Lynas Rare Earths charters ships to ensure its refinery keeps running

Lynas books record sales in the December quarter but still faces challenges getting its rare earth products to market.

Lynas chief executive Amanda Lacaze. Picture: John Feder

Lynas Rare Earths says it can no longer rely on container shipping lines to deliver transfer WA concentrate to its Malaysian refinery, in a fresh sign of the supply chain crisis gripping manufacturers across the world.

The rare earth company, one of the few non-Chinese suppliers of the critical minerals, said on Tuesday it had been forced to take the financial hit associated with chartering its own vessels to move rare earth concentrate from WA to Malaysia as shipping delays and disruptions threatened to undermine its ability to deliver into strong prices in the rare earth markets.

Lynas released its December quarter production report on Wednesday, saying it booked record sales of $202.7m in the period as market prices for a key product hit the highest levels in a decade.

The company said its Malaysian refinery produced 4209 tonnes of rare earth oxides in the December quarter, up from 3166 tonnes in the September period.

Production of its key neodymium and praseodymium (NdPr) product lifted to 1359 tonnes, up from 1255 the previous quarter.

The production lift came as spot prices for NdPr in domestic Chinese markets cross $US100 a kilogram in November, with Lynas saying it was the first time pricing for the product crossed into triple figures since 2011.

Lynas does not disclose its average sales price for the individual oxides it sells, but said the average price for its basket of products lifted 21 per cent in the December quarter, to $54 a kilogram.

But its ability to deliver into a strengthening market was again threatened by the global supply chain crisis, with chief executive Amanda Lacaze saying the company had begun chartering its own vessels to ship concentrate produced at its WA mine to its Malaysian refinery.

Lynas said shipment delays forced temporary production halts in Malaysia in November.

“Shipping delays and disruptions continue around the world and in some cases are getting worse,” Ms Lacaze said.

“For Lynas, transit time for concentrate shipped from Fremantle to Kuantan, has increased from 15 days in March 2021 to 33 days in December 2021. Many supply chains are yet to return to normal and we see this continuing for some time.”

Ms Lacaze said Lynas had been forced to charter its own vessel to guarantee delivery of enough concentrate to keep the refinery running.

“Whilst this comes at an additional cost, it is outweighed by the benefit of ensuring continuity of supply to our customers. We expect to continue with a combination of charter and commercial shipping in the near term,” she said.

Lynas shares closed down 12c, or 1.1 per cent on Wednesday at $10.97.

Originally published as Lynas Rare Earths charters ships to ensure its refinery keeps running