MELBOURNE (Reuters) - Australia's Lynas has the rare earths the West needs and the skills to economically produce them, CEO Amanda Lacaze said, adding that tapping existing resources was much easier than developing anew in other countries.

Lacaze's comments come after sources said there had been agreement on the terms of a draft deal for Ukraine to supply critical minerals to the United States as part of President Donald Trump's plans to rapidly end the war with Russia.

Ukraine has deposits of 22 of the 34 minerals identified by the European Union as critical, according to Ukrainian data.

"Everybody who assesses this industry would know how long it takes from having the thought bubble of, 'Wouldn't it be great to have some rare earths from X?,' wherever X may be, and actually having a separated product sitting in a big bag waiting for a customer to buy it," Lacaze said.

"Our view, to get guaranteed supply in the West, is to buy product from Lynas because we have it. We have the resource, and we have the skills to process that resource cost efficiently," she told an earnings call.

Lynas Rare Earths ( LYSCF ), the world's biggest producer of rare earths outside China, reported a steeper-than-expected drop in first-half profit on Wednesday, hurt by weak market prices due to oversupply and higher operating costs.

Its shares slid to be down 4% in afternoon trade.

Net profit after tax for the six months through to end-December was just A$5.9 million ($3.7 million), far short of a Visible Alpha consensus of A$36.2 million and the A$39.5 million it made in the same period a year ago.

Market conditions for rare earths have been challenging over the past couple of years as prices have slumped. But there has been improvement in recent days after China issued draft reforms that suggest it will consolidate its industry, Lacaze said.

The rare earth miner's cost of sales jumped 29% to A$205.3 million, driven by higher neodymium and praseodymium (NdPr) sales volume and a provision of A$5 million against low-value inventory and work in progress.

The commencement of additional facilities at Mt Weld, Kalgoorlie and Malaysia further added to its production costs.

Net sales revenue of A$254.3 million came in 8% higher than last year, though lower-than-average prices for NdPr in China kept revenue growth in check.

"Market conditions remain unpredictable, and Lynas' success will depend on its continued ability to balance growth ambitions with disciplined financial management", Jefferies' analysts said in a note to clients.

($1 = 1.5763 Australian dollars)