Lynas now a serious global player
Lynas Corporation is positioning itself to become the world's largest Western supplier of rare earths to the US military. Its latest capital raising will fund a de-risking of the business.
Aug 18, 2020 – 12.00am
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It took Amanda Lacaze six years but she has succeeded in turning Lynas Corporation into a serious global player in the geopolitically strategic rare earths industry.
Rare earths are critical to the manufacture of electric vehicles, green technologies, consumer electronics robotics, medical devices and military hardware.
Lynas chief executive Amanda Lacaze has overseen a fourfold rise in the company's market capitalisation. David Rowe
Lacaze's progress in turning around Lynas, which was a debt-laden mess when she became chief executive in June 2014, can be shown through a comparison of the latest capital raising with the emergency raising in September 2014.
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Six years ago, Lynas needed money to survive. It was forced to increase its issued capital by a third through the issue of about 1 billion shares to raise $83 million, taking the market capitalisation to $260 million.
The company has since done a one-for-10 share consolidation, which means this week's capital raising at $2.30 a share is priced about three times the level prevailing in 2014. Its market cap after the share issue will be $2 billion.
Lacaze says the significance of the capital raising is that Lynas now has control over its own destiny instead of having its actions influenced or dictated by providers of debt.
"Any debt will always come with strings attached – even kindly government debt will always have some strings attached to it," she says.
"With debt, you've always got some component of somebody else's timing or agenda associated with it.
"This equity raise really makes sure that we have our Kalgoorlie project – which is a foundational project on the way to get to our Lynas 2025 vision – clearly funded and clearly within our agenda and our control in terms of timing."
Beyond Wesfarmers
It will not have escaped the attention of Lynas shareholders that the company is issuing new shares at a price 5¢ a share higher than the $2.25 a share Wesfarmers offered to take over the entire company last year.
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Wesfarmers abandoned the Lynas takeover and turned its attention to lithium through the $776 million takeover of Kidman Resources, which included a commitment to spend $700 million in developing a mine and processing plant. This project is on hold.
Lacaze refuses to comment on Wesfarmers' failed takeover of Lynas, except to say: "I'm very focused on our business and our ability to continue to grow.
"But I think that one of the things we said to our shareholders over a year ago now was that we thought that we could deliver more value as a pure play than sitting inside somebody else's stable, and we remain committed to that."
RELATED Lynas hits green approval snag on new plant, waste storage plan
The construction of a new rare earths processing plant in Kalgoorlie will help de-risk the company's $1 billion Malaysian rare earths processing plant because it will remove the need for mildly radioactive material to be produced and stored in Malaysia.
The WA plant has been awarded major project status from the federal government and lead agency status from the state government.
Earlier this month, the Malaysian authorities cleared the way for Lynas to dispose of residue collected from its purification processes and stockpiled near the Lynas plant. This approval removes uncertainty over Lynas' operating licence, which now runs until 2023.
In tandem with its capital raising, Lynas released its full-year results that were hit by the forced closure of the Malaysian plant for 44 days because of COVID-19.
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Lacaze says the company had two good quarters where there were no operating constraints. Despite a 10-day shutdown in the final quarter of the year, Lynas had a record quarterly production of the rare earth metals neodymium and praseodymium.
"Our goal during the time that we were shut down was to make sure that we used that time wisely to really interrogate everything that we did and make sure that if we started up that we did it better than when we had shut down," she says.
"I'm actually very confident that we're pretty much there."
Lacaze says the most exciting thing about the Lynas expansion in WA is the creation of jobs.
"Lots of people are talking about the importance of funding Australian projects and all those sorts of things – we're actually doing it."
(20min delay)