The Lynas share price has been dropping primarily due to a significant 90% profit decline reported for the fiscal year ending June 30, 2025. Although revenue grew by 20% driven by increased production of key rare earth elements, the company's profits plunged largely because of increased depreciation and investment expenses from major growth projects such as the Mt Weld mine expansion and the new Kalgoorlie processing facility. Production ramp-up issues at Kalgoorlie and higher operational costs, including energy, labor, and regulatory compliance costs, have also pressured profitability. Additionally, global rare earth prices remain volatile due to Chinese market dynamics, weak demand growth, global economic uncertainty, and trade volatility, all impacting Lynas's margins. The company also increased its share count by 6.1%, diluting earnings per share, which negatively affects shareholder returns. External factors such as US-China trade relations and market uncertainty over rare earth supplies also weigh on investor sentiment. Furthermore, Lynas announced a significant capital raising to pursue growth opportunities, which may have raised concerns about dilution and financial strain. These financial challenges and market conditions explain the drop in Lynas's share price in 2025.
However, there are some signs of optimism in recent months due to China's rare earth export restrictions possibly supporting prices and demand, but overall profitability pressures and market challenges dominate the narrative.
