customer agreements and working with new magnet makers to ensure guaranteed supply chains for critical applications and key industries," the company said. It aims to get more agreements on price that are independent of the China-driven market index.

Lynas said it produced less rare-earth oxide in the quarter ended March 31 versus the three months immediately prior, although its output of neodymium and praseodymium was higher quarter over quarter.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

April 27, 2025 20:33 ET (00:33 GMT)

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