Lynas Rare Earths (ASX: LYC) Stock Outlook: ASX 50 Promotion, Power Disruptions and 2026 Boom Forecasts

Sydney, 8 December 2025 — Lynas Rare Earths Limited (ASX: LYC), the largest rare earths producer outside China, is entering a pivotal phase. The stock is being promoted into the blue‑chip S&P/ASX 50 Index, analysts are calling for revenues to almost double in 2026, and yet fresh coverage from Morningstar says the shares are fundamentally overpriced. At the same time, power problems at a key plant are weighing on near‑term output and sentiment. ^[1]

Against that backdrop, Lynas has become one of the most closely watched names on the ASX — both for what it says about the rare earths market and for what it signals about the West’s attempt to loosen China’s grip on critical minerals.

Lynas share price on 8 December 2025

As of trading on 8 December 2025, Lynas shares are changing hands around A$13–13.3, down sharply from last week’s close of A$14.14 on 5 December. ^[2]

Key stats:

Year-to-date performance: The stock has more than doubled in 2025, with various data providers putting the 12‑month gain at around 85–120%. ^[3]
52-week range: About A$6.16 to A$21.96, meaning the current price is roughly 35–40% below the recent high despite the huge rally from 2024 levels. ^[4]
Volatility: Price swings remain elevated, reflecting both commodity‑price sensitivity and news flow around projects and regulation. ^[5]

In other words: Lynas is still a 2025 success story, but investors are no longer just cheering momentum — they’re starting to argue about valuation and execution risk.

Promotion to the S&P/ASX 50: structural support for the share price

On 5 December, S&P Dow Jones Indices confirmed that Lynas Rare Earths will join the S&P/ASX 50 Index, effective before the market opens on 22 December 2025. It will replace Amcor and Mirvac in the benchmark, alongside Washington H. Soul Pattinson as another new entrant. ^[6]

That promotion matters for several reasons:

Forced buying by index funds: Passive funds and ETFs that track the ASX 50 will be required to add Lynas to their portfolios, typically in the days leading up to the rebalance. This “index effect” can create short‑term demand for the stock. ^[7]
Higher profile: Inclusion in the flagship Australian blue‑chip index cements Lynas’ status as a core holding for domestic institutions and global EM/small‑cap managers who screen for liquidity and index membership.
Signal about size and liquidity: ASX 50 membership reflects both market capitalisation and trading volumes — confirmation that Lynas has moved from niche play to mainstream large‑cap.

Several commentaries in the last few days have framed the index move as a strategic milestone but also noted that it comes just as investors are wrestling with new operational setbacks and valuation concerns. ^[8]

Morningstar’s verdict: high growth, but “overpriced”

The most market‑moving piece of analysis this week came from Morningstar, which initiated coverage of Lynas and immediately labelled the shares overvalued. ^[9]

The key points from the Reuters‑summarised note:

Morningstar set a fair value estimate of A$7 per share — roughly half of where the stock traded before today’s sell‑off.
Analysts forecast EBITDA to grow at a 65% compound annual rate over five years, driven by higher sales volumes and firmer prices for neodymium‑praseodymium (NdPr), the key magnet material. ^[10]
They expect NdPr volumes to double to about 12,500 tonnes by FY2030, as new capacity ramps up. ^[11]
However, Morningstar argues that to justify the prevailing share price, the market is implicitly assuming a mid‑cycle NdPr price of around US$220/kg — more than double the firm’s own long‑term assumption of US$100/kg. ^[12]

Despite that caution, broader analyst sentiment remains broadly constructive:

Of 14 analysts tracked by LSEG, 7 rate Lynas a “buy” or better, 4 as “hold” and 3 as “sell” or worse.
The consensus 12‑month price target sits around A$16.3, modestly above last week’s close but well above Morningstar’s fair value. ^[13]

In other words, the professional community is split: the growth story is widely acknowledged, but opinions diverge sharply on how much investors should pay for it.

Operational reality check: Kalgoorlie power disruptions hit near‑term production

Lynas’ share price wobble is not just about spreadsheets; it’s also about real‑world reliability.

On 24–25 November, the company warned of a one‑month production shortfall in the current December quarter after “significant” power supply disruptions at its Kalgoorlie Rare Earths Processing Facility in Western Australia. ^[14]

Highlights from the company’s statement and subsequent reporting:

The Kalgoorlie plant saw a sharp rise in power outages in 2025, with November disruptions causing a “significant loss” in production of mixed rare earth carbonate (MREC).
MREC from Kalgoorlie feeds into the Lynas Malaysia advanced materials plant in Gebeng, so the outages will reduce finished goods output in the December quarter. ^[15]
For the September quarter, Lynas had produced 3,993 tonnes of total rare earth oxides and 2,003 tonnes of NdPr, generating A$200.2 million in sales revenue. ^[16]

Broker reaction was swift. Canaccord Genuity cut its December‑quarter forecast:

NdPr production estimate reduced from 2.7 kt to 1.8 kt.
Quarterly revenue expectation trimmed from A$280 million to A$220 million. ^[17]

Analysts now see the Kalgoorlie issue as a short‑term operational overhang on the stock. It reinforces a key risk for Lynas: as it leans more heavily on complex, high‑throughput processing assets, grid reliability and engineering uptime have a direct line into earnings.

