lyc pricing article

MELBOURNE, June 12 AAP - Lynas is worried that it is giving away
its rare earths products and has decided to draw a line in the sand
for its own prices.
Current spot prices of typical light rare earths are $US16-$US20
a kilogram, 25 per cent below the minimum sustainable level for
producers, according to Lynas.
Major industry participants in China, which controls most of the
world's supply, agreed the price falls were not sustainable, it
says.
Less than three years ago prices hit $100.
Lynas has set a new "minimum price schedule", which will come in
on July 1.
It will try to convince its mostly Chinese customers that they
should pay higher than market prices, because the benefits of
striking long-term contracts that guarantee supply are in their
interests.
Unprofitably low prices are something Lynas cannot afford after
only recently beginning production at its refinery in Malaysia,
following a protracted legal battle involving local and foreign
environmentalist opponents.
The company's shares slumped on the news, losing 1.75 cents, or
3.43 per cent, to 49.25 cents.
"Lynas believes that only prices which are sustainable for
producers and for customers will allow the REO (rare earths) market
to grow to its full potential over the long term," chief executive
Eric Noyrez said in a statement.
Rare earths have a large range of hi-tech uses, with the demand
growth expected to come in permanent magnets, devices used in cars
called automotive catalytic converters and fluid cracking catalysts
used in oil refineries.
Customers have recently been running down inventory and
contributing to the price falls.
The weak demand prompted Lynas to announce last week that it was
cutting costs and would wait for it to improve before increasing
production from 11,000 tonnes a year to 22,000.
At full capacity, it will produce up to a fifth of global rare
earths output.
Its Mt Weld mine in Western Australia is considered the world's
richest deposit of rare earth minerals.
AAP gr/dmc