Lynas in US rare-earths joint venture
Plans for a rare-earths plant in the US show Lynas is looking past its Malaysia problems and Wesfarmers’ bid.
Takeover target Lynas has flagged plans to establish a new rare-earths processing plant in the US, a move that would take it closer to one of the biggest and most strategic rare-earths customers.
Lynas, which has rebuffed a $1.5 billion, $2.25-a-share proposal from Wesfarmers, yesterday said it had signed a memorandum of understanding with Texas-based Blue Line Corporation to develop a rare-earths separation plant in the US.
Lynas has previously flagged its potential to move further downstream in the US into higher-value products.
The proposed US plant would allow Lynas to separate out key individual materials from the heavy rare earths product currently produced at its plant in Malaysia.
Lynas is hosting an investor day today and is likely to shed more details on the plan then.
While the MoU is only an early stage agreement, it shows Lynas is planning beyond both its current regulatory headaches in Malaysia and its takeover tussle with Wesfarmers.
Malaysian authorities are currently weighing the future of Lynas’s processing facility in Kuantan amid concerns from environment groups about radioactive waste materials produced at the plant. Wesfarmers, meanwhile, continues to watch Lynas closely and is likely to consider its position once there is greater clarity from the Malaysian government.
The US is one of the biggest consumers of rare earths and has previously expressed concerns about China’s dominant supply position in the rare-earths market.
In a statement, Lynas said the joint venture would “help ensure that US companies have continued access to rare-earth products by providing a US based source”.
“The JV would be the only large-scale producer of separated medium and heavy rare-earth products in the world, outside of China,” Lynas said.
“Key uses of rare-earths materials include permanent magnets, catalytic converters, catalysts, batteries, electronics, polishing powders, and water treatment chemicals.”
No details around the expected capital cost of the venture have been announced to date.
Any spend on the US plant could come on top of a potentially significant, early-stage cracking and leaching processing facilities back in Western Australia.
Lynas earlier this year indicated it could carry out those early steps in WA, rather than in Malaysia as it currently does, in an effort to tackle the concerns flagged by members of the Malaysian government.