MELBOURNE (Reuters) -Australian miner Lynas posted a slump in third-quarter sales revenue on Wednesday, missing analyst expectations on the back of a plunge in prices for rare earths, while it flagged higher costs at a project in Western Australia.
Prices of rare earths were fairly weak during the third quarter, as increased production in China, the top producer, and slower-than-expected demand growth recovery remained a drag.
"The market continues to be less than kind to us and to anybody else in rare earths sector," CEO Amanda Lacaze told analysts on a quarterly call, noting a "slight improvement in price, but not at a significantly accelerated rate."
"There's a general consensus that the current price is below cost for many Chinese producers. There's also a general consensus that the Chinese economy is starting to pick up momentum again," she said.
Given low prices, Lynas won't be accelerating production at its Malaysian operations and will hold on to inventories to wait for prices to improve, she said.
The firm's quarterly sales revenue fell to A$101.2 million ($65.64 million) in the three months to March 31, down from A$242.8 million a year earlier. It missed a Visible Alpha consensus estimate of A$146.3 million, according to Morgan Stanley. Lynas shares traded down 1.2%.
Lynas raised the budget for its Kalgoorlie facility in Western Australia to A$800 million from A$730 million it projected in October.
Cost management is a major focus, Lacaze said.
The company said its Mt Weld Expansion Project in Western Australia was on track with construction activities progressing as planned during the quarter.
It expects to start earth works at a U.S. processing plant it is building in Texas by the end of the year, as the world's biggest economy looks to reduce its reliance on China.
"I think nobody would be surprised that the U.S. government is very focused on making sure this project moves forward as fast as possible," Lacaze said.
($1 = 1.5418 Australian dollars)