Power cuts hit Lynas; Canaccord flags fiscal-2026 earnings risk

[Ben Graham]

Lynas Rare Earths (ASX: LYC; US-OTC: LYSDY) says repeated grid interruptions this month at its new Kalgoorlie cracking-and-leaching plant will leave a shortfall in mixed rare earth carbonate feed this quarter, constraining finished product from its Malaysian refinery.

The company linked the outages to Western Power’s Eastern Goldfields load permissive scheme and said November’s frequency and duration of cuts caused “significant lost production.”

“Lynas estimates there may be a shortfall equivalent to one month’s production during this quarter,” the company said Tuesday in a release. Compounding matters, Malaysian kilns are shut for scheduled major maintenance, preventing a catch-up in the near term, the company said.

Canaccord Genuity put numbers to the hit, trimming its December-quarter neodymium-praseodymium (NdPr) output forecast to about 1,800 tonnes and modelling about a 20% revenue drop to about A$220 million ($142 million) and a 35% fall in quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) to about A$77 million. It nudged fiscal-2026 EBITDA to A$524 million (from A$567 million) and kept a A$15.55 target price.

Lynas shares in Sydney fell almost 30% from late October until Nov. 6 before rising slightly to their closing price A$15.02 on Tuesday. It has a market capitalization of A$15.1 billion ($9.7bn).

Power play

The Kalgoorlie facility is on an interruptible supply scheme that requires customers to quickly reduce power use when the network is constrained, shifting to on-site generation. Lynas said it has seen reliability issues through the year, with shortages intensifying in November.

It is assessing short-term off-grid options while working with the Western Australian government and Western Power. It expects lost production can be recovered within the financial year ending June 30.

Any hiccup at Kalgoorlie matters beyond one quarter. Lynas operates Australia’s first downstream rare earths processing plant at Kalgoorlie with nameplate capacity to support about 9,000 tonnes per year of NdPr finished product. Its Malaysia plant is the world’s largest single separation facility running about 10,500 tonnes per year. The site, in eastern Malaysia near the city of Kuantan targets about 12,000 tonnes per year of NdPr separation capacity across the system as part of its “Towards 2030” growth plan.

Inventory on hand

The Malaysian facility also produces the heavy rare earth oxides dysprosium and terbium. Disruptions at the plant scale can ripple into magnet-grade oxides used in electric vehicles and wind turbines.

Even so, Lynas said it will “still produce sufficient finished product to meet key customer needs” this quarter. Canaccord notes inventories could soften the immediate sales impact.