Lynas Surprises With Plans For New US Processing Operations

By Glenn Dyer | More Articles by Glenn Dyer

Monday’s statement from rare earths group Lynas Corp of an interesting idea for the US has left far more questions unanswered than it has resolved.

The announced plans to establish processing operations in the US has left the future of its operations (and hundreds of thousands of tonnes of waste material) in Malaysia up in the air, and left a huge question mark over talks with the WA government for some sort of plant that state.

Lynas is expected to provide an update later today of talks with the WA government, Malaysia and possibly Wesfarmers.

But from the tone and details in Monday’s statement, it seems Lynas is moving towards a growing processing operation in the US.

Lynas investors didn’t like the surprise and sent the shares down 1.25% to $1.975 in a wider market up 1.7% or more than 110 points.

Lynas told the ASX on Monday morning that it has signed a memorandum of understanding (MOU) with one of its US customers, Blue Line Corp, for a joint venture to process rare earths in Texas.

Lynas, the only rare earths processor outside China, said it would be the majority owner of the venture.

The deal plays into the escalating tensions between the US and China and last week’s technology crackdown by the Trump administration on dealings with China.

“Lynas is the largest producer of Rare Earth materials outside of China and has captured a significant percentage of Rare Earth materials produced worldwide today. Lynas has expertise in extraction, separation, and mining at its mine in Western Australia and separation facilities in Malaysia. Blue Line Corporation is a leading United States processor of Rare Earth products,” yesterday’s statement said.

“Rare Earths separation capacity has been absent from the United States for several years, and the Lynas / Blue Line joint venture aims to fill a key gap in the United States supply chain.

“Rare Earths are essential inputs to high technology, high growth industries in the digital age. The Lynas/Blue Line joint venture (JV) will help ensure that U.S. companies have continued access to Rare Earth products by providing a U.S. based source.

“The JV would be the only large-scale producer of separated medium and heavy Rare Earth products in the world, outside of China. Key uses of Rare Earths materials include permanent magnets, catalytic convertors, catalysts, batteries, electronics, polishing powders, and water treatment chemicals.”

Lynas said it and Blue Line “will work together exclusively over the next year on the proposed development of a Rare Earths separation facility at the Blue Line site in Hondo, Texas. Initially, the JV will focus on Heavy Rare Earths separation (including Dysprosium and Terbium), however, it may also include Light Rare Earths separation (including Neodymium, Praseodymium and Lanthanum),” the statement said.

There was no mention on how this would affect its billion-dollar Malaysian operations, which could be forced to close in September if Lynas does not remove more than 450,000 tonnes of low-level radioactive waste from the country.

Lynas also made no mention of the talks with the WA government for possible processing of the rare earths