Lynas to increase Mt Weld's mine operation life over 20 years

Asian Metal: Thanks a lot for accepting the interview of Asian Metal, Tony. Although Lynas is famous in rare earth industry, would you like to introduce your company firstly?

Tony: Lynas is a market leading specialty materials business. We mine Rare Earths ore at Mt Weld in Western Australia and we produce Rare Earths concentrate on site. The concentrate is shipped to our plant in Kuantan, Malaysia for separation into finished Rare Earths products that are delivered to our global customers. Lynas is now the second largest NdPr producer in the world.

Asian Metal: Would you please to give us a brief introduction of your Mt Weld project and its latest updates?

Tony: Mt Weld is the highest grade operating Rare Earth mine in the world and is located in the Northeast Goldfields of Western Australia approximately 1000kms from Perth. Mt Weld mines Rare Earth ore from an open pit and upgrades the ore through a flotation process in the concentrator. Double lined bags are filled with the concentrate and loaded into sea containers ready for shipment by road and rail to the Fremantle port. Mt Weld was the first Rare Earth mine to be operational in Australia. Currently we are operating in excess of design, exceeded the expected recovery rates and reduced the expected costs by approximately 30%.

Asian Metal: What’s your project’s development prospect in the coming years? What do you see as the main challenges for this? What do you think is the advantage of Mt Weld Project?

Tony: Mt Weld is currently undertaking a drilling program to increase the size of the mineral resource in order to keep the life of mine operation over 20 years. The main advantages of the Mt Weld deposit is the high grade ore, particularly the NdPr content, and the life of mine which is over 20 years. The Western Australian operation has developed an experienced workforce that has learned how to safely and cost effectively mine and process the ore from Mt Weld.

Asian Metal: What’s your next programme for Mt Weld?

Tony: We are continually endeavoring to improve our processes. There are investigations into alternate chemicals, different processing methods and continual fine tuning of what we currently do. Mt Weld costs and recoveries are continually reviewed and under the microscope. Our main priorities are ensuring long term sustainability, maximizing recoveries, ensuring that throughput meets LAMP’s requirements, maintaining a long life of mine and continually operating at the lowest possible cost.

Asian Metal: Lynas released an announcement on September to disclose its financial report for the year ending 30 June 2017 (FY17). According to the announcement, during FY17, Lynas has improved and strengthened the business on all operational measures. Lynas is now the second largest PrNd producer in the world. Would you like to introduce the production of rare earth oxides of LAMP in FY2017?

Tony: In FY17, Lynas achieved record total sales revenue after commission of A$257.0m, compared with A$191.0m in FY16, reflecting increased production volumes and continuing strong relationships with strategic customers. Positive improvements in the production process, throughput rates and quality of final output continued in FY17. Ready for sale production of neodymium-praseodymium (NdPr) was 5,223 tonnes in FY17 compared to 3,896 tonnes in FY16. Total ready for sale production of rare earth oxide (REO) in FY17 was 16,003 tonnes compared to 12,631 tonnes in FY16. Positive cash flows from operating activities increased to A$34.0m in FY17 from $4.1m in FY16.

Asian Metal: As far as I know, your products are widely accepted by Japanese, European and even Chinese consumers now as Chinese rare earth prices were sensitive about policy. How about Lynas’ current products’ sales distribution?

Tony: Lynas sells finished Rare Earths products to customers in each key jurisdiction, including Japan, China, Europe, North America and elsewhere in Asia.

Our aim is to build a company that has control of its production and costs, but also of its revenue. To do this, we need to de-emphasise the influence of published prices in our pricing agreements with customers. The right time to do this is now – when demand is accelerating and pricing is relatively higher.

We are doing this by engaging at various stages through the Rare Earths value chain and by focusing on our key benefits:
-Ability to commit to long term contracts which guarantee supply – our resource is a long life resource and we are able to continue to grow our processing capability
-Preparedness to offer predictability of price. We have no desire to see the extreme high prices that prevailed earlier this decade with their subsequent destructive market impacts. We are and will continue to offer long term pricing based on value to our customers.
-Assurance of environmental care and continuous improvement in the manufacture of our materials – and this is essential for companies who are selling brands and products with implicit and explicit environmental benefits at their heart.

Customer response to Lynas’ preparedness to offer long term contracts has been very positive. We are well advanced in negotiations with a number of key users of Rare Earth materials.

Asian Metal: Would you like to introduce Lynas’ next production plan?

Tony: On 28 November 2017, we announced the Lynas NEXT Programme. With Lynas NEXT, we will increase our production as demand for our materials, particularly NdPr, grows. On completion of this programme, we will produce 600 tonnes/month of NdPr, almost 40% above original nameplate. CAPEX associated with this programme of work is A$35m, of which A$22.5m is additional to already planned expenditure. In addition to increasing throughput, we will improve our product mix, including adding separated Nd and Pr and additional separated La and Ce and more grades of La and Ce products. A key element of the project is to target expenditure on activities which will improve plant reliability and recoveries at our Kuantan facility and activities to improve our understanding of our Mt Weld resource and improved water use at Mt Weld.

Asian Metal: Light rare earths are mainly applied in rare earth permanent magnet, catalyst and polish powder industries. What’s your opinion about the light rare earth demand in the coming years?

Tony: The light Rare Earths market is growing. The key growth driver is demand for magnetic materials. The key segments driving this demand growth are electrification of vehicles, growth in direct drive wind turbine manufacture, and the continued growth of consumer electronics and automation.

With Lynas NEXT, Lynas will grow with the market and we will play a major role in supporting development and adoption of new technologies. In this next phase, we will invest in industry engagement, particularly with the automotive market and Applications R&D.

Asian Metal: PrNd oxide and neodymium oxide prices increased gradually in this H1 and climbed up sharply in July and August. As consumers reduced purchasing, the markets witnessed decreasing deals concluded and sliding prices over the past months. How do you think about the price trend in the near years?

Tony: While underlying demand for NdPr continues to grow, we have seen volatility in benchmark prices during 2017. Volatility is not good for either producers or consumers of NdPr. That is why we will focus on reducing revenue volatility by de-emphasising our reliance on market benchmark pricing. We will achieve this by agreeing long term supply agreements with key customers and by increasing the proportion of products produced to meet differentiated customer specifications.

Asian Metal: Thanks for your time and support for Asian Metal. Wish you every success in your business.

Tony: Thank you.