Article by Brad Thompson, courtesy of The Australian
25.11.2025
The world’s biggest supplier of non-China rare earths, Lynas, is evaluating diesel fuel and gas alternatives to a defective power supply contract that has intermittently stranded its $800m processing plant near Kalgoorlie.
Lynas is counting the cost of unreliable transmission and broken commitments which have been a source of constant interruption and a production downgrade issued on Tuesday.
The Amanda Lacaze-led Lynas said blackouts would cut production by about a third in the December quarter, in the latest blow to the Albanese government’s flagship Made in Australia policy and Labor’s aim of positioning itself as a trusted critical minerals supplier to the US and other allies.
Lynas is urgently assessing off-grid options in a bid to make up lost production over the months to June 30, 2026.
A single transmission line stretching about 600 kilometres and a single water pipeline built more than 130 years ago currently supply Kalgoorlie, one of Australia’s biggest mining centres, with its power and water.
Federal resources minister Madeleine King was witness to this when Lynas suffered a blackout during the official opening of the $800m rare earths cracking and leaching facility last November.
Mrs Lacaze has been sensitive to the energy risks West Australian producers face and said during the last federal election campaign that Australia should at least consider nuclear power stations in line with then opposition leader Peter Dutton’s energy strategy. And she argued last year that Australia needed to be energy agnostic and keep all options open in applying Made in Australia’s ambition to the critical minerals sector.
Mrs Lacaze was unavailable for comment on Tuesday but is expected to provide an update on the Kalgoorlie power supply problem at the company’s annual meeting in Sydney on Wednesday.
The situation deteriorated in November as outages became more frequent and longer in duration, with Lynas taking aim at the WA government and state-owned utility Western Power.
Lynas said it was promised reliable and cleaner power when it signed up to a Western Power agreement under what the utility calls the Eastern Goldfields Load Permissive Scheme (ELPS) in 2021.
Lynas recited Western Power’s public promise that “ELPS customers are ensured access to cleaner power in lieu of costly, emissions-intensive diesel generators”. The company was told that indicative reliability was consistent with that required to run the Kalgoorlie cracking and leaching plant safely and efficiently.
“In November, outage frequency and duration have been at a level that has led to significant lost production of mixed rare earth carbonate,” Lynas said on Tuesday.
WA energy and decarbonisation minister Amber-Jade Sanderson said delivering reliable power for Kalgoorlie, including for industrial users, is a key priority for the state’s Labor government, which has been in office since 2017.
“We are working closely with Lynas and other major users on potential solutions to improve reliability and reduce interruptions to supply,” she said. “Western Power will complete local equipment upgrades in coming weeks, building on key upgrades to the transmission network that feeds the area.”
Ms Sanderson said industrial users are being consulted on the improvements and a new common-use electricity network.
The blackouts are having a knock-on effect in the supply of carbonate to the Lynas rare earths refinery at Kuantan on the east coast of Malaysia where Lynas shut down cracking and leaching capacity for scheduled maintenance.
Lynas produced 2003 tonnes of ready-for-sale neodymium and praseodymium in the September quarter and smaller volumes of prized heavy rare earths dysprosium and terbium.
Lynas, the WA government and Western Power are trying to identify the cause of recent outages.
“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. Whilst the power supply remains unpredictable, it is not possible to quantify the exact production shortfall,” the company said, estimating one month’s production lost this quarter. “Importantly, Lynas will still produce sufficient finished product to meet key customer needs.”
The company is putting the finishing touches on a hybrid power station that includes a solar farm and wind turbines at its Mt Weld mine about 400km from Kalgoorlie. The 46 megawatt power station will reduce reliance on diesel at the remote mine where Lynas has invested $500m in a new ore processing plant.
City of Kalgoorlie-Boulder mayor Glenn Wilson said Lynas’s options were diesel-fired generators that were expensive to run, or gas piped by APA Group. Mr Wilson said the blackouts were affecting supply to all heavy industries, but residences were better off since a prolonged outage early in 2024.
Kalgoorlie-Boulder is connected to WA’s South-West Interconnected Grid by what Mr Wilson described as an umbilical cord that starts at Collie, where the state is aiming to phase out coal-fired power stations by 2030. Collie was one of the towns earmarked for a nuclear power station by Mr Dutton in his failed campaign.
Mr Wilson, also the chairman of the Australian Mining Cities Alliance, said miners operating close to Kalgoorlie were investing in their own power supply. “A lot of mine sites rely now on diesel generation,” he said. “But now we have started to see the likes of Gold Fields and Northern Star Resources invest heavily in their own behind the meter solutions (including renewables).
“It is a big cost for many of those businesses, but at the end of the day, it secures their power supply. That’s something that’s critical for maintaining production.”
Many were warming to the idea of nuclear power. “That’s more and more of a talking point,” he added.
In the wake of US President Donald Trump signing what was touted as a $US8.5bn critical mineral pact with Australia, and rare earths deals with Malaysia, Cambodia and Japan in October, Lynas said production rates and sales would be carefully managed until the full effect of the various governmental agreements and any regulations had been finalised.
Ms Lacaze has endorsed the floor price for NdPr set by the Trump administration as Australia weighs up a similar move. The US has locked in a floor price of $US110/kg for NdPr.