Rare Earths: Lynas Corporation reports A$35M (US$28M) investment in Lynas NEXT programme

Lynas Corporation reported record profits and production in its July-December (H2) 2017 half year report, including a 75% increase in revenue compared to the previous half year. Production of Nd-Pr oxides was also reported to have increased by 6% compared to H1 2017 to 2,664t, whilst total rare earth production increased by 17% to 8,839t REO.

In addition to the improved results, Lynas announced its commitment to a A$35M (US$28M) expansion programme (Lynas NEXT) at both the Mt. Weld mine in Australia and Lynas Advanced Materials Plant (LAMP) in Malaysia. The expansion plans to increase Nd-Pr oxide production to 7,200tpy by January 2019, an increase of around 1,200tpy Nd-Pr oxide compared to current capacity. Lynas was the second-largest Nd-Pr producer in 2017, behind China Northern Rare Earths Group, and looks set to consolidate this position with the expansion programme.

Roskill View: Lynas Corporation is well positioned to take advantage of growing rare earth demand, after weathering the storm of falling rare earth prices between mid-2011 and mid-2016.  As rare earth prices have recovered from mid-2016 lows, a range of companies have displayed renewed interest in the rare earth market and project development. China is expected to continue its dominance of the rare earth industry, both in terms of supply and demand, though production from non-Chinese operations is forecast to increase its share of global supply from 14% in 2017 to around 32% by 2027.

Rare earths used in magnet applications, particularly neodymium, praseodymium and dysprosium, are forecast to exhibit strong demand growth over the coming decade, driven by their use in hybrid and electric vehicles, robotics and renewable energy generation. Neodymium demand in particular is forecast to increase by 10.5%py between 2017 and 2020, with supply already reported to be in deficit during 2017. The planned increase in production at Lynas’ operations will be a welcome addition for consumers, though further expansions by Lynas and other operations outside China will be essential to meeting forecast demand growth.