Heavy rare earth expansion in Malaysia: A$180m bet on supply outside China

While Kalgoorlie grapples with power, Lynas is simultaneously making an aggressive push further downstream.

On 28 October, the company announced plans for a new heavy rare earth (HRE) separation facility in Malaysia, backed by both an ASX announcement and a Reuters write‑up. ^[18]

Key features of the project:

Capital cost: Around A$180 million, to be self‑funded from the equity raising completed in September 2025. ^[19]
Capacity: Up to 5,000 tonnes per year of heavy rare‑earth feedstock, processed into a suite of separated oxides.
Product mix at initial nameplate capacity: Samarium (Sm), Gadolinium (Gd), Dysprosium (Dy), Terbium (Tb), Yttrium (Y) and Lutetium (Lu), with later flowsheet enhancements under consideration for additional HREs such as Europium and Holmium. ^[20]
Ramp‑up timeline: First production of Samarium from Mt Weld feedstock is forecast for April 2026, with capacity for the initial HRE suite expected to be in place within about two years, subject to approvals. ^[21]

This builds on earlier milestones:

According to the U.S. Department of Commerce, Lynas Malaysia became the first commercial heavy rare earth refinery outside China in May 2025. ^[22]
Lynas has also announced a US$145 million magnet production joint venture with South Korean firm JS Link in Malaysia, plus a US$117 million expansion of its HRE separation facility, deepening its downstream footprint. ^[23]

CEO Amanda Lacaze has framed the new facility as a cornerstone of the company’s “Towards 2030” strategy, emphasising that market demand for heavy rare earths is high enough that Lynas can be “selective in where, and at what price” it sells. ^[24]

FY25 results: revenue up 20%, profit down over 90%

The tension in the Lynas story shows clearly in its full‑year 2025 numbers, released on 28 August. ^[25]

For the year to 30 June 2025:

Revenue rose from A$463.3m to A$556.5m (about +20%), driven mainly by higher NdPr production and sales. ^[26]
Net profit after tax (NPAT) collapsed from A$84.5m to A$8.0m, a decline of more than 90%, falling well short of analyst expectations around A$30m. ^[27]
EBIT fell from A$75.2m to A$6.2m, while EBITDA eased from A$132.1m to A$101.2m. ^[28]
Cost of sales jumped 29% to A$426.7m, reflecting higher NdPr tonnage and the ramp‑up of new facilities in each operating region. ^[29]
NdPr sales volumes increased 18% to 6,555 tonnes, while total rare earth oxide (REO) sales volumes actually fell 10% to 10,970 tonnes as Lynas deliberately reduced output of lower‑value La and Ce products. ^[30]

The company highlighted that:

China’s domestic NdPr price (excluding VAT) rose from US$44/kg in June 2024 to US$55/kg in June 2025, with further gains into the September quarter — a tailwind for realised pricing. ^[31]
However, depreciation on new plant and equipment at Kalgoorlie and the expanded Mt Weld operations, plus sub‑nameplate production at Kalgoorlie, severely compressed margins. ^[32]

To fund its next phase, Lynas launched a A$750 million fully underwritten equity raising, plus a A$75m share purchase plan, at A$13.25 per share, roughly a 10% discount to the prior close. ^[33]

The capital will support:

Expanded production at Mt Weld and Kalgoorlie
Increased heavy rare earth separation in Malaysia
Participation in metal and magnet projects, including potential U.S. ventures such as the Seadrift heavy rare earth facility in Texas, though Lynas has explicitly warned that there is “significant uncertainty” over whether that project will proceed as originally envisaged. ^[34]

The numbers reinforce the central reality: Lynas is deep in a capital‑intensive growth phase. Revenue is rising strongly, but near‑term profitability is fragile.

2026 and beyond: consensus expects revenue to almost double

While FY25 looked messy, the 2026–27 outlook is where the bulls are planting their flag.

