Australia’s Lynas Rare Earths raises cost estimates for Kalgoorlie facility

(Reuters) -Lynas Rare Earths Ltd increased cost estimates for its Kalgoorlie rare earths facility in Australia by more than a quarter on Tuesday, and upgraded its production capacity outlook amid ongoing regulatory concerns around its Malaysian facility.

The miner now expects to incur A$730 million ($469.39 million) costs for Kargoorlie, higher than its previous forecast of A$575 million. It also estimates an additional A$50 million in costs over the life of the project.

While increasing costs, the company also upgraded nameplate production capacity forecast to 9,000 metric tons per annum (mtpa) from 7,000 mtpa.

Shares of Lynas Rare Earths Ltd fell 1.1% to A$6.88 in early trade.

Lynas has been racing to complete construction of the Kalgoorlie facility amid worries that its Malaysian facility would have to be partly wound down after domestic regulators raised concerns about radiation levels from the process of cracking and leaching.

The miner said it continued to engage with federal and state governments in Malaysia to support development of its rare earths facility.

Lynas’ new cost guidance for Kalgoorlie is related to additional resources for construction activities and contractor management challenges due to its accelerated schedule, it said in a statement.

The company’s annual profit slumped 43% to A$310.7 million, as higher supply from top producer China and softer demand in key markets led to weaker pricing for its products.

For fiscal 2023, the world’s largest producer of rare earths outside China sold its products for an average price of A$46.2 per kilogram (kg), down from A$60.3 per kg a year ago.

($1 = 1.5550 Australian dollars)

(Reporting by Poonam Behura in Bengaluru, Additional reporting by Melanie Burton in Melbourne; Editing by Shailesh Kuber and Rashmi Aich)