Lynas’ Rare Earths Chain Jolted by Power Outage

Power Hit at Kalgoorlie Tests Lynas’ Rare Earths Engine

Lynas Rare Earths (ASX: LYC) reported a significant power supply disruption at its Kalgoorlie rare earths processing facility, which is supplied through Western Power’s Eastern Goldfields Load Permissive Scheme (ELPS). The outages during November 2025 were severe enough to cause a substantial loss, although the company expects the lost production may be recovered within the financial year (not necessarily that all is lost permanently).

This event highlights the operational sensitivity of Lynas’ vertically integrated model. The Kalgoorlie facility is central to the company’s upstream value chain, and any disruption in feedstock flow has a direct knock-on effect on downstream processing and shipment schedules. While management will likely move quickly to stabilise operations, the market’s focus will now shift to the duration of the outage and potential implications for December quarter production and cash flow. Investors should also note that while such events are often short-term, they can test confidence in the company’s ability to maintain consistent output as global demand for rare earths remains tight.

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Lynas’ Power could defer A$40M in Rare Earth Output

For investors, what stands out is that the production shortfall at Lynas Rare Earths’ Kalgoorlie facility is roughly equivalent to one month of output this quarter. Based on Q1 FY25 results, which totalled 2,700 tonnes of rare earth oxides and 1,677 tonnes of NdPr, it can be estimated that about 900 tonnes of REO and 560 tonnes of NdPr production will be deferred, or roughly one third of Q1’s volumes. The average selling price in Q1 was US$41.50 per kilogram, which translates to around A$38M in potential revenue impact using previous pricing benchmarks.

In simple terms, the Kalgoorlie power disruption likely cost Lynas between A$35M and A$40M in deferred sales for December, assuming product prices remain near Q1 FY25 levels. While this impact is significant, it is expected to be temporary, as production should resume once supply stability is restored. The market will now focus on whether lost production can be recovered in upcoming quarters and whether this event exposes deeper reliability risks within the company’s upstream processing chain.

No Need To Panic

The nature of the disruption is dilutive to near-term value because the Kalgoorlie facility sits at the heart of Lynas Rare Earths’ supply chain. It processes rare earth concentrate from Mount Weld into mixed rare earth carbonate (MREC) for export to Malaysia. Any interruption at this stage creates bottlenecks across the company’s vertically integrated production network. This event exposes a clear operational vulnerability: reliance on a single grid connection has created a single point of failure, and the Eastern Goldfields Load Permissive Scheme (ELPS) has proven less reliable than initially expected.

For investors, this appears to be a short-term setback rather than a structural flaw in the business model. However, it does highlight an important weakness in Lynas’ energy infrastructure and power redundancy. The company will need to address this through greater grid resilience or backup power systems to ensure operational continuity as it scales.