The Lynas Rare Earths Ltd (ASX: LYC) share price is plunging as the company reported its operations were hit with a COVID-19-induced shutdown over the quarter just been.
The company released its quarterly activities report for the first quarter of financial year 2022 this morning. It detailed a tough quarter for Lynas, during which the company faced several pandemic-related challenges.
However, the company has high hopes for the rest of FY 2022. It expects demand for its materials to increase in the new year.
At the time of writing, the Lynas share price is $6.94, 6.72% lower than its previous close.
Let's take a look at what the 3 months ended 30 September looked like for Lynas Rare Earths.
Lynas share price falls on COVID-19 struggles
Over the quarter just been, Lynas generated $121.6 million of revenue. That's the second-highest quarterly result on record for the company but is down from the $184.9 million it saw in the previous quarter. Sales receipts also dropped by $100 million to $92 million.
According to Lynas, global demand for rare earth materials is very strong, particularly in the magnet market. The company's customers told it they expect demand to continue heating up in 2022.
Over the September quarter, the average China domestic price for neodymium-praseodymium was US$80.1 per kilogram.
The Lynas share price could also be reacting to news the company's production was hit with COVID-19-induced restrictions during the period, as Malaysia experienced a third wave of cases, peaking at around 20,000 a day.
Despite over 99% of those working at Lynas' Malaysian cracking and leaching plant being fully vaccinated as of 13 October, the plant was shut down for 11 days of the quarter due to staff unavailability. The company used the shutdown to complete maintenance.
Additionally, Lynas shut down the finishing of non-neodymium-praseodymium products for 16 days. It instead used its available staff for neodymium-praseodymium production.
The September quarter saw 70% of its neodymium-praseodymium production capacity achieved. Production of neodymium-praseodymium came to 1,255 tonnes, 138 tonnes less than the previous period.
Lynas' total production of rare earth oxide came to 3,166 tonnes for the first quarter of financial year 2022. Though, that was down from 3,778 tonnes in the previous quarter.
Lynas also battled shipping delays during the quarter just been. However, the company said its close relationship with its longstanding customers meant it could minimise the supply chain disruption.
Finally, the quarter saw Lynas continuing to work on its Lynas 2025 foundation projects. The company also commenced its Mining Campaign 4-1 at Mt Weld.
