Lynas Rare Earths (ASX: LYC) became the first company outside China to produce separated dysprosium and terbium oxide at commercial scale — dysprosium in May 2025, terbium in June 2025, both at its Gebeng Advanced Materials Plant in Malaysia. The achievement positions Lynas rare earths supply chain operations as the primary non-Chinese source of defence-critical heavy rare earth oxides at a moment when Western governments are urgently funding alternatives to Chinese processing dominance.
Why Heavy Rare Earths Are Defence-Critical
Dysprosium (Dy) and terbium (Tb) are not interchangeable with lighter rare earths. Both are essential to the high-temperature performance of neodymium-iron-boron (NdFeB) permanent magnets — the magnets used in F-35 fighter jet actuators, submarine propulsion systems, missile guidance units, EV motors, and wind turbine generators. Without dysprosium additions, NdFeB magnets demagnetise at the operating temperatures typical of defence applications.
China controls approximately 70% of global rare earth mining and approximately 85% of rare earth refining and separation. Export controls on rare earths introduced in 2023 and tightened in 2025 have removed any assumption of reliable Chinese supply for Western defence procurement. No country outside China had produced separated dysprosium or terbium oxide at commercial scale for many years prior to Lynas’s 2025 breakthrough.
Lynas Rare Earths Supply Chain — Malaysia Breakthrough
The Gebeng plant in Pahang, Malaysia, is the operational core of the Lynas rare earths supply chain. It receives mixed rare earth carbonate from Mount Weld in Western Australia — one of the world’s highest-grade rare earth deposits — and separates it into individual rare earth oxides for sale. The Mount Weld ore body contains heavy rare earths, a structural advantage over light-REE-only deposits that limits most competitors’ ability to replicate Lynas’s heavy REE output.
Malaysia’s operating licence was renewed for ten years, removing what had been a significant geopolitical risk to processing continuity. Approximately two-thirds of Lynas’s feedstock is processed in Malaysia — concentration risk that remains a live concern despite the licence renewal.
The first commercial production of dysprosium oxide (May 2025) and terbium oxide (June 2025) represents the first meaningful non-Chinese separated heavy rare earth oxide supply in many years. Volumes at commercial scale have not yet been disclosed; ramp-up execution is a key variable to watch.
US Department of Defense Partnership and Seadrift Facility
The US Department of Defense has provided funding to Lynas to develop rare earth processing capacity on US soil. The designated site is Seadrift, Texas, where a DoD-funded heavy rare earth processing plant is under development. Permitting challenges — specifically wastewater management at the original site design — have introduced uncertainty into the project’s timeline and structure.
An alternative zero-discharge site design has been identified. It requires additional capital expenditure and agreement with the DoD on revised parameters. Whether Seadrift proceeds in its current form remains uncertain. In parallel, Lynas is working with the DoD on an offtake agreement covering its existing operating assets in Malaysia and Australia — a structure that would give the US government access to separated rare earth supply without waiting for a US processing facility to come online. For context on how the DoD is approaching domestic rare earth supply more broadly, see CMN’s coverage of the MP Materials DoD deal.
Noveon Magnetics and the Western Magnet Supply Chain
Rare earth oxide production is not the end of the supply chain problem. China also dominates rare earth permanent magnet manufacturing — the step that converts separated oxides into the components used in defence and industrial equipment. Lynas has entered a supply partnership with Noveon Magnetics, a US-based rare earth permanent magnet manufacturer, under which Lynas will supply rare earth oxides for production of magnets destined for US defence and commercial sectors.
The partnership represents a meaningful step toward a fully Western rare earth magnet supply chain: mine → separation → magnet production → end-use. It remains partial — Noveon is not yet producing at the scale of Chinese magnet manufacturers — but it establishes a commercial link between the two most critical nodes in the chain outside China.
Lynas vs MP Materials — Western Rare Earth Processors Compared
Lynas and MP Materials (NYSE: MP) are the two primary non-Chinese rare earth processors operating with government backing. Their positions differ in maturity and geography. Lynas’s Malaysian separation capacity is operational at commercial scale; MP Materials’ separation capability is at an earlier development stage. Lynas produces heavy rare earths (Dy, Tb); MP Materials’ Mountain Pass deposit in California is predominantly light rare earth bearing. CMN has published a detailed analysis of the MP Materials DoD $400m deal and US magnet supply chain strategy.
