Lynas sales revenue crimped by Malaysian production caps

Lynas has booked sharply lower sales revenue after processing at its Malaysian planted was halted after hitting production limits.

Stockpiles of rare earth ore at Lynas’s Mount Weld Mine in Western Australia.

Lynas has booked a sharply lower sales revenue for the December quarter after production at its Kuantan plant in Malaysia was halted when the rare earth miner reached its annual approved limit for processing.

The company (LYC) booked quarterly sales revenue of $79.9 million, down from $105.6m the prior quarter and down from $93m in the same period last year.

Total tonnes sold hit a new record but the product mix skewed towards cerium and lanthanum compared to previous quarters which delivered a lower average selling price, Lynas told the market in a quarterly production update this morning.

Chief executive Amanda Lacaze said that the company’s business operations performed well during the quarter and that customer demand remains strong.

“Lynas is proud to deliver another strong quarter and we are excited by the opportunity to deliver an increased range of world-class materials to customers around the world from our plant in Malaysia,” she said.

Still, the company is yet to receive one of the approvals it sought last year, which was for an increase in the annual volume of lanthanide concentrate that can be processed at Lynas Malaysia in a calendar year.

As a result, production was temporarily halted in December 2018 in order to remain compliant with the regulatory limit for that year.

But the limit was reset in January and with the completion of upgrades during the December quarter, the plant is now achieving record recoveries, Lynas said today.

While sales revenue was reduced as a result of the reduced production, the company said it had fulfilled all orders from its customers in Japan — one of its key markets — during the production halt late last year after it built up stock prior to the halt with its partner there.

Last year’s production halt followed a long battle with the Malaysian government over the environmental impact of the Kuantan plant, which was under construction in the lead up to the last election in 2012, and became a target for candidates who were seeking to drum up local support.

A committee reviewing the operations confirmed late last year that Lynas’ operations in Malaysia were low risk and that the company complies with applicable laws.

The company said today it was working to implement the committee’s recommendations.

Lynas says its Malaysian plant is important to the industry, being the only rare earth production plant not operated by a Chinese entity.

At 10.16am (AEDT), shares in Lynas has dropped 1.5 cents, or 0.94 per cent, to $1.58.