Lynas Rare Earths books profit fall on lower prices, but will push ahead with ramping up Malaysia output
CEO Amanda Lacaze says the company won’t idle production, despite the rare earth market slump.
Lynas Rare Earths boss Amanda Lacaze says the company won’t look to wind back production of its rare earth oxide products despite an oversupplied market, saying the company’s believes it has enough demand.
Ms Lacaze made the comments after Lynas posed a big fall in first-half revenue, profit and earnings following a six-week shutdown at its Malaysian operations and the low market price environment.
Revenue fell 37 per cent to $234.8m, while profit shrank 74 per cent to $39.5m compared to the first half of the previous financial year.
Lynas used the period in which the company’s Malaysian facilities were idles – a partial reaction to a running dispute over the continued cracking and leaching of concentrate in the country – to expand its refinery to allow a significant uplift in production capacity for Lynas’ core neodymium and praseodymium (NdPr) product.
Lynas quarterly record production was 1864 tonnes of NdPr, an annualised run-rate of just under 7500 tonnes.
Lynas now says it has the capacity to produce at a rate of about 10,500 tonnes a year and, despite an increase in Chinese production quotes in 2024, and talk of an oversupplied market this year, Ms Lacaze told analysts the company was still intending to ramp up its own production.
“We can sell everything that we produce. We have more inquiries to our sales line than we could serve today,” she said.
“I think everybody knows that idle capital can be quite expensive. So running our assets as efficiently as possible is always very close to the top of our priority list. So we will drive to get that 10,500 tonnes by the end of this year.”
Lynas eventually won an extension of the licence for its local cracking and leaching plant in Malaysia, meaning the WA facilities the company has built near Kalgoorlie in WA can eventually be used to expand the company’s production further, with Lynas also working on expansions at its Mt Weld mine in WA that will eventually allow supply of enough raw material to produce up to 12,000 tonnes of NdPr.
Ms Lacaze said she hopes to ramp up production from Kalgoorlie over the second half of the financial year.
But the Lynas boss also sounded a warning on the collapse of the WA nickel industry, saying governments need to be aware that the mining sector is “an ecosystem”, not a collection of separate companies.
Lynas’ Kalgoorlie facility will be reliant on BHP’s Nickel West smelter in Kalgoorlie for supply of sulphuric acid, and the potential for BHP to mothball its WA nickel operations would throw a major shadow over the cost of an alternative source of supply.
Ms Lacaze warned that both Lynas and other regional businesses would be hit by the closure of BHP’s nickel operations, as it was “by far the most cost-effective” source of sulphuric acid in the region.
“The BHP smelter has been a source of sulphuric acid for Goldfields processing for many years,” she said.
“When we initially scoped Kalgoorlie we looked at a variety of different sources of sulphuric acid, and buying acid from the BHP smelter was by far the most cost-effective – and also the lowest risk in terms of being able to bring it to bring it into our operations on a timely basis.”
While BHP has made no final decision on the fate of its WA nickel assets, Ms Lacaze said Lynas’ had always been aware the mining giant may not run its smelter forever.
“We were always alert – as were BHP – to the fact that BHP would not run its smelter for the benefit of our facility,” she said.
“So we needed to look at what were alternate pathways to ensure that we had sulphuric acid – and we will work through those.”
Lynas shares closed 1 per cent higher at $5.90 on Monday.