FILE PHOTO: Rare earths dug up and processed into concentrate at Mount Weld in Western Australia, are pictured after being shipped to the Lynas plant in Gebeng, Malaysia, July 3, 2014. REUTERS/Sonali Paul/File Photo
MELBOURNE: Lynas Rare Earths Ltd of Australia says that it will focus on getting its Kalgoorlie plant operational, despite concerns that its Malaysian facility will have to be partially shut down after a 4% drop in first-half profit.
The world’s biggest producer of rare earth metals outside China faces the prospect that its Malaysian cracking and leaching plant may have to shut after regulators halted it from importing and processing rare earth concentrate after July 1.
Lynas has appealed that decision. But it has raised the prospect of an interruption to the supply of neodymium and praseodymium (NdPr), used in magnets for industrial applications in sectors from electrified transport to defence.
Lynas is building a processing plant in Australia’s Kalgoorlie, which is needed to replace its Malaysian facility in the event Lynas is not successful in its appeal.
“We are growing to meet the accelerated market demand,” said Lynas chief executive Amanda Lacaze on an investor call.
“We have proven ourselves to be competent at bringing on new facilities. I think we have reasonable data on which to create our various models.”
Half-year results were in line with analyst expectations as a disruption in the supply of water to a plant in Malaysia, a rise in sales costs due to high chemical prices, and increasing wages crimped profits.
A complete outage of water supply at the plant in Malaysia resulted in 16 days of lost production during the quarter ended Sept. 30.
That, coupled with rising costs and weak realised prices, dented the miner’s bottom line.
According to Barrenjoey, Lynas has indicated that its Kalgoorlie plant will begin accepting feed in the June quarter, rather than the previously anticipated July ramp up.
“It’s still possible to have a gap, but it will come down to how quickly Kalgoorlie ramps up and ships product to Malaysia for finishing. Any gap is looking likely to be modest.”
Still, a portfolio manager at Lynas’s top shareholder, Argo Investments, said the company needed to provide more information.
“No real update on the Malaysia licence or contingency plan, Kalgoorlie progress, and no guidance,” he said.
Shares of the rare-earths producer were down 2.8% at A$8.26 (RM24.77).
For the six months ended Dec 31, Lynas reported net profit after tax of A$150.1mil (RM450.1mil), compared with A$156.9mil (RM470.3mil) a year ago.
Lynas sold 7,050 rare earth oxide tonnes in the first half, 8.8% less than the previous year, while costs of sales increased by nearly 32% to A$185mil (RM555mil).
“We and the market have been fearful that there is a delay to Kalgoorlie being complete and therefore a potential production gap,” said Barrenjoey — Reuters
