Lynas - The LAMP, Kuantan, Malaysia. Courtesy of Lynas Corp.
Jul 30.07.2019, XNUMX - Australian Lynas Corp (ASX: LYC) reported a decline in sales and production of rare earths on Monday due to ongoing trade tensions between China and the United States.
Lynas, the world's largest rare earth mining company outside of China, announced that, given the volatile market conditions, the production of neodymium and praseodymium (NdPr) will continue to be maintained and serviced by its "strategic customers".
Last month, Lynas announced that parts of the production would be stored to provide reserves if Beijing actually used rare earth exports as a weapon in the US trade war. Even the US still imports more than 80% of the rare earths and other strategic metals from China.
Lynas explains that China is exploiting its dominant position in the rare earth market and is using it as a weapon. The rare earth supplies from China to Japan are still very erratic after a maritime dispute in the year 2010. Because of this dispute, Japan has invested a lot of effort into its own rare earth production. Today, Japan receives over 50% of its national needs from its own productions. This example shows that China's dominance in the rare earth market can be broken. But for the next 20 years, China will definitely remain the top dog.
Lynas confirmed media reports earlier this month that reported an alliance. Thus, an agreement has been reached between Australia, USA and Japan, that rare elements from the Lynas production of LAMP in Malaysia should go directly to these states. The agreement is intended to help both industrialized nations to further break China's dominance.
As we reported this month (/ Lynas-and-blue-line corp sign MoU /) Lynas will start building a heavy rare earth separation plant in Texas in the very near future. The plant is expected to start operations at 2021.
Lynas recently signed a revised loan agreement with its Japanese investors. In this contract, the priority rights to production were extended to 2038. This agreement provides Lynas with sufficient capital for the long term to be able to finance the operating business itself in the future.
These two agreements have both been recently closed and show cooperation in the Asia-Pacific region. Apparently, all parties are preparing for a commodity commodity war.
Headache Lynas prepares the pending license extensions with the Malysian government. From rare earth processing in Kuantan, Malaysia, at the LAMP plant, incidents of slightly radioactive waste have occurred again and again in the past. The interaction of the authorities and Lynas is anything but hamonish. For example, the Malaysian Atom Energy Authority informed Lynas that 450.000 tons of waste must be removed by the beginning of September, otherwise the license would not be renewed or extended.
Lynas Mt. Weld, Australia
Half an year later, an agreement was found. Lynas builds its own waste management plant in Malaysia. Thus, the resident government is happy, Lynas can continue to produce and finance the whole of the US and Japan. A rogue is the one who thinks evil.
Lynas Mt Weld REE pit
Based on this prelude, Lynas decided in May of this year to build a first-stage processing plant in Mt. Weld, close to the production plant. Only the "half-finished" products are then transported from Australia to Malaysia in order to allow them the final processing in LAMP. Lynas hopes that this relief in Malaysia will ease the situation accordingly.
Lynas recorded in the three months to the 30. June sales of 4,6% to 87,5 million AUD (60,5 million USD) and was thus below the previous year's value of 91,7 million AUD.
Source and images: Lynas Corp Text: Institute for Rare Earths and Metals
