Australian rare earths miner Lynas has effectively abandoned its ambitious plans to build a processing facility in Texas after failing to secure crucial support from the Trump administration and encountering persistent permitting issues.
Project Seadrift Meets Its End
The company's chairman, Professor John Humphrey, delivered the disappointing news to shareholders during Lynas Rare Earths' annual general meeting in Sydney on Wednesday. He confirmed the proposed Seadrift facility was unlikely to proceed, marking a significant reversal for the ASX-listed miner's American expansion strategy.
This decision follows nearly a year of uncertainty surrounding the Texas project, which had been championed as a strategic move to strengthen Western rare earths supply chains outside of Chinese dominance.
Funding and Permitting Hurdles Prove Insurmountable
The collapse of the Texas venture stems from two critical challenges. Firstly, Lynas struggled to negotiate additional financial support from the US Department of Defense to cover substantial cost overruns. The department had initially committed $US288 million ($443 million) to develop the site, with construction of both heavy and light rare earth separation plants originally scheduled for completion by mid-2026.
Secondly, as previously revealed by The West Australian, the company faced a significant wastewater management permitting issue at the south Texas site it first acquired in 2023. Professor Humphrey told shareholders that resolution of these site-specific problems had not progressed as hoped.
Lynas chief executive Amanda Lacaze didn't mince words when explaining the competitive landscape, noting that Nevada-based MP Materials - which shares a substantial shareholder with Lynas in Australian mining magnate Gina Rinehart - had secured significantly better terms from the US government.
MP Materials received a $US400 million stock purchase from the Department of Defense and a guaranteed minimum price of $US110 per kilogram for its products.
America First Policy Creates Uneven Playing Field
Ms Lacaze attributed the differential treatment directly to current US political priorities. "MP has got a better deal out of the US than we have, because they have this one major benefit; they're American," she stated during the AGM.
"We need to recognise and acknowledge that we will never get the same treatment in an America First environment politically, which is what is there at present."
Despite this setback, Ms Lacaze emphasised that Lynas wasn't relying on government support to access the US market, leaving open the possibility of future offtake arrangements with American end-use customers.
Western Australian Operations Face Power Challenges
The Texas news came as Lynas also revealed production challenges at its Kalgoorlie processing plant in Western Australia. The company blamed significant power outages from Western Power for putting operations about a month behind schedule.
"We were just ready to really hit our straps and then Western Power gave us the gift of really quite some significant power outages, which has made it quite difficult this quarter," Ms Lacaze told shareholders.
WA Energy Minister Amber-Jade Sanderson responded that the government was working with Lynas and other major users to reduce interruptions, with equipment upgrades planned in coming weeks.
Meanwhile, Shadow Energy Minister Steve Thomas criticised the state government for failing to deliver proper power solutions for the Goldfields region despite eight years in office and repeated budget surpluses.
As Lynas pivots from its American ambitions, the company has been strengthening ties with other international partners, recently hosting delegations from Japan and the European Union at its Kalgoorlie facility.
