Wed. Jan 26th, 2022

Lynas Rare Earths (ASX: LYC) CEO Amanda Lacaze says an effort to reduce emissions will be a boon for rare earths, increasing growth estimates in the miner’s product market to 10% per year.

Speaking to shareholders at the company’s general meeting after a record-breaking fiscal year in 2021, when Lynas had a 9x increase in profits to $ 157 million amid strong prices for their flagship neodymium-praeseodymium product.

Lacaze is optimistic about the prospects for rare earths, saying that key markets for permanent magnets, catalysts and electric cars are reaching turning points as governments and businesses face more pressure to reduce carbon emissions.

“We have revised our estimates to an average annual growth rate of 10% from the previous year, that was around seven and a half percent. And of course, there will be a similar demand for dysprosium terbium.

“All of this is based on consumer demand for things like electric vehicles.

“Sales of electric cars increased by 140% in the first quarter of 2021. Growth in the autocat market is driven by global car sales, which are expected to grow between eight and 10%.

“And what we find is that the demand for catalysts from the automotive industry and the MCC sector is back at the level before COVID.”

Lacaze said the Chinese market for permanent magnets, which improve energy efficiency in industrial equipment, would need 5,000 tonnes of extra NdPr each year.

This is similar to Lynas’ Malaysian processing plant, the largest producer of NdPr in the world outside China.

“So in addition to electric cars and wind energy, permanent magnet technology is now heavily promoted in China in the steel, cement and machinery markets because it provides 20-40% energy savings,” Lacaze said.

“China is expected to remain dominant in the magnet industry and consumes around 5000 tonnes more NdPr every year, that is you know almost what is equivalent to our factory in Malaysia every year.

“As the power of the electric motor increases, so does its temperature. And therefore you also need more Dy and Tb for high-performance magnets.”

Western economies need to diversify production

After decades of seeing their manufacturing sectors fall toward the rise in lower-cost, larger-scale production in Asia, Lacaze says Western economies are beginning to recognize the need to diversify their supply chains.

Nowhere is this sharper than in rare earths, one of the areas with critical minerals, places like the US, EU and Australia want more control over to secure supply against the dominance of the Chinese market.

Lacaze said Lynas would be well placed to “win more than others” because of its role as the sole producer of separate rare earths “of scale” outside China.

“Most people would know that governments around the world have intensified their efforts to ensure the supply of rare earths to industry,” she said.

“There are a number of reasons for doing this, not just the strong consumer demand. But the pandemic has shown that it is not just geopolitics that is disrupting supply chains.

“The pandemic has also prompted many Western governments, which happily outsourced production to East Asia 20 years ago, to reconsider whether it is the best and most sensible thing to do economically.

“So the result is that there is now a significant focus on how to really support modern production in Western economies.”

Lynas is moving some of its own operations out of Asia and into Australia with the construction of a $ 500 million downstream processing plant in Kalgoorlie, which is expected to open around mid-2023.

According to figures presented at Lynas’ general meeting, while 60% of all rare earth oxide oxidation takes place in China, 87% of the treatment takes place there, while 91% of all rare earth metals are produced in China and 94% of permanent magnets.

With only 5%, Japan is the only competing market.

“The Chinese have been very good at moving down the value chain and insourcing the production of the finished goods,” Lacaze said.

“And so I think this is certainly in our discussions with various governments, they are recognizing that they need the economic firepower, especially when they come out of the pandemic for strong manufacturing industries.

“And that means they need supply chains outside of China.”

Lynas Rare Earths stock price today:

Rinehart and Ellison join forces to create a new iron ore export center

Gina Rinehart’s Roy Hill and Hancock Prospecting will join forces with Chris Ellison’s Mineral Resources (ASX: MIN) in an effort to open a new iron ore export facility in Port Hedland.

MinRes has been awaiting approvals for the South West Creek quay, which would open up the development of its Marillana and Opthalmia iron ore deposits.

The proposed mines are joint ventures with Brockman Mining (ASX: BCK), which today rose 12.2% without news.

Hancock Prospecting outlined its plans for a number of new iron ore developments both at its own 1Bt-plus Mulga Downs depot and through its subsidiary Atlas Iron in its annual report on Friday, in which Rinehart’s company had a striking $ 7.3 billion profit for FY2021.

MinRes, Hancock and Roy Hill have entered into an agreement to jointly investigate the development of a facility at Stanley Point Berth 3 where Roy Hill would develop and operate the project, including rail transport and port services.

MinRes CEO Chris Ellison said the deal will unlock stranded assets in Pilbara as the company seeks to move from higher-cost production to cheap, long-life assets.

“We are pleased to have entered into the Port and Railway Agreement with Hancock and Roy Hill,” he said.

“This partnership and infrastructure sharing is the first of its kind in the Australian resource industry and will enable significant value for MRLs to be unleashed in a sustainable way.

“Our long-term strategy is to go from short-lived, high-cost mines to lower-cost, long-lived ones, backed by innovative infrastructure solutions. Development of our stranded assets will provide further growth for MRL’s unique mining services, built self-operating model.

“We are pleased to have reached this agreement, which builds on our long and strong relationship with Hancock.

“We look forward to working with Hancock, Roy Hill, the PPA and the Government to promote this project, which will help unlock stranded assets in Pilbara and would create thousands of jobs for Western Australians in the years to come.”

MinRes share price today:


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