Article by Peter Ker and Mark Wembridge, courtesy of The Australian Financial Review
25.11.2025
Lynas Rare Earths has blamed grid outages caused by Western Australia’s transition to green energy for a slump in production at its Kalgoorlie processing hub.
The miner, whose biggest backers include Australia’s richest person and climate change sceptic Gina Rinehart, warned that output of rare earths would drop by a third in the three months to December because of “unpredictable” power supplies to its plant.
Lynas performs an intermediate level of processing known as cracking and leaching at its $800 million facility in Kalgoorlie – a remote city that is evolving its diesel-powered grid towards cleaner, cheaper green power.
However, the city has been beset by blackouts during electricity supplier Western Power’s transition of its South West Interconnected System, raising concerns for residents and businesses alike.
Marcelle Watson, operations manager of Lynas’ Kalgoorlie rare earth processing facility, said a one-second power outage could shut down the plant for an hour, and that the power shortages had undermined expansion plans.
“It does affect our ramp up. We are looking at our own options to have off-grid energy supply,” she said.
Lynas, the biggest producer of separated rare earth oxides outside China, estimates the shortfall at one month’s production, but said it would still meet customer orders. The loss cannot be overcome by switching supply to its Malaysian facility because of scheduled kiln maintenance.
“Lynas is working constructively with the WA government and Western Power to identify causes of recent outages and options to improve power availability to the Lynas plant,” the miner said.
“Whilst these are being progressed on an urgent basis, even on a best-case scenario they will not be in place in time to improve this quarter’s forecast production.”
Reg Spencer, a mining analyst at Canaccord Genuity, estimated the production cut would knock 20 per cent from Lynas’ revenues for the quarter, noting that the impact could be softened by selling some of its stockpile.
The setback comes as Australia, the United States, and other Western countries throw their cash behind the construction of new rare earths mines and refineries to loosen China’s grip on the metals needed for defence and decarbonisation products.
Lynas has been backed by the US Department of Defence to build a refinery in Texas, and recently raised $750 million to expand its production.
Lynas mines rare earths at Mount Weld in Western Australia – one of the world’s richest sources of the elements – and refines them in Malaysia. The neodymium and praseodymium produced by Lynas are used to manufacture the industrial magnets that go in vehicles and wind turbines.
China supplies 80 per cent of the world’s neodymium and praseodymium, as well as 90 per cent of the world’s terbium and dysprosium – used to make magnets and lasers – which Lynas has started producing in small volumes in Malaysia.
The miner has constructed four enormous wind turbines to power the Mount Weld mine near Laverton, about 300 kilometres north of Kalgoorlie.
The miner transports rare earth ore in 27-tonne truck containers to Kalgoorlie for processing. The plant can process up to 16 of the containers per day, heating the ore to 900 degrees in a 110-metre cracking tube that separates that elements.
Over the past decade, the ASX-listed miner has run up against China’s suppression of rare earth prices. The tactic is used to thin out global competition and enable Beijing to retain control over the market.
Yet global interest in the elements has sent the miner’s shares soaring this year. Its stock last month rose above $21, after starting the year at less than $7. Its market capitalisation has risen beyond $15 billion, and its shares rose 1 per cent to $15.20 on Tuesday.
Lynas, which posted a 90 per cent drop in annual profit to $8 million in the year to June 30, will hold its annual shareholder meeting in Sydney on Wednesday.
Although Australia is a relatively high-cost location to process critical minerals, Lynas chose Kalgoorlie as the site for its facility due to its proximity to Mount Weld.
Kalgoorlie is renowned for its immense gold wealth, yet the city is struggling with a raft of social issues. Its water is piped in from Perth, almost 700 kilometres to the west, and the city has one of the state’s tightest housing markets despite its population declining by 10 per cent over the past decade.
“Western Australia needs to improve the reliability of its electricity supply,” said Lynas executive general manager Chris Torrisi. “We had a five-day blackout last summer for the entire city of Kalgoorlie-Boulder. We need to work on that.”
The booming gold price is driving the expansion of mining projects such as Northern Star Resources’ Super Pit, increasing the need for workers.
Residents of Kalgoorlie, home of the annual mining conference Diggers and Dealers, say the city is in danger of becoming a giant worker camp because of miners relying on “fly in, fly out” staff, while few houses are being built.