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Australia's Lynas lays out A$500m rare earths expansion plan, shares jump
[MELBOURNE] Rare earths producer Lynas Corp on Tuesday unveiled detailed plans to spend A$500 million (S$475.9 million) to boost production and set up an initial processing facility in Western Australia by 2025.
The plan includes investing in its processing facility in Malaysia, where Lynas is facing problems in getting license renewals for its plant due to concerns over waste storage, and building out a heavy metals facility in the United States.
Shares in Lynas, which in March rebuffed a US$1.1 billion takeover offer from Australian conglomerate Wesfarmers, surged as much as 12 per cent to a 5-1/2 month high on the Australian stock exchange.
"The geopolitics is highlighting the value of Lynas' reliable supply," said Matthew Ryland at Greencape Capital, the company's second-biggest shareholder.
The investment comes as concerns mount that supplies of rare earths, used in everything from consumer electronics to military equipment supply, could be impacted by Sino-US trade tensions. China produces about three quarters of the world's Neodymium and Praseodymium (NdPr), used in magnets for electric motors.
Lynas said it expects demand for NdPr to accelerate from 2021 due to demand from electric vehicles.
The company plans to increase production of NdPr production to 10,500 tonnes a year, up from an annualised rate of about 6,300 tonnes in the March quarter.
"When it comes to providing high quality magnets... China has it all - an industry structured around six SOEs (state-owned enterprises) from mine to magnets," Lynas vice-president of sales and marketing, Pol Le Roux, told an investor call.
"The only alternatives to this monopoly is the Lynas and Japan alliance," he said. Japan is Lynas' major customer.
Lynas mines rare earth minerals in Western Australia and processes them at its plant in Malaysia. It is in talks with Malaysia to renew its operating licence, which is due to expire by September, but has said it cannot meet demands to export years of stockpiled residue by then.
The company has said previously it has been considering initial ore processing near its Australian mine, at Mt Weld, and also in the town of Kalgoorlie, which would ease concerns about future stockpiling of waste at its Malaysian plant.
Broker CLSA has pegged the cost of building a cracking and leaching plant at about A$100 million over three years.
On Monday, Lynas also said it would develop a separation facility in the United States with Texas-based Blue Line Corp.