Rare earths producer Lynas Corp has unveiled detailed plans to spend $500 million to boost production and set up an initial processing facility in Western Australia.
Company officials said choosing between two sites for Lynas’s initial ore processing facility, one near its mine at Mount Weld, or near the mining hub of Kalgoorlie in Western Australia.
Lynas expects that its growth plan out to 2025 will help it overcome political headwinds in Malaysia where its operating licence, due for renewal in September, is under threat on concerns over waste disposal.
Lynas will invest in the Malaysian plant and also build out a heavy metals separation facility in the United States as part of its strategy, company officials said during an investor briefing.
Shares in Lynas, which in March rebuffed a $1.5 billion takeover offer from Wesfarmers, surged to a six-month high.
At 1507 AEST they were up 28.5 cents, or 14.43 per cent, to $2.26.
“We have a great deal of confidence that the (Malaysian) government wants Lynas to continue to operate,” chief executive Amanda Lacase said, noting support from its prime minister as well as the Australian, Japanese, and US governments given the strategic importance of rare earths.
Lynas mines rare earth minerals in Western Australia and processes them at the Malaysian facility.
In December, the country’s environment minister said that Lynas must remove its waste stockpiles before its licence could be renewed.
Lynas has maintained that it would not be possible for it to remove the waste within such a short time frame.
Dato Mashal Ahmad, vice president of Lynas’s Malaysian operations, said during the briefing that as required under the company’s licence Lynas had found an end use for the waste as a fertiliser component.
If that failed, it could set up a permanent disposal facility as per the licence conditions and the government could choose its preferred option.
“There is no more issue. We are given permission to continue operation,” Ahmad said, referring to supportive comments made by the Malaysian Prime Minister Mahathir Mohamad in April.
The spending plan comes as concerns mount that supplies of rare earths, used in everything from consumer electronics to military equipment supply, could be impacted by the Sino-US trade dispute.
China produces about three quarters of the world’s neodymium and praseodymium (NdPr), used in magnets for electric motors.
“The geopolitics is highlighting the value of Lynas’ reliable supply,” said Matthew Ryland at Greencape Capital, the company’s second-biggest shareholder.
Lynas said it expects NdPr consumption to accelerate from 2021 because of demand from electric vehicles.
The company plans to increase NdPr production to 10,500 tonnes a year, up from an annualised rate of about 6,300 tonnes in the March quarter.
On Monday, Lynas said it would develop the heavy metals separation facility in the United States with Texas-based Blue Line Corp.
By Melanie Burton