Should Lynas management be sacked?

[John]

The key question for me regarding Lynas is why are they not selling their NdPr at higher prices?

From the latest quarterly:

"Our pricing offer reflects the high demand for these products outside China rather than the market index which is based on inside China transactions."

But from the prices seen...they are not much higher?

It doesn't quite add up.

Lynas is the ONLY large-scale producer of NdPr oxide outside of China. That alone should give it leverage. Its product should be commanding a premium. But instead, Lynas is still selling at about Chinese spot prices.

Why?

In my opinion, the issue sits squarely with management.

Lynas has a premium product—but they're not doing enough to sell it as such. Here's what they’re failing to capitalise on:

• Lynas offers stable, geopolitically insulated supply. It’s not subject to the whims of the CCP, nor caught in the web of Chinese export restrictions. That’s a major strategic advantage—especially for Western buyers trying to de-risk their supply chains.
• Contracts with Lynas are backed by the Australian and Malaysian legal systems—transparent and enforceable. There’s genuine recourse if something goes wrong, unlike with many Chinese suppliers. For multinationals, this kind of legal certainty is worth paying for.
• Compared to most Chinese producers, Lynas actually reports ESG metrics, adheres to environmental regulations, and is accountable to public shareholders. For downstream customers under investor pressure or regulatory scrutiny, this is gold.

And yet, management doesn’t seem to be able to monetise these advantages. They aren’t making the case strongly enough to customers. They’re still pricing off a Chinese benchmark, despite being fundamentally different in value proposition.

So the big question is: Why is Lynas management failing to extract a large premium for a product that clearly deserves one?

If they're not going to lead the charge in defining ex-China rare earth pricing, who will?


OR - have i got this wrong...and this is just the start? Prices ex-China will keep going up?


Would love to hear others’ takes—especially from anyone who’s seen evidence of how (or if) Lynas is pitching its value to OEMs. Any customer pitch decks out there you can email me?

Has anyone heard any of the reasons that management give for not being able to extract better NdPr prices?

 

[Dustin]

The first thought I had hearing this was that competing against China can't be fun... or fair. Lynas probably could charge far more, but at what cost of losing business to China simply because of greed and padding one's profit margin?

 

[Mumbles2025]

the NdPr is market is incredibly opaque, with the exception of the SMM spot market price, it is very difficult to get an idea of the actual market price. Argus and a couple of others try to come up with something but it isnt reliable. Note also needs to be made of the liquidity ( or lack there off) in the rare earth market, the volume are ridiculously small, and the in big picture, total value of the total market is very low.

Consequently it is difficult to put in place a robust price discovery mechanism, the SMM spot price is the nearest to it, and the reality is that price is based on a couple of phone calls made to brokers every day. There isn't a trading window as for the other larger volume commodities. The buyers know exactly what they want ie ESG credentials transparent, but they don't make it easy for the sellers, to quote one commercial guy i know, "The pricing is incredibly opaque and the buyers aint telling". Pricing published is based on a point of delivery, which, with the SMM, is delivered china. This price bears absolutely no resemblance to the price buyers are actually paying with suggestion that effective prices even before the current situation were up to 35% more than published. what is being paid now is any one guess.....

It is for this reason that a desk for rare earths on price discovery platform such as the LME isnt going to happen soon. Transparent price discovery is required and the market doesnt want it...................yet.

The price shown is essentially FOB port of loading. Also MREC pricing isnt by price discovery either, it is a percentage of the published NdPr price, and for at least the last 3 or 4 years is fixed at 8.1% of SMMs own published NdPr oxide price, assuming 42.5 to 45% rare earth content. but the higher the NdPr content the higher theatric his paid. in the case of Pensana, they can justify over 11% of the NdPr price, rather than the published.

The only other source of pricing discovery is the Chinese published monthly selling price by China Northern which is invariably a large percentage lower than the Spot price. To quote Dudley Kingsport, a rare earths analyst. "China doesnt control the market - it is the market"

Lynas sells oxide, not finished product, they are limited by who will take their production in a very constrained off take market. This is the japanese, who also take product from the Chinese, Lynas have to compete with the pricing offered by the alternate supplier. Until Lynas move further up the supply chain, which they are doing, they will be price takers, not makers.

 

[John]

Hi @Mumbles2025

You are 100% correct. Rare earth trading is a "black box" industry. Even when dealing with ex-china supplier to ex-china customer. There are a bunch of groups/indivuals who make a fortune out of brokering these deals. And they are incentivised to keep it all hush hush.

But we do have some indications of how things are travelling right now in terms of ex-China pricing.

• LYC's last quarterly as stated above, "Our pricing offer reflects the high demand for these products outside China rather than the market index which is based on inside China transactions".
• USA Rare Earths interview on REEx - Joshua Ballard, CEO discussed the company's shift away from using Chinese pricing benchmarks in their customer negotiations. He emphasized that their discussions with customers are now based on ex-China pricing, reflecting a broader trend in the industry to establish independent pricing mechanisms outside of China's influence.
• In the last quarterly with ARU, the CEO stated that there has been a significant shift in rare earth pricing dynamics. They noted that domestic rare earth prices in China should no longer serve as a functional representative price for the non-China magnet value chain.
• This perspective aligns with insights from Argus, an independent forecaster, suggesting that a long-term pricing of US$163 per kilogram is necessary to establish a supply chain independent of China.
• And when tariffs were applied earlier this year, MP Materials observed increased interest from customers outside China, including those in Japan, South Korea, and the United States. This was a very diplomatic response, given they would still like to sell some of their unprocessed product to china (if tariffs were dropped etc.).

But again, these are just little snippets of information. And why is that? Well as you say above, the customers who want to buy ex-China product, are trying to keep a lid on pricing.

ARU has previously spoken about setting up a published Seabourne Index for NdPr....and with Gina being a major shareholder with LYC, MP, ARU and BRE....she could probably demand this. And this would then probably push prices up even further.


Hey thanks for the insights on the pricing of MREC. I was never sure of the exact figures. But looks like my guesses in my modelling were about right!