Excerpts for relevance from an article on Lynas in today's AFR,...

Excerpts for relevance from an article on Lynas in today's AFR, my bold:

Lynas has a problem that (CEO) Lacaze is trying to solve: finding a source of the heavy rare earths terbium and dysprosium vital to its backers in the US Defence Department. If M&A is the answer, then it stands to reason Lacaze’s horizon extends beyond the edge of the Mojave Desert, where Mountain Pass is located. A unified Lynas and MP Materials would have brought together the world’s two biggest non-China producers of rare earths. Their talks concluded before the merits of such a tie-up could be sold to investors.

‘‘We have a market which is dominated by single geography (ie China), and opportunities for us to improve the dynamics of the outside-China market are somewhat limited, but we need to explore them. ‘We’ve explored that [via a potential deal with MP]. It didn’t end up with us moving forward, but it’s always worthwhile.’’

Lynas and MP Materials produce light rare earths in the form of neodymium and praseodymium (NdPr), the price of which has halved over the past year.

Lynas says soft rare earths prices are linked to weakness in the Chinese construction sector and demand for appliances such as air conditioners that contain rare earths materials. Rare earths are also vital in renewables and defence technologies, where the US and Japan put a high priority on non-China supply chains.

The talks with MP Materials came after China banned the export of rare earths extraction and separation technologies, and with the US tax breaks for downstream investment in the industry under consideration. Any tax benefits are on top of US defence backing for Lynas and MP Materials to move into downstream processing closer to home.

MP Materials is slowing the ramp-up of its own refinery in response to low prices and to reduce costs. (CEO) Litinsky argues Wall Street has declared ‘‘Armageddon for the electric vehicle’’ after disappointing sales, and predicts more critical minerals mining projects will be cancelled. ‘‘That said, it is not economically rational to paint that broad brush equally across the material space. In rare earths, China controls in excess of 80 per cent of the market via two super majors, and then the remaining almost 20 per cent is MP and Lynas,’’ he told analysts.

MP Materials produced 150 tonnes of NdPr at its refinery at Mountain Pass in October-December, but Lacaze indicated the facility was still in the development stage and would face more challenges: ‘‘They don’t have an established US refinery. We’ve been there, done that in terms of how long it takes to ramp up and develop,’’ she said.

The Lynas refinery in Malaysia, used to process rare earths from WA, was shut for six weeks for maintenance at the end of the first half. Restarted in January, it is slated to produce up to 10,500 tonnes of NdPr a year.Lynas invested $347 million in capital projects in the half, with a cash balance of $686.1 million.

As for its heavy rare earths quandary, Lynas will weigh up options to develop a mine in Malaysia, where it has newfound certainty around the licence to operate its refinery. It will also consider options in ionic clay-based rare earths in Australia and buying projects in South America. One of the requirements of Washington in offering up almost $400 million to support Lynas is that it can supply the heavy rare earths it needs in modern weapon systems.

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Ash here.

This graphic from NTU's cap raise August 2023 illustrates the problem Lynas/MP Minerals has and the opportunity before ILU/NTU:


Non-China DyTb supply is a key industrial objective throughout the West. These countries are prepared to fund the creation of REE production chains. They are rational player and will focus efforts on operations that can deliver.

They need ILU's under-construction refinery. ILU in turn needs NTU to sweeten their mix. Together they put daylight between Eneabba and Lynas' efforts.

Wolverine is a shovel-ready fully-permitted project. The giant unknown is in how much support NTU can expect from governments and whether it is grants or loans.

I gesture at the opportunity. There it is. GLTAH & DYOR.

Ash