Data from Visible Alpha, published by S&P Global Market Intelligence and reiterated by European market commentary this week, points to a powerful upswing as new capacity ramps and prices recover. ^[35]

Consensus assumptions include:

Total rare earth oxide production rising 53% year‑on‑year in 2026 to about 16,100 tonnes.
Average realised prices for the basket increasing around 47% to A$72.5/kg, up from roughly A$49.5/kg last year.
NdPr oxide, which accounts for over 90% of Lynas’ revenue, seeing:
- Prices up around 48% to A$118/kg,
- Volumes up 35% to about 8,800 tonnes,
  leading to nearly A$1 billion in NdPr revenue alone. ^[36]
Total group revenue forecast to double to around A$1.1 billion in 2026, versus approximately A$556–557m in FY25. ^[37]

Broker‑level views are similarly upbeat about the medium term:

A German‑language analysis this weekend highlighted that UBS and Goldman Sachs upgraded Lynas to “Strong Buy” ratings in mid‑November, while Macquarie maintains an “Outperform” with a A$17 price target and assumes NdPr sales of around 9 kt in FY26. ^[38]

Put simply, the bullish case is that as Kalgoorlie ramps, heavy rare earths in Malaysia scale up, and NdPr prices rise off cyclical lows, Lynas will finally move from “build and spend” to “harvest and cash‑in”.

Policy tailwinds: price floors, EU de‑risking and Malaysian reforms

Lynas’ story is tightly bound to geopolitics. Several recent policy moves tilt the playing field in favour of non‑Chinese producers:

US‑led price floor initiative: In August, Canberra backed a U.S. Department of Defense initiative that includes an NdPr price floor (around US$110/kg) and support for non‑Chinese suppliers. Investor interest in Lynas and peer Iluka jumped on the news, with Lynas’ shares climbing about 5% on the day. ^[39]
EU ReSourceEU strategy: On 3 December, the European Commission unveiled ReSourceEU, a €3 billion programme aimed at reducing reliance on Chinese supplies of critical raw materials, including rare earths. Officials have even floated the possibility of legally compelling European industries to diversify away from China if voluntary efforts fall short. ^[40]
Malaysia’s critical minerals push: Malaysia has banned exports of unprocessed rare earth ores and is actively promoting domestic processing, magnet production and recycling. In that context, Lynas’ Malaysian plant — now the first commercial HRE refinery outside China — sits at the centre of a policy‑driven build‑out of non‑Chinese supply chains. ^[41]
Tighter nuclear controls in Malaysia: On 2 December, Malaysia amended its atomic energy laws to require permits for all nuclear and radioactive‑material activities, including imports, exports and transshipment. That raises the regulatory bar for operators handling naturally occurring radioactive material — like rare‑earth processors — but also provides clearer frameworks and oversight. ^[42]

So far, Lynas has a strong compliance record in Malaysia; a 2025 sustainability report notes that the Gebeng plant again received a “very satisfactory” rating — the highest possible — from the Malaysian atomic energy regulator (Atom Malaysia). ^[43]

Net‑net, government actions in the U.S., EU, Australia and Malaysia increasingly favour an expanded “rest‑of‑world” rare earth industry, a trend Lynas is well positioned to exploit — provided it can navigate the added regulatory complexity.

Valuation and risk: what could go wrong?

Despite the heavy macro and policy tailwinds, there are clear fault lines in the investment thesis.

1. Valuation risk

After a triple‑digit rally in 2025, Lynas trades at levels that some analysts consider rich relative to mid‑cycle commodity assumptions.
Morningstar’s A$7 fair value versus a market price in the low teens encapsulates the concern that investors may be over‑paying for a cyclical earnings recovery. ^[44]

2. Execution risk

The Kalgoorlie power disruptions show that even completed projects can under‑deliver if infrastructure reliability is lacking. Continued outages or slow remediation could drag on volumes and margins longer than expected. ^[45]
The new Malaysian HRE facility depends on timely approvals, successful ramp‑up of a complex flowsheet, and reliable access to feedstock from Mt Weld and other sources. ^[46]

3. Regulatory and political risk

Malaysia’s tighter nuclear law could introduce additional permitting steps or compliance costs for Lynas over time, even if the company continues to meet safety and environmental standards. ^[47]
U.S. government support for rare earth supply chains is a plus, but the Seadrift, Texas HRE project remains uncertain; changes in funding or offtake terms could alter the economics of that part of the growth plan. ^[48]

4. Commodity price risk

The bullish 2026–27 forecasts rely heavily on higher NdPr prices and tight market conditions. If Chinese supply policy loosens, demand underperforms in EVs and renewables, or a global downturn hits, those price assumptions could prove optimistic. ^[49]

Bottom line: a blue‑chip rare earths play at a crossroads

On the eve of its promotion into the S&P/ASX 50, Lynas Rare Earths is both rewarded and challenged by its success.

On one side: inclusion in a premier index, clear policy tailwinds in multiple jurisdictions, and a Visible Alpha consensus that expects revenue to roughly double in 2026 as volumes and prices rebound. ^[50]
On the other: a recent 90% drop in annual profit, operational hiccups at Kalgoorlie, and high‑profile warnings that the stock now bakes in very optimistic assumptions about the future rare earth price environment. ^[51]

For investors and market watchers, Lynas has shifted from being a niche “China alternative” to a systemically important test case for whether Western‑backed critical‑minerals strategies can translate into sustainable, shareholder‑friendly returns.