Lynas Rare Earths pressures Albanese to help fund WA chemical plant

Lynas Rare Earths is set to ramp up pressure on the Albanese government to help fund a chemical plant in Western Australia as the fallout continues from the collapse of the Australian nickel ­industry.

The Lynas Rare Earths Ltd. processing plant in Kalgoorlie, Western Australia, on Wednesday, Aug. 3, 2022. Lynas, the only key supplier of the critical minerals outside China, has won further financial backing from Washington to build a plant in the US. Photographer: Carla Gottgens/Bloomberg via Getty Images

Lynas Rare Earths is set to ramp up pressure on the Albanese government to help fund a chemical plant in Western Australia as the fallout continues from the collapse of the Australian nickel ­industry.

Lynas boss Amanda Lacaze said world’s biggest non-China supplier of rare earths needed a source of sulphuric acid close to its new $800m rare earths cracking and leaching plant at ­Kalgoorlie.

BHP’s decision to suspend its nickel mining and processing operations in Australia for at least the next two years in the face of heavy losses has robbed Lynas of a cost-effective and reliable supply of the acid, which is a by-product of nickel smelting.

Ms Lacaze told the Lynas annual general meeting on Wednesday that the BHP decision was “disappointing for a variety of reasons”.

BHP is now having to import sulphuric acid from overseas to supply the Lynas plant under a contract that runs until 2027.

Ms Lacaze said Lynas needed a long-term, cost-effective solution for the supply of acid critical to its business.

She has suggested the Albanese government help fund a chemical plant if it is serious about supporting a critical mineral industry with key infra­structure.

BHP also supplied some of the acid needed by Glencore to run its Murrin Murrin nickel laterite mine in the WA Goldfields.

Glencore boss Gary Nagle warned this month that Murrin Murrin, one of only two nickel mines left standing in Australia, was perilously close to slipping into loss-making territory, with no end in sight to Indonesia’s market dominance.

Industry sources suggest it could cost about $130m to build a plant capable of producing 1000 tonnes of sulphuric acid a year, with the price dependent on a range of factors.

In Malaysia, where Lynas does most of its downstream processing, the company relies on near neighbours SPCI and MSCI for supplies of sulphuric acid, hydrochloric acid and sodium ­hydroxide.

Ms Lacaze said that US-Australian co-operation on rare earth supply chains would thrive under the new Donald Trump administration.

She said Mr Trump had been effective in gathering support on China-related trade policies in his last presidency and was set to do the same, even though some of his measures were hard to fathom for Australians.

“Notwithstanding everything, I still would not bet against the Americans,” Ms Lacaze said.

Lynas is poised to break China’s stranglehold on the supply of two heavy rare earths – dysprosium and terbium – in the first six months of 2025. Both are essential in modern weapons systems.

Lynas currently sells dysprosium and terbium and other heavy rare earths oxides from its Mt Weld mine in WA to China as a mixed heavy rare earths compound.

The company will start doing its own refining in Malaysia in a move that reduces the danger to the US and its allies of China cutting off supplies – as Beijing has threatened to do in the past.

Lynas shares rose 5c to $6.87 on Wednesday, valuing the company at $6.4bn.