Ahead of what could be a company redefining court hearing in Malaysia tomorrow (Friday) Lynas Rare Earths
(ASX:LYC) reported a record neodymium-praseodymium (NdPr) production of 1,725 tonnes in the three months to March.
Lynas reported that the March quarter record was up from the 1,687 tonnes of NdPr in first quarter of 2022 and 1,508 tonnes in the December quarter.
The strong performance was attributed to plant efficiency improvements and no significant downtime from external events.
Lynas said it achieved this new mark despite experiencing a shutdown of its Malaysia processing plant, where tie-in works for a mixed rare earth carbonate (MREC) facility took place over more than three days.
Lynas shares dipped 0.9% to $6.66 on Wednesday.
Lynas has lodged an appeal with Malaysia’s Minister of the Ministry of Science, Technology and Innovation (MOSTI), seeking administrative review for the prospective ban on the operation of its plant which is located in the Gebeng Industrial Estate near Kuantan, Malaysia.
A hearing will take place on April 28 to determine the outcome of this appeal but the company has been planning for the worst outcome from the court.
Lynas made it clear yesterday it is preparing for a three-month shutdown later this year if the decision goes against it in Malaysia.
The company’s Kalgoorlie rare earths processing facility is entering its final phase of construction with dry commissioning has also commenced. Raw material ‘feed on’ is expected to commence at Kalgoorlie this quarter.
The progress of the Kalgoorlie plant is key to stemming solving the Malaysian problems where a forced shutdown of the cracking and leaching component of the Malaysia facility looms.
Lynas aims to rectify this shutdown by using MREC (a different type of rare earth raw material) from the Kalgoorlie plant as feedstock for downstream processing.
“As indicated in previous reports, Lynas has been planning for this for some time with a key focus on inventory management to assist in meeting our key customers’ requirements during any transitional period of reduced production,” Lynas CEO Amanda Lacaze said in the March quarterly report released Wednesday.
“Notwithstanding these actions, if the Lynas Malaysia cracking and leaching plant is required to shut down from 1st July 2023, the whole Lynas Malaysia facility will shut down in mid-July until the new MREC feedstock is received.
“In light of the current target date for feed on at the Kalgoorlie Facility (Q4 FY23), the first MREC from Kalgoorlie will likely be received at Lynas Malaysia in about August 2023.”
But Lacaze said the commissioning and ramp up of the Kalgoorlie plant remains “inherently unpredictable” and Lynas has altered its expectations accordingly.
“We are planning for either a complete shutdown or very low production at Lynas Malaysia for at least up to three months, followed by a period of reduced production which will increase as the ramp-up to capacity of the Kalgoorlie rare earths processing facility is achieved.”
The company said its Mount Weld mine produced sufficient concentrate to feed the Lynas Malaysia plant and, at the same time, build inventory ready for feed-on at the new Kalgoorlie Rare Earths Processing Facility in the next month or so.
The company said total rare earth oxide (TREO) production dropped 12% to 4,348 tonnes in the three months to March from 4,945 tonnes produced in the same period in 2022 thanks to a shortage of a key acid which restricted output of lanthanum and cerium.
Despite this hiccup, sales revenue increased hit $237.1 million in the latest quarter and is up 45% since the start of the 2022-23 financial year last July. But the March figure was $90 million lower than the strong $327 million reported a year ago.
“The demand for Lynas’ NdPr product family from customers outside China remained very strong during the quarter,” Lynas commented in the quarterly report.
“This, together with excellent NdPr production volumes, resulted in strong sales performance in the quarter despite a decrease in the average selling price.”
Lynas reported an average selling price of $A48.3/kg in the March quarter, down sharply from the $A64.7 a kilogram a year ago.
Lynas’s cash and liquidity position improved dramatically compared with a year ago – $A1.11 billion against $A768 million. That’s more than enough to help the company handle any delays at Kalgoorlie or in Malaysia.
