(Bloomberg) -- Lynas Rare Earths Ltd.’s first-half profit plunged 85% from the year before, as prices for the materials — used in everything from wind turbines to military hardware and electric vehicles — remain in the doldrums. 

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“The reduced profit recorded for the period reflected low market prices,” Chief Executive Officer Amanda Lacaze said in a statement Wednesday. “We see the current challenges as short-term issues.”

Shares of Lynas fell as much as 5.8% in Sydney after the announcement. Last month, Australian billionaire Gina Rinehart increased her stake in the company to 8.31%, becoming its third-largest shareholder.

The miner’s performance indicates the market is still over-supplied, with rare earth oxide prices down due to strong output from China and its economic slowdown. Lynas is one of the only rare earths producers that competes with the nation’s domination of the market.

The Australian miner reported net income of A$5.9 million ($3.7 million) for the six months to Dec. 31. That compared with a consensus estimate of A$32.2 million. It won’t pay an interim dividend. 

The US and allies such as Australia are trying to challenge China’s stranglehold by unlocking their significant deposits. That plan has been hindered by the price decline that has complicated development of some new projects.

After peaking in February 2022, rare earths prices on a benchmark index in Shanghai had fallen almost 70% by March 2024. Still, they have since ticked up by about 30%.

“Market conditions remain unpredictable, and Lynas’ success will depend on its continued ability to balance growth ambitions with disciplined financial management,” Jefferies Equity Research analysts including Mitch Ryan said in a report. Still, the company was “strategically positioned to capture any market strength as it continues to expand capacity and product offerings,” they added.

Lynas saw a slight increase in the unit cost of production during the period as its processing facilities in Western Australia and a refinery in Malaysia come online. It’s also developing a processing plant in the US.

--With assistance from Paul-Alain Hunt.

(Updates with share prices in the 3rd paragraph, analyst comment in 8th, and processing facilities in final.)

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