| Lynas' Malaysia plant Hits Record ProductionDespite ongoing COVID-19, logistics and water supply challenges during the year, Malaysian operations averaged approximately 81% of Lynas NEXT production capacity, sufficient to meet its key customers' needs. In the March quarter, a record NdPr production of 1,687 tonnes was achieved, including over 600 tonnes of NdPr production in the month of March for the first time since the pandemic began. An industrial plan has been developed for the Lynas Malaysia plant for capital expenditure over the next two to three years. The planned works include: · Ongoing works required for the Lynas Malaysia plant to receive and process the mixed rare earth carbonate (MREC) feedstock from the Kalgoorlie Rare Earths Processing Facility (including facilities for unloading and receiving, sulphate removal and dissolution), · the works required in the solvent extraction and product finishing areas to achieve the capacity uplift to 10,500 tpa NdPr finished product; · repurposing existing equipment to expand the range of products; and · other efficiency initiatives. During the year, construction commenced on the Malaysian permanent disposal facility (PDF) for WLP residue, and the Malaysian Operating Licence was updated to include a Class G licence for WLP disposal activities in the PDF. Kalgoorlie facility is a future growth storyThe new Rare Earths Processing Facility in Kalgoorlie is a foundation project of the Lynas growth plan. There was continued progress on the facility during the year. Receipt of full approvals for construction of the Kalgoorlie Project was received in February 2022, allowing construction activities at the site to progress. All five kiln drum sections, the four riding rings, sixteen rollers, two main drives and an auxiliary drive have been lifted into position and assembled. The kiln was rotated under its own power during the final quarter of FY2022. Work on concrete, foundations and frames for key buildings has progressed rapidly. Tank farm earthworks completed and blinding concrete installed. Waste Gas Plant foundation construction is now underway. The 20,000m3 raw water tank is complete, two 1700m3 water treatment tanks are complete, and the fabrication of two 1300m3 tanks is complete. The key personnel in the Operational and Maintenance Leadership teams have been recruited and commenced work. Lynas USA is positioning the firm for longevityIn keeping with the Lynas 2025 growth vision to have upstream processing close to the resources and downstream processing close to their customers, Lynas is currently in the planning phase for the proposed U.S. Rare Earths Separation Facility. Lynas has now received funding grants from the United States Government for:Construction of a Heavy Rare Earths separation facility in the United States. Following successful completion of the Phase 1 contract (contract announced 27 July 2020), Lynas was awarded a follow-on contract for approximately US$120 million with the U.S. Department of Defense to build a commercial Heavy Rare Earths separation facility in the U.S (announced 14 June 2022). Following completion of the site selection process, the facility is expected to be located within an existing industrial area on the Gulf Coast in Texas. It will house both the Heavy Rare Earths separation facility and the planned Light Rare Earth separation facility (announced on 22 January 2021). Construction of a commercial Light Rare Earths separation plant in the United States. Lynas was awarded a funding contract with the U.S. Department of Defense or Pentagon for constructing a Light Rare Earths separation facility with funding to be capped at approximately US$30 million, and Lynas contributed a matching amount. Investment ThesisUnderpinned by record production numbers and high rare earth prices, the 2022 financial year was exceptional for Lynas as the company delivered another record profit. Market conditions were favourable throughout the year, and demand for Lynas' rare earth materials remained strong. The external environment continued to be challenging due to the COVID-19 pandemic, logistics and the inflationary environment; however, effective solutions were implemented to mitigate these challenges. Sales revenue rose to $920 million, an increase of 88.1% on FY2021, and a Net Profit After Tax (NPAT) of $540.8 million was achieved, a 244% increase on the FY2021 NPAT. Lynas' EPS has gone from 18.08 cents in FY21 to 59.95 in FY22. In the second half of FY2022, in particular, rare earth prices were sustained at high levels, especially the NdPr price, which remained between 70% and 80% higher than at the same time last year. The average China Domestic Price for NdPr during the final quarter of FY2022 was US$120/kg. Lynas began using a combination of commercial shipping and charter shipping to transport concentrate from Fremantle to Lynas Malaysia during the year, mitigating the risk of unforeseen delays in commercial shipping schedules. As has been reported across the industry, various cost categories have seen significant increases over the past 12 months. The high commodity prices for rare earths and Lynas' ever-increasing production numbers have not just offset inflationary costs but have surpassed them by an eye-opening margin. |
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