KUALA LUMPUR, Aug 1 — After months of controversy, Australian rare earth miner Lynas Corp got off to a “disappointing” start last quarter when a weak market saw its venture in Gebeng, Pahang, run into losses.
According to the maiden quarterly report released on its website yesterday, the company earned A$600,000 (RM1.8 million) from sales of 117 tonnes of rare earth products shipped in the quarter ending June, which is just over A$5 per kg.
In comparison, production costs at the Lynas Advanced Materials Plant (LAMP) stand at around A$15 per kg, according to Lynas. The market price for rare earths is currently estimated at A$29 per kg.
“Rare earths market volumes and prices have been extremely challenging for the past six months,” Lynas CEO Eric Noyrez told Australian news channel ABC, describing the result as “disappointing”.
“We have a slow start and I want to recognise it and not hide it,” he added.
Lynas attributed the lower earnings to weakening prices of minerals, especially as the average “basket price” of rare earth products from its Mount Weld mine has fallen by 21 per cent compared to the prior quarter.
The company also has been selling products below market prices in the first sales to allow its customers to certify them. It has also sold less of its more expensive products, which had lower demand in the quarter.
The weak market has also caused Lynas to hold off its production to only Phase 1 level at 11,000 tonnes per year, until prices recover.
The plant was originally scheduled to start its Phase 2 and produce up to 22,000 tonnes per year in the third quarter of this year.
Productivity has also been low after Lynas discovered some clogging and premature wearing of equipment in LAMP’s cracking and leaching units.
The hurdles came as Lynas was forced to delay plans to develop the new Duncan Deposit in Mount Weld, making its shares one of the worst performers in Australia’s ASX stock exchange yesterday.
Despite the less than rosy performance, Lynas is finally making money after months facing three separate legal challenges in obtaining temporary operating licences (TOL).
Just last week, a group of residents withdrew their appeal against the Kuantan High Court decision to let Lynas intervene in their judicial review application after the Court of Appeal dismissed a similar application from another group.
Lynas has also highlighted in its report that LAMP’s emission levels have been “significantly lower” since operations started in November last year, causing Lynas to drop its defamation suit against environmental activists Save Malaysia Stop Lynas (SMSL) last month.
“Now that the facts are available to demonstrate that the LAMP is safe, Lynas believes it is time to recognise the opportunities arising from the project ... As such, Lynas believes there is no value in continuing disputes with members of our local community,” said the report.
Lynas will keep its TOL until plans for a permanent waste disposal facility are approved. The plan was submitted early last month, according to Noyrez.