For deeper coverage of Lynas’s rare earth mining operations, resource base, and NdPr market position, see the Lynas company profile on rare-earth-mining.com.
Financial Position and Western Supply Premium
H1 FY2026 (July–December 2025) revenue reached A$413.7m, up 63% year-on-year, with EBITDA of A$152.4m — a 300% increase — and net profit of A$80.2m. NdPr selling price in Q2 FY2026 averaged A$85.6/kg against A$49.2/kg a year earlier, a 74% increase. Lynas consistently achieves a 15–20% premium over standard benchmark pricing, attributed to Western supply chain preference from defence and automotive customers seeking non-Chinese provenance.
Cash position stands at A$1,031m following a A$932.6m equity raising, providing sufficient capital to fund ongoing programmes including Seadrift development and heavy REE production ramp-up at Gebeng.
Risks to the Western Rare Earth Supply Chain
Several structural risks qualify Lynas’s position as the anchor of the Lynas rare earths supply chain. The Seadrift facility faces permitting and funding uncertainty — if the alternative design is not agreed with the DoD, specific facility funding could be at risk. CEO Amanda Lacaze, in post since 2012 and credited with Lynas’s strategic direction, is retiring by end FY2026; succession is underway but leadership transition at this stage of the company’s development carries execution risk. Malaysia processing dependency remains: licence renewed, but two-thirds of feedstock processing concentrated in a single jurisdiction. NdPr revenue is highly leveraged to spot price — the 74% year-on-year price increase that drove H1 FY2026 results can reverse. Heavy rare earth production volumes are confirmed but not yet disclosed at scale — ramp-up pace is unverified.
Company Snapshot
| Headquarters | Perth, Western Australia, Australia |
|---|---|
| ASX Ticker | LYC |
| Key Processing Facility | Gebeng Advanced Materials Plant, Malaysia |
| First Dysprosium Oxide Production | May 2025 (first outside China at commercial scale) |
| First Terbium Oxide Production | June 2025 (first outside China at commercial scale) |
| H1 FY2026 Revenue | A$413.7m (+63% YoY) |
| H1 FY2026 EBITDA | A$152.4m (+300% YoY) |
| Cash Position | A$1,031m |
| CEO | Amanda Lacaze (retiring end FY2026; succession underway) |
| DoD Partner Facility | Seadrift, Texas (under development; permitting uncertain) |
| Magnet Supply Partner | Noveon Magnetics (US) |
Is Lynas Rare Earths the only non-Chinese producer of separated heavy rare earths?
As of mid-2025, Lynas is the only company to have achieved commercial-scale production of separated dysprosium and terbium oxide outside China. Its Gebeng plant in Malaysia produced dysprosium oxide in May 2025 and terbium oxide in June 2025 — the first meaningful non-Chinese heavy rare earth oxide supply in many years.
What is Lynas’s relationship with the US Department of Defense?
The US DoD has provided funding to Lynas to develop a rare earth processing facility at Seadrift, Texas. Permitting challenges at the original site design have created uncertainty over the project’s structure. In parallel, Lynas is negotiating a DoD offtake agreement covering its existing Malaysia and Australia operations as an alternative or complementary supply route.
What are dysprosium and terbium used for in defence applications?
Dysprosium and terbium are added to neodymium-iron-boron permanent magnets to maintain magnetic performance at high operating temperatures. These magnets are used in F-35 fighter jet actuators, submarine propulsion systems, missile guidance units, and other defence equipment where magnet demagnetisation under heat would represent a critical failure.
How does Lynas compare to MP Materials as a Western rare earth supplier?
Lynas operates Malaysian separation capacity at commercial scale and produces heavy rare earths (dysprosium, terbium) from its Mount Weld ore body. MP Materials mines at Mountain Pass, California — predominantly a light rare earth deposit — with separation capability at an earlier development stage. Both companies have DoD backing; their supply chain positions are complementary rather than directly competing.
What are the main risks to Lynas’s Western supply chain role?
Key risks include: Seadrift facility permitting and DoD funding uncertainty; CEO succession following Amanda Lacaze’s retirement by end FY2026; Malaysia processing concentration risk despite licence renewal; NdPr price volatility; and unverified ramp-up pace for commercial-scale heavy rare earth oxide production.
