News: Lynas to cut costs , page-28

Dear Jan Johnson,

The Australian article-

Lynas limits output as rare earths demand slips

by: RHIANNON HOYLE
From: Dow Jones
June 08, 2013 12:00AM

LYNAS Corp plans to wait for demand to improve before ramping up production at its newly expanded Malaysian rare earths processing facilities.

A refinery in the state of Pahang began producing its first rare earths in February after long delays in setting it up.

Lynas said an expansion of the plant was in a commissioning phase, in which equipment was being tested, but there was no immediate plan to increase production to its new capacity.

"The current rare earths market remains subdued," Lynas said yesterday. "In response to this macro environment, Lynas is optimising production at the phase one capacity level."

It said it would look at increasing production only when rare earth prices started to climb. Lynas said it expected demand to increase with the growing use of products such as magnets and auto-catalysts in cars.
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Lynas built the Malaysian plant with the ambition of breaking China's grip on the market. Chinese companies supply more than 90 per cent of the minerals used to produce everything from hybrid cars to wind turbines.

At full capacity, Lynas's Malaysian facilities could produce up to a fifth of annual global output. But its plans have been undermined by weakening prices. Prices declined in the first three months of the year, continuing a steady slide from a record high in 2011 as Lynas's growing production capacity eased supply concerns.

Sydney-based Lynas said it planned to continue processing about 11,000 tonnes a year instead of boosting volume to the new capacity of 22,000 tonnes.

The company, which gets its raw material for processing from the Mount Weld deposit in Western Australia, said it would also reduce operating costs and spending. Spokesman Alan Jury said the company had not cut jobs but was reviewing all options.

The start-up of Lynas's sole refinery was delayed by several legal challenges to its operating licence.

Activists led by the environmental group Save Malaysia Stop Lynas claimed the company's operations there posed health and environmental risks.

Lynas said its Mount Weld "basket price"-- the weighted average it would receive for material dug out of its Australian mine -- dropped by 13 per cent in the first three months of 2013, compared with the three months prior, to $US37.22 a kilogram.

Prices were also down considerably from the same period a year earlier, when rare earths traded for $US92.20/kg.


http://www.theaustralian.com.au/business/mining-energy/lynas-limits-output-as-rare-earths-demand-slips/story-e6frg9df-1226659608111