- BOSS
- May 11 2018 at 12:15 AM
- Updated May 11 2018 at 12:15 AM
Amanda Lacaze aims to return Lynas Corp to the ASX100
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Amanda Lacaze, chief executive of Lynas Corp" “In the first two years here, in particular, it was hard and I mean like really hard." Ian Teh
by Michael Smith
Amanda Lacaze was seven when her mother put a star chart on the fridge in their family home in suburban Brisbane: it would
define her entire career.
The document set out targets, with gold stars as rewards, which Lacaze – now the chief executive of the world’s second-largest rare earths company – embraced with vigour.
The star chart had categories: household chores, academic pursuits, creative development, current affairs, decency and religious activity, and came with clear directions: “Anything but your best will not qualify.” And “Listen to other people, ask questions and form your own opinions.” Tasks included studying current affairs and forming opinions for discussion at the dinner table and learning a new piece of music.
Already toughened up by having three older brothers and gifted with a natural competitive streak, Lacaze excelled at the weekly list.
Lacaze, who has taken on four corporate turnarounds, including
one at her current employer, Lynas Corp, was gobsmacked decades later when her father produced one of the star charts from that fridge in Tarragindi. The directions mirrored her own management philosophy.
“I now recognise this chart as a balanced score card. The KPIs are clear, there is a clear articulation of vision, clear objectives, clear measures, the recognition is well displayed for all to see and the rewards are very clearly defined. The characteristics I bring to my job as a leader are well grounded in this framework I had from an early age.”
We are sitting in Lacaze’s modest office outside Kuantan, a small city on Malaysia’s east coast about three hours’ drive from Kuala Lumpur. This is the Lynas Advanced Materials Plant (LAMP), the company’s sprawling rare earths processing plant that includes high-tech chemical laboratories, 60-metre-long gas-fired kilns and a complex array of equipment needed to undo millions of years of geology and extract the valuable lightweight materials vital to the modern technology economy.
There are 17 rare earths elements used in electric cars, wind turbines, mobile phones, computers and hundreds of other products. Despite growing demand, China controls most of the market.
Toughest decision
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Amanda Lacaze, an australian woman who is the CEO of rare earths company Lynas Corp. Kuantan, Malaysia. 2018. BOSS first use. Do not use before May 12, 2018. Amanda Lacaze, CEO, Lynas Corp Ian Teh
We are a long way from Brisbane where Lacaze grew up, or the office towers of Melbourne and Sydney from which most of Australia’s S&P/ASX200 chief executives run their empires.
BOSS travelled to Malaysia to interview
Lacaze, who steered Lynas from the brink of collapse into a profitable business with plans to win back its former glory as an ASX 100 company. She also wants to share the story of the company’s most valuable assets:
its staff, who four years earlier were close to losing their jobs. Morale was low at the time and many were ashamed to wear their uniforms bearing the Lynas logo in public, due to a political campaign targeting the company’s environmental record.
Lacaze, a former senior marketing executive at global food and drink company Nestle and telecoms behemoth Telstra, took on one of the toughest jobs in corporate Australia in 2014 when she decided Lynas was worth saving. Problems at the plant, high debt and plunging rare earths prices caused by monopoly producer China restricting imports meant Lynas was on the precipice. Lacaze, who was a non-executive director, knew after three board meetings she either had to bail or put her hand up to save the company. Despite no experience running an industrials company, she chose the latter.
Lynas’ turnaround has been well documented but Lacaze’s story has not.
She is one of only eight women running an ASX 200 company. She is direct, down to earth, quick to crack a joke and seems to have unlimited energy.
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An employee at Lynas Corp's rare earths facility at Kuantan, Malaysia. Ian Teh
She is also tough, unafraid to speak her mind, get her hands dirty or stand up to the bullying she says is rife in corporate Australia. Lacaze rates her ability to listen to people – one of the star chart lessons – as her strongest attribute.
“My secret sauce is truly engaging with the people who work with me,” she says. “That’s not being their friend, I can be pretty tough. The task of leadership is about being really clear about expectations.”
“From an outsider’s perspective, Amanda appears to be in the ‘harsh but fair’ mould of leaders,” says Michael Evans, a director of stockbroker Curran & Co, who has followed the Lynas turnaround closely. “She’s no nonsense and has a singular resolve to take Lynas to the next level. While some of the earlier critics may have pointed to her lack of experience in rare earths, and it’s not a field where you find a lot of CEO experience, she has certainly silenced them with results.”
Lacaze is not the type to sit in her office reading emails. She spends a lot time out in the tropical heat on site where materials are mixed with sulphuric acid and “cracked” at high temperatures. She eats lunch with her engineers, technicians and site managers in the staff canteen and has employees over for dinner at her home half-an-hour’s drive away.
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Amanda Lacaze with husband Wayne Morgan.
Her philosophy of truly understanding a business by engaging with staff at all levels drove one of her first decisions as chief executive to close the company’s Sydney headquarters and move to Malaysia, where most of its 700 staff are based. The predominantly Malaysian workers, who previously had little contact with their Australian bosses, did not know what hit them.
‘I love a bit of bling’
Lacaze is a whirlwind of colour as she strides through the company’s open-plan offices in a dress by New Zealand designer Adrienne Winkelmann and Ferragamo heels with a makeup artist in tow for the
BOSS shoot. The chief executive, who has just eaten lunch in the staff canteen with some of her staff, is joking around with the women working in the cubicles around us. They clearly find the whole situation amusing.
“You can focus on how we are different,” Lacaze says later. “You can focus on the fact that I have blonde hair and all the women working for me have black hair and a lot them have it covered with a scarf. Or we can spend our time thinking about all the things we share and how does that bind us together.”
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Amanda Lacaze: "I am living proof that you don't have to sacrifice femininity for success." Christopher Pearce
When we met up a day earlier, Lacaze was dressed more casually in Ted Baker jeans with floral applique and a denim jacket with Swarovski crystals. But she spends a large part of her time wearing the same high-vis vests, helmets and other safety gear the rest of the staff have to don when they go on site. Her one concession is a pair of pink work boots.
“I like pretty things, I like colour, I like fashion, I love a bit of bling,” Lacaze says, while stressing the point that women should also not be judged on their grooming, which happens too often. “Some people would say this is frivolous and girlie. Well,
I am living proof that you don’t have to sacrifice femininity for success.”
It is an understatement to say that Lacaze’s arrival at Lynas triggered a cultural change as much as an operational overhaul. Days after being appointed chief executive, she organised a series of workshops where staff were asked to give a presentation on their local food, dress and traditions under the guise that Lacaze had never been to Malaysia before and wanted to learn about the local culture.
“In one session, we had Chinese women in cheongsams, Indians in saris, Malays in baji kurungs and they paraded around the boardroom,” she says. “The men took me out the back and I had to eat durian and jackfruit. This was about giving me an opportunity to engage with people, to learn their names, to understand what was going on in their lives.
“When I came in, there were lots of people who had been working really hard but failing, and that can be crushing. I needed to give people a chance to win. The more you win, the more confidence you have and the more you can do to be successful.
“The first job for me when I came in here was to identify who had the skills and the attitude to go on what was going to be a very difficult path and who didn’t.”
Lacaze learnt the lesson of engaging with staff early in her career. Over two days of interviews, she reluctantly reveals that her first full-time job was working as a cigarette girl for US tobacco giant Philip Morris. “I was a Marlboro girl with the skirt and bolero and cowboy hat,” she laughs heartily.
That job lasted for only seven weeks when the company offered her a job as a sales representative. She was 20-years-old and did not have a driver’s licence. There was only one other female sales rep in the company at the time and no one else under 25. By the age of 22, she was a field sales manager with six people working for her. She knew by then she wanted to be a chief executive.
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A lab worker at Lynas Corp's facility in Kuantan, Malaysia. Ian Teh
Ambition and sacrifice
Lacaze puts her ambition down to a natural competitive streak, a childhood where she was challenged by her brothers and mother and encouraged by her father, and having a secondary school education at St Margaret’s Anglican Girls School in Brisbane, which was run by Anglican sisters who taught her that there was nothing girls couldn’t do.
“My mother was way ahead of her time,” Lacaze says of her mother, Helen, who still occasionally joins the family on holidays. “She had flash cards to prepare the boys for school and I kept getting the cards before the boys. She determined she should keep me very active and challenged. I learnt piano and violin, had swimming training, theatre workshops, speech and drama, all to keep me intellectually stimulated and active.”
Lacaze decided early on that the best way to achieve her goal to be a chief executive was via marketing, preferably for a major consumer goods company. So she quit Philip Morris and joined Nestle’s marketing graduate program, where she quickly rose through the ranks. It was there she met her husband, Wayne Morgan. The two later moved to Sydney.
Lacaze moved to ICI, which was the majority owner of fertiliser giant Incitec, in Melbourne. She then moved into telecommunications as the industry was undergoing the huge structural reform that led to the privatisation of Telstra. She held senior roles, including head of marketing, at Telstra under former chief executive Frank Blount.
When the children started arriving, Lacaze and her husband – who also had a demanding executive role that included a lot of travel – made an important decision. They agreed he would become the primary carer of their young family.
“There is no way I could achieve what I have in the workplace and have three pretty nice kids if it wasn’t for Wayne,” she says.
“But I knew in making that decision I was making a trade-off. There were days of their lives as children when they didn’t see me because I was away travelling or I was gone before they woke in the morning. If I had said I am happy to be a middle manager, I wouldn’t have needed to make that trade-off, but my aspiration was always something different.”
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Amanda Lacaze in her days as chief executive of AOL/7 with her favourite bits of tech: her tri-band mobile phone and secure identifier.Wade Laube
Morgan, who cooks a mean roast beef for Australian visitors and plays golf, says he had no problem moving to Kuantan. “We’ve not had an argument in 30 years of marriage. Some people think that’s because I always let Amanda have her way. But that’s not true. It is because we share the same values and priorities in life.” As well as her husband, Lacaze names Peter Madden and Peter Shore, former colleagues at Philip Morris and Telstra respectively, as other men who have been supportive of her career.
Lacaze got her wish to become a chief executive but it was never an easy ride. After Telstra, she oversaw corporate turnarounds at AOL7, a broadband joint venture between AOL, Seven Network and AAPT, Orion Telecommunications and then junior telco Commander Communications. The first two companies survived but, on the opening night of the Beijing Olympics in 2008 in the brutal early months of the global financial crisis, Commander went into administration.
“The only satisfaction I take from this is, because we had fixed it operationally, each of the businesses were sold as going concerns so most people got to keep their jobs, or they could get their entitlements and appropriate redundancy payments.”
Lacaze broke a promise to herself never to do something as difficult as Commander again when she joined the board of Lynas in January 2014 and realised the company, headed by Eric Noyrez at the time, was in deep trouble. It had just raised $40 million from shareholders but its losses were widening. Investors and lenders were alarmed. US rare earths company Molycorp, the other only major supplier besides Lynas outside China, went bankrupt the following year.
“When I arrived at Commander, it was awash in red ink, cash was just streaming out of the business. I came into Lynas and it was a degree of difficulty further.”
Sleepless nights
Lacaze shut down the Sydney HQ and upped stumps to Malaysia, where the focus was on making the plant more efficient, lowering costs and improving safety, as well as sorting out a long-running battle with Malaysia’s opposition party over allegations the plant’s wastewater discharge was unsafe.
Within a month, she had announced a cost-cutting plan aimed at tackling inefficiencies at the plant, which was producing the company’s flagship product, neodymium and praseodymium (NdPr), at just 60 per cent of capacity. NdPr is a combination of the two most commonly used rare earths elements that are found in hard disc drives, phones and the magnets for electric vehicles. Lynas also owns a mine at Mount Weld in Western Australia which ships materials to Malaysia for processing.
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Amanda Lacaze with Kerry Stokes, chief executive of Seven, and David Bedford, chairman of AOL Australia, at the press conference announcing the formation of AOL7. Bob Pearce
But the hairiest issue was renegotiating the company’s debt with its Japanese lenders, who were running out of patience. The company was running out of money. Things were so tight at one stage, Lacaze says, she looked at cutting back coffee in the staff room. It is unclear if she is joking.
“In the first two years here, in particular, it was hard and I mean like really hard. It was really hard for everyone here.
“Did I close the door and put my head in my hands and have a little cry? Not really. It’s such a waste of effort. But did I have nights when I sat bolt upright at 3am in the morning and thought, ‘What the f---?’ Maybe.
“Our lenders showed a lot of patience for a long time. Everyone bought into the philosophy there is a no win-loss scenario. We would either all win together or all lose together.”
It took three years but Lynas hit a turning point in December 2016 when it secured its second debt restructure. Lacaze took the family skiing in Japan for Christmas, her first holiday in years. “Up until then I still had sleepless nights. We had fixed it operationally, but were financially vulnerable. Then the price started to up, life started to get better.”
At the same time as Lynas got its house in order, demand for rare earths spiked again due to China’s environmental pollution controls and growing demand for electric vehicles.
Well aware of the price crash in 2011 and with the market still at the mercy of China, Lacaze does not believe it is always going to be smooth sailing. China’s environmental controls, which restrict rare earths production, have worked in Lynas’ favour, but Beijing also controls most of the world’s supply.
Still, investors and analysts are optimistic. Lynas turned a $78.7 million profit in the first half-year but, under the terms of its lending arrangements, cannot pay dividends. The company last made a full-year profit in 2000, when it was a gold miner.
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Amanda Lacaze shut down Sydney HQ and upped stumps to Malaysia. Carla Gottgens
“There will be a time when we have that conversation with our Japanese lenders,” Lacaze says. She remains ambitious, though, and wants Lynas back in the ASX 100.
“Amanda has driven down costs, and increased production consistently over the last few years, placing the company in a globally competitive position, at the same time dealing with a very precarious balance sheet,” says Curran & Co’s Evans. “She now has an outstanding track record. have full confidence she will deliver, most likely over deliver, on growth plans.”
With a current market capitalisation of $1.7 billion, Lacaze would have to more than double its value to reenter the ASX100. Lacaze wants to boost NdPr production to 600 tonnes a month by the first quarter of 2019 and target more niche but higher-margin markets by selling neodymium and praseodymium separately.
“A top 100 is $3.5 billion to $4 billion, so that gives you an idea of my appetite,” she says, without giving a time frame. The world’s largest producer is Northern Rare Earths in China. Lynas, whose biggest customers are in Japan, is also looking at opportunities in the US.
Lacaze does not welcome the prospect of a Sino-US trade war. “After the 2011 rare earths crisis, the price skyrocketed. Everyone got very drunk and the hangover was severe. That sort of volatility is not good for the market or our business. It resulted in demand destruction and customers got nervous about using rare earths.”
Safe snake-handling
Like many people, Lacaze did not know a lot about rare earths until she became a director of the company. Lynas has the biggest rare earths processing plant in the world. High-grade concentrate from Mount Weld is shipped to Malaysia, where it is mixed with concentrated sulphuric acid and heated in kilns to 1000 degrees, leached and run through a solvent extraction process.
As we enter one of the on-site laboratories, which contains an extraordinary amount of intellectual property, including software that “decodes” chemicals, Lacaze is talking about the myriad safety measures introduced since 2014. There is a poster on the wall promoting the company’s snake-handling program. As well as the 20,000 tonnes of sulphuric acid handled at the plant each month, there are other dangers, including cobras that visit from the surrounding tropical jungle. “There are monkeys, too,” she says.
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Lynas Corp CEO Amanda Lacaze has enjoyed strong Japanese backing. David Rowe
A young woman doing something complicated-looking with test tubes looks up sheepishly. “Don’t look so suspicious,” Lacaze laughs.
Lacaze says the staff are a big part of her motivation. She is angry at the debate in Australia about corporate tax and domestic politics which pits business against the unions.
“I really hate this concept of the hero CEO. No matter how hard I work or how smart I am, I cannot do what hundreds of people bringing their best effort every day can do.
“Just because I have a different job doesn’t make me a better person, which I think is the silliness that some people get carried away with. I hate this setting people apart. I just want to be someone who works hard and make people’s lives better.”
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