Lynas Rare Earths (ASX: LYC) has highlighted the “complex” nature of the current rare earths market as a factor that significantly impacted its latest half-year profits.

The leading rare earths producer reported a net profit after tax of $5.9 million for the six months to 31 December, a substantial decline from the $39.54m reported a year ago.

Lynas recorded a 14% decline in total rare earth oxide sales compared to 1H24.

NdPr sales increase

Looking for positives in an otherwise difficult period, the volume of neodymium and praseodymium (NdPr) family sales jumped by 23%.

However, the average Chinese domestic price of NdPr decreased from US$56 to US$49 from December 2023 to December 2024.

As a result, the sales volume increase only added 8% to sales revenue.

Low market prices

Chief executive officer Amanda Lacaze said the reduced profit recorded for the period reflected the low market prices.

“The rare earths market continues to be subject to complex influences,” Ms Lacaze said.

“Conditions that may support improved market conditions include demand growth, which continues in key sectors, proposed changes to the regulatory environment in China and sustained support for supply chain development from key governments.”

“Lynas has a strong track record of operating in challenging rare earth market conditions.”

“We see the current challenges as short-term issues, and our team has the skills and competence to manage these and deliver stronger results in the future.”

Major project investments

Lynas invested $267m into major projects during the half-year.

“We made significant progress on our major projects, which together will deliver increased capacity, efficiency, and sustainability, ensuring Lynas is well placed to benefit from improvements in market price,” Ms Lacaze said.

“Key growth project milestones achieved included successfully commissioning and integrating Stage 1 of the Mt Weld expansion project into operations, ramping up production at the Kalgoorlie rare earths processing facility and the official opening of the Kalgoorlie facility.”

“Significant milestones were also achieved at Lynas Malaysia, including commissioning and operating the new mixed rare earth carbonate receival facility, operating the new solvent extraction flowsheet and installing new equipment in product finishing.”