Light rare earth prices to increase slowly because the demand is back to strong growth
----Interview with Pol Le-Roux, Vice President of Sales & Marketing department of Lynas Corporation
Lynas has a portfolio of aligned assets to explore, develop, mine and process rare earth minerals. These assets are:
Mt Weld – one of the world's highest grade rare earths mines, located 35km south of Laverton in Western Australia.Mt Weld Concentration Plant – commissioned in 2011 and located 1.5km from the mine site.Lynas Advanced Materials Plant (LAMP) – an integrated manufacturing facility, separating and processing rare earths materials, located in the Gebeng Industrial Estate (GIE) near the Port of Kuantan in Malaysia.The LAMP was granted a Full Operational Stage License (FOSL) from Malaysia's Atomic Energy Licensing Board (AELB) on 2 September 2014. The LAMP is now supplying rare earths products to customers in Japan, China, Vietnam, South Korea, Europe and North America. The company's Japanese customer base continues to grow strongly and currently represents about 60% of sales.
Asian Metal: Dear Pol, Thanks for accepting the interview of Asian Metal. Would you like to give a brief introduction of your project process firstly?
Pol: Lynas project consisted in developing the Mt Weld mine in Western Australia which carries the highest grade of rare earth in the world. This has been a very long and difficult process but is now well established with a concentration plant next to our mine and a rare earth extraction plant in Kuantan Malaysia designed to 22,000 tons of a light and medium rare earth, and customers around the world who have supported our development and buy all of the production of Kuantan.
Asian Metal: What’s rare earth your company provides at present?
Pol: Lynas is now the 2nd biggest producer of NdPr in the world and leading supplier to the free market (Lynas has no downstream activity). Our production mix consists in NdPr oxide (30% of our production), SEG (5% of our production, with high Tb/Dy/Eu content), LaCe sold as La, Ce or LaCe and other compounds, produced in the form of oxide or carbonates. In addition, we have established a few partnerships with specific downstream players which allow us to adjust the form of our supply to the requirement of our end customers (metal and alloy as examples).
Asian Metal: Would you like to introduce your project’s development prospect in the coming years? What do you see as the main challenges for this?
Pol: Lynas is now established as the leader of the NdPr free market, running slightly above design capacity (around 500ton/month of NdPr oxide). The rare earth market is not yet fully healed from the 2011 rare earth crisis which saw massive value destruction by speculation.
Our mission consists in supporting a sound and sustainable growth of the market, making sure that end users trust in rare earth, in a stabilized market that includes sustainable players respectful of the environment so that innovation gets back to driving the growth of our business.
Lynas will continue playing its role, developing long term agreements with end users, participating to further optimization of the supply chain and promoting responsible care of environmental performance.
Asian Metal: Chinese separation plants ran at as low as 50% of operating rate in average over the past year due to the soft demand and low price levels of rare earth oxides. How about your separation plant’s operating rate in 2016 and this Q1?
Pol: Since its start-up early 2013, Lynas has ramped up to its design capacity of 450tons/mo of NdPr reached in Q4 2016. Our customers find in Lynas the truly independent supplier they are looking for, and their demand remains big enough for us to continue running at or slightly above design capacity. We will decide of further capacity increase based on the growth of the demand.
Asian Metal: Chinese rare earth market saw soft demand and consumers delayed making substantial purchases. How about the demand for your products in 2016 and this Q1?
Pol: As I said previously, our customers find in Lynas the truly independent supplier they are looking for, and their demand remains big enough for us to continue running at or slightly above design capacity.
Asian Metal: Chinese rare earth oxides markets witnessed increasing price over the past Q1 due to the national storage and major suppliers’ wait-and-see attitudes. How about your company’s rare earth prices in Q1?
Pol: Rare earth prices have increased steadily since November 2016, because they were at low levels that were unsustainable to all suppliers. Speculation around the impact of China national storage affects mainly heavy rare earth. Light rare earth prices are increasing because the demand is back to strong growth and the market needs sustainable suppliers able to further support this growth accelerating especially in the magnet and catalyst sectors.
Asian Metal: Rare earth prices have kept showing downtrend in general since H2 of 2011 and current prices hover at low levels. Some Chinese participants are optimistic about the market in the reminder months of this year and believe the prices don’t have much room to slide. Would you like to share your opinion about rare earth market in the near term?
Pol: As supply-demand remains tight, we expect prices to continue to grow steadily. However, we are always aware that the rare earth market is still exposed to the same risks, speculation, uncontrolled productions, fragmentation and geo-political changes. Therefore, we continue to focus every day on the things that make our business strong, so that we can continue to serve our customers no matter what the market conditions.
Asian Metal: Thanks for your time and support for Asian Metal. Wish you every success in your business.
