2 Rare Earth Stocks That Could Secure Supply Chains
The global economy is entering a new era—one defined not just by oil, steel, or even semiconductors, but by rare earth elements. These obscure minerals are the backbone of technologies we rely on daily, from smartphones and electric vehicles to renewable energy turbines and advanced defense systems. Yet, their supply is overwhelmingly concentrated in China, creating a strategic vulnerability for industries and nations alike.
This is where Australia steps in. As one of the world’s richest sources of rare earths, Australia is now emerging as a trusted alternative for global supply chains. And among the companies leading this charge, two ASX-listed names stand out: Lynas Rare Earths (ASX: LYC) and Iluka Resources (ASX: ILU). Both are building scale, capacity, and credibility to secure a central role in the global rare earth market.
Let’s break down why these two stocks matter—and how 2025’s numbers and projects paint a promising picture.
Lynas Rare Earths: More Capacity, More Independence
If there’s one company that investors often associate with rare earths outside China, it’s Lynas Rare Earths. For years, Lynas has been the only significant producer of separated rare earths outside China. And in FY25, it reinforced that status despite facing cost pressures.
Financial Pulse
Lynas’ revenue climbed 20% to $556.5 million in FY25, a solid performance in a volatile market. Net profit, however, fell sharply—down 90% to just $8 million—due to heavy ramp-up costs, depreciation, and investment linked to new projects. While the headline number may concern some, the production data tells a brighter story: NdPr output (the critical ingredient for permanent magnets used in EV motors and wind turbines) jumped 16% to a record 6,558 tonnes.
CEO Amanda Lacaze summed it up best when she said demand could “sell out several times over.” In other words, the market is there—the challenge is scaling up to meet it.
Production Muscle
The production expansion is real and visible. Lynas’ new Kalgoorlie processing facility began producing mixed rare earth carbonate (MREC) in June 2024, marking a major milestone. Meanwhile, upgrades at its Malaysian facility are on track to boost NdPr oxide capacity to 10,500 tonnes per annum by 2025.
Even more exciting is Lynas’ entry into heavy rare earths (like dysprosium and terbium), crucial for high-performance magnets. The new heavy rare earths line is targeting first output by mid-2025, further diversifying its portfolio.
Strategic Footprint
What makes Lynas unique is its strategic shift toward processing more in Australia, reducing its reliance on external geographies. By commissioning new capacity both in Kalgoorlie and Malaysia, Lynas is strengthening the western-aligned rare earths supply chain. This makes it not just a mining story, but also a geopolitically significant one.
Why it matters: Lynas is effectively the bridge between Australian resources and the world’s clean energy and tech industries. For investors, it offers leverage to rising demand in EVs, renewable energy, and defense—all while contributing to a critical geopolitical goal: less dependence on China.
Iluka Resources: Integrated Refining and Government-Backed Growth
While Lynas has long been in the rare earth spotlight, Iluka Resources is transforming rapidly from a mineral sands producer into an integrated rare earth powerhouse. And the pace of change has accelerated thanks to strong government support and ambitious projects.
Eneabba Refinery: A National Project
At the heart of Iluka’s strategy is the Eneabba refinery project in Western Australia. Once complete, this will be Australia’s first fully integrated rare earths refinery, capable of producing separated rare earth oxides—a vital step in the supply chain that has long been dominated by China.
Construction is already underway, with commissioning now expected in 2027. The project isn’t just commercially important; it’s nationally strategic. Proof? The Australian government extended a massive $1.25 billion non-recourse loan to fund it, underlining its geopolitical weight.
Financial Strength
Despite industry headwinds, Iluka’s financial footing remains solid. In H1 2025, mineral sands revenue hit $558 million, with a robust 39% EBITDA margin and NPAT of $92 million. Sales volumes were down 8% year-on-year, reflecting broader market softness, but profitability stayed resilient thanks to operational discipline.
Phased Expansion
The Eneabba project is being developed with scalability in mind. Beyond producing separated rare earth oxides, it also leaves room for future upgrades and third-party tolling, allowing Iluka to offer refining services to other producers. This flexibility could make it a central hub for the global rare earth market.
Strategic Vision
Eneabba represents more than just a project—it’s a transformation. By moving up the value chain from mining to refining, Iluka positions itself as a “mine-to-magnet” player, ensuring that Australia becomes a genuine alternative to Chinese rare earth separation.
Why it matters: For investors, Iluka offers a rare opportunity to back a government-supported project with long-term structural importance. Its mix of resource scale, financial strength, and strategic support makes it one of the best-placed names in the global rare earths narrative.
What to Watch Next
Both companies are at turning points that investors should keep an eye on:
Lynas Rare Earths (LYC): Watch for commissioning updates on the Malaysian expansion, ramp-up progress at Kalgoorlie, the debut of its heavy rare earths line, and new long-term supply agreements.
Iluka Resources (ILU): Monitor construction milestones at Eneabba, updates on customer contracts (especially with international buyers), and quarterly margin performance as capital investment flows through.
Final Thoughts
Rare earths may not dominate the headlines like gold or lithium, but their importance is unmatched in the 21st century economy. Securing stable, non-China supply chains is no longer optional—it’s a necessity for industries and governments worldwide.
Lynas Rare Earths is already proving its capability with record NdPr output and new processing facilities, while Iluka Resources is building the future with a government-backed refinery that could redefine Australia’s role in the global market.
For investors, these two companies don’t just represent commodity plays—they represent critical pieces of a new industrial and geopolitical puzzle. If demand for EVs, renewable energy, and advanced electronics keeps climbing, Lynas and Iluka may well become the anchors of supply chains the world can trust.
In 2025 and beyond, rare earths aren’t just rare—they’re indispensable.
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