Tight labour market forces another delay at Lynas’ Kalgoorlie processing plant

Lynas is facing a fresh round of ­delays at its Kalgoorlie rare earth processing plant as the company looks to meet an extended deadline to move some of its operations out of Malaysia.

Lynas Rare Earths’ processing plant in Kalgoorlie, in Western Australia’s Goldfields region. Picture: Bloomberg

Lynas is facing a fresh round of ­delays at its Kalgoorlie rare earth processing plant as the company looks to meet an extended deadline to move some of its operations out of Malaysia.

The rare earth producer now has until January to commission its cracking and leaching plant ­before the expiry of the company’s licence to import and process the concentrate produced at its Mt Weld mine in Western Australia, after the deadline was extended by six months in early May.

But while that decision – and associated legal appeals still in progress – gave the company significantly more wiggle room to avoid the potential curtailment of its Malaysian refinery, the company said on Monday it was facing fresh delays to the commissioning of a replacement plant in WA.

Lynas pulled the trigger on the development of the Kalgoorlie cracking and leaching plant in 2020, and the company had originally hoped to have the facility fully commissioned and supplying its Malaysian refinery by the end of this financial year.

But the tight labour market in WA, and the supply chain constraints partly caused by the Covid-19 pandemic, have pushed up costs and delayed work at the facility.

The Lynas materials plant in Kuantan, Malaysia.

Lynas said on Monday it now faced fresh delays to the final stage of commissioning at the facility after delays to receiving and installing key parts of the manufacturing centre – including the waste gas treatment plant and on-site gas supply.

“Further challenges have presented to the completion of these two items, including lack of availability of suitably qualified people to fully staff 24-hour construction activities and late delivery of equipment required for finalisation of commissioning,” the company said.

“While Lynas has sourced additional labour, the full effect of these two items cannot be fully mitigated at this time.”

Lynas said it now expected to produce its first mixed rare earth concentrate at Kalgoorlie in August, not July, but noted the delay still left the company “within the range of ramp-up scenarios considered for the Kalgoorlie facility”.

The company said it had finished the first three phases of commissioning at the plant, and now only needed to finish the final installation of the gas and waste gas treatment plant so it could begin introducing reagents and feedstock to the facility and turn on the kiln needed to roast the material produced from Mt Weld.

“Commissioning of other productive equipment will continue unimpeded while these two items are completed,” Lynas said.

Lynas said in May it was still pursuing its legal options over the Malaysian government’s decision to ban the importation of concentrate, and hoped to eventually reverse the decision.

That, together with the successful commissioning of the Kalgoorlie plant, could eventually lead to a significant increase in ­capacity at the company’s Malaysian refinery.

The company is also working on a multimillion-dollar expansion of its Mt Weld mine to help meet growing demand for the rare earth oxides it produces.

Lynas shares closed down 11c, or 1.5 per cent, at $7.24 on Monday, giving the company a market value of $6.7bn.

The stock is down almost 8 per cent since the start of this year.

Originally published as Tight labour market forces another delay at Lynas’ Kalgoorlie processing plant