LYC 0.60% $6.66 lynas rare earths limited

Triple Trifecta Week - July 28 Court; EIA; Quarterly Report, page-67

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    Lynas, BHP deal set to boost rare earth supply

    Lynas Rare Earths and BHP are set to emerge as powerful partners looking to boost supply of materials essential to electrification out of Western Australia.

    It is understood Lynas has struck a deal for BHP’s resurgent nickel business to supply it with sulphuric acid, a key input in processing of rare earths.

    The acid will come from BHP’s nickel smelter at Kalgoorlie as the mining giant expands its footprint in battery metals to supply the likes of Elon Musk’s Tesla.


    Lynas is being welcomed with open arms in Kalgoorlie, where it is investing close to $500 million in rare earths cracking and leaching operations unwanted in Malaysia after a campaign against the storage of low-level radioactive waste.

    The City of Kalgoorlie-Boulder has signed off on a deal to invest $3.4 million of ratepayer funds in supplying Lynas with treated effluent.

    The treated effluent will come at a fraction of the cost miners are now paying for supply from the WA Government’s Water Corporation through an historic pipeline to Kalgoorlie opened by Andrew Forrest’s great, great uncle and then-premier in 1903.

    However, the cost will still be about 20 times higher than what Lynas pays for water in Malaysia.

    Lynas’s existing cracking and leaching operations sit in Malaysia’s petrochemical heartland and benefit from water and chemical costs.

    The company had faced the prospect of building its own chemical plant in WA if unable to secure a deal with BHP or another third party for sulphuric acid.

    In turn, it is understood BHP is looking to tap a water supply deal similar to Lynas’ with the City of Kalgoorlie-Boulder.

    Lynas vice-president of upstream Kam Leung said the city’s offer to co-invest by supplying water was a key factor in the company opting to invest in Kalgoorlie, about 300 kilometres north-east of its Mount Weld mine.

    Lynas announced on Monday that recent drilling has indicated mineralisation at Mount Weld extends at least 1000 metres into a volcanic plug that is 3.5 kilometres in diameter.

    Mr Leung was tight-lipped about any deal with BHP but said Lynas was looking to keep operating costs as low as possible to compete with its Chinese rivals in rare earths.

    The Kalgoorlie plant will send rare earths carbonate to another new Lynas facility in Texas, which is being partially funded by the Pentagon as part of effort to break China’s near stranglehold on supply of materials essential in military applications, electronics, electric vehicles and wind turbines.

    Lynas is racing the clock to have the Kalgoorlie plant up and running under a deadline imposed by Malaysia to stop cracking and leaching and building on stockpiles of low level radioactive waste.

    Mr Leung said the plant could be just the first phase of investment in Kalgoorlie as the company looked to boost production.

    Kalgoorlie mayor John Bowler said the city would supply Lynas with water at a quarter of the cost charged by the WA’s Water Corporation.

    “We are looking to spend about $3.4 million getting our pumping and our storage and our piping up to where their plant is so we can get water to them,” he said.

    “We are putting big investment to sell water to them but we’ll get that back in just over a year and from then on it is pure profit for ratepayers.”

    Mr Bowler said miners once enjoyed discounts on water from the Perth to Kalgoorlie pipelinebut those deals had dried up.

    “The Water Corporation is now charging all companies some of the highest prices for water in western world,” he said.

    “Water has become very valuable in Kalgoorlie.”

 
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