Potential rivals no problem for Lynas
Tensions between the US and China have spurred interest in new rare earths production over the past few years.
Lynas boss Amanda Lacaze says she is not afraid of the emergence of new competitors for the company’s status as the only major non-Chinese producer of refined rare earths products, as big miners such as Iluka Resources eye the markets it has built outside of China.
Lynas released its December quarter production report on Friday, reporting record revenue for a quarter of $119.4m, from $87.3m in the September period.
The company benefited from improved prices in the period, with its average selling price hitting $29.50 a kilogram up from $19.40/kg in the previous quarter, as global economies returned to life after the initial impact of the pandemic crisis. Lynas cited the accelerating penetration of electric vehicles into European and Chinese markets as a factor in driving demand for its products.
Lynas booked total rare-earths sales of 4052 tonnes, down from 4499 tonnes in the prior three months.
Production of its key products — neodymium and praseodymium — rose slightly to 1367 tonnes, with Ms Lacaze saying coronavirus restrictions in Malaysia are likely to keep its refinery in the country operating at a maximum of 75 per cent capacity for the time being.
Tensions between the US and China have spurred interest in new rare earths production over the past few years, and the anti-climate change measures by the new administration of US President Joe Biden of — including the electrification of the federal government’s fleet of vehicles — has helped increase interest in the sector.
But rising interest in the long-term outlook for the metals, critical ingredients in high technology and renewable energy equipment, has spurred renewed interest from other potential producers.
Iluka Resources is now exporting a rare earths concentrate from tailings at its Eneabba mineral sands operation and is considering plans to build a full-blown rare earths refinery in Australia. Emerging juniors, such as Australian Strategic Materials and Arafura Resources, are again pumping money into other rare earths projects in Australia.
But Ms Lacaze told analysts on Friday she was not concerned about the prospect of emerging competition, saying the company’s position in the market and plans for incremental growth in output as part of its Lynas 2025 plan would ensure it maintained its place as the dominant producer outside of China.
“A lot of the problem in mining and chemical industries is that they bring on capacity in big chunks and it’s always at the wrong time — it’s either before the demand or after the demand,” she said.
“Our modular approach means that hopefully we will have a situation where we can, cost effectively, incrementally increase (capacity) as the market does, because the market doesn’t tend to want to go in leaps and bounds.”
Lynas announced US defence department funding for the establishment of a light rare earths facility in Texas earlier this week, and Ms Lacaze told analysts Lynas expected to have some clarity from the US government about support for a heavy rare earths refinery by the middle of the year.
“We’ve indicated that by the end of this financial year we have an expectation we will have a path forward on the heavy rare earths facility and so I think you could safely assume we would be targeting that by the end of this financial year, we will have a very fleshed-out plan for that facility,” she said. Lynas shares rose 15c to close at $5 on Friday.
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