(Reuters) -Australia's Lynas Rare Earths ( LYSCF ) missed market expectations for revenue on Thursday, even as it posted a 66.1% jump in the first quarter, while flagging a continuation of challenging market conditions as prices for strategic metals continue to be volatile.

Governments outside dominant producer China have been scrambling to develop alternative supply pipelines for some of their industries, including automotive and defence, as China has stepped up export restrictions linked to the sector. 

The world's largest producer of rare earths outside China posted sales revenue of A$200.2 million ($130.09 million) for the quarter ended September 30, up from A$120.5 million a year earlier but missing the Visible Alpha consensus estimate of A$230 million.

"The initial relaxation of China magnet exports during the quarter led to increased demand for NdPr from China magnet makers," Lynas added in its statement.

"The market price increased through July and into August but reversed in September with a pause in rebuilding inventories as magnet makers assessed market demand."

The firm also continues to see "significant uncertainty" over the future of its heavy rare-earths processing plant at Seadrift, Texas.

Total rare earth oxide output for the first quarter stood at 3,993 tonnes, compared to 2,722 tonnes reported last year.

($1 = 1.5389 Australian dollars)