Lynas Rare Earths Ltd (ASX: LYC) shares are rising on Tuesday morning.
At the time of writing, the rare earths producer's shares are up 1% to $15.17.
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Why are Lynas Rare Earths shares rising?
Investors have been buying the company's shares today after a rally in rare earths stocks offset some bad news.
With respect to the latter, Lynas has revealed that significant power supply disruptions are affecting the Kalgoorlie Rare Earths Processing Facility.
The company notes that its Kalgoorlie Rare Earths Processing Facility is supplied with power through Western Power's Eastern Goldfields Load Permissive Scheme (ELPS).
It points out that it signed on to ELPS in 2021 on the basis that, as stated in Western Power's public announcement:
ELPS customers are ensured access to cleaner power in lieu of costly, emissions-intensive diesel generators.
Indicative reliability levels were consistent with the requirements to run the Kalgoorlie facility safely and efficiently. However, during 2025, the company advised that there has been a significant increase in power supply disruptions at the Kalgoorlie Rare Earths Processing Facility.
So much so, that in November its outage frequency and duration have been at a level that has led to significant lost production of Mixed Rare Earth Carbonate (MREC).
What's the impact?
Lynas revealed that the production of finished goods at its Malaysian facility will be affected by these outages.
It advised that while the Kalgoorlie team is working hard to recover the lost production, it cannot reach the Malaysian facility in time to be processed to finished goods within the quarter.
Furthermore, the shortfall in MREC feedstock cannot be mitigated by increased production in Malaysia as the Malaysian kilns are shut down for scheduled major maintenance.
Lynas is working constructively with the Western Australian Government and Western Power to identify causes of recent outages and options to improve power availability to the Lynas plant.
However, while these are being progressed on an urgent basis, even on a best-case scenario, management concedes that there will not be enough time to improve this quarter's forecast production.
In addition, given that its power supply remains unpredictable, Lynas stated that is not possible to quantify the exact production shortfall. Though, at present, it estimates there may be a shortfall equivalent to one month's production during this quarter.
One positive, though, is that Lynas will still produce sufficient finished product to meet key customer needs.
Lynas is now urgently assessing off-grid power solutions in the hope that lost production can be recovered within the financial year.
