As the world's only significant rare earth producer outside of China, Lynas Rare Earths Ltd. CEO Amanda Lacaze said the company would remain focused on its core strategy of supporting the development of additional processing capability outside of China as well as serving strategic customers inside China.
Lynas is working with the U.S. government to build a heavy rare earth separation facility and a light rare earth separation plant in the country. Earlier in February, the U.S. Defense Department granted Lynas a $30.4 million investment for a light rare earth elements separation plant in Hondo, Texas.
Lacaze expects that all documentation and discussions for the heavy rare earths facility with the U.S. government will be finalized within the financial year 2021, in line with earlier guidance. "All of our engineering work is substantially complete as far as that's concerned, but there are many issues to be dealt with for a project of this size and complexity, and we continue to work through those processes," Lacaze said in a Feb. 26 call following its earnings for the first half of fiscal 2021.
"We are balancing our production, balancing our ability to manage risk in our supply chains. But we sell to strategic customers, some of whom have inside China operations. ... But of course, the bulk of our material goes to outside China markets. ... Our objective is to grow the outside China rare earths market to create a strong and capable ecosystem [outside China], and our strategy has always supported that process," Lacaze said.
Amid a rally in rare earth prices driven by recovering demand, the company's net profit for the last six months of 2020 surged more than 9 times from a year earlier with the cost of sales edging down during the period.
"We make money without any fancy adjustments to our [profit and loss statements]. And I must say that, in terms of an investment in this market, it looks to me on the fundamentals that we are significantly cheaper than some others," Lacaze said.
Although the COVID-19 pandemic has led to delays in shipments and cash collection, the company's sales revenue hit a record during the December 2020 quarter with prices for neodymium and praseodymium rising 31% in the period.
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In Malaysia, where the company operated at 75% capacity during the last six months of 2020 due to COVID-related restrictions for on-site operations as well as logistics, the CEO said a major piece of maintenance was undertaken on one of the kilns, which has already come back online. With certain movement control orders in Malaysia being lifted just last week, Lacaze said the company is looking at opportunities to ramp up production while ensuring that it has sufficient materials to support production.
At its proposed Kalgoorlie facility in Western Australia, which will produce rare earth carbonate for the light rare earth separation plant in the U.S. to process, Lacaze said some increase in capital expenditure is expected in this six-month period while the major part of that capital will be expended in the next financial year. The kiln for Kalgoorlie will arrive in about the middle of 2021 and substantive construction at the project will commence after that, according to Lacaze.
Asked if a joint venture will be created or third-party material suppliers might be brought in for the Kalgoorlie project, the CEO said the way that Lynas is designing its facilities accepts material from third-party sources to maintain sufficient supply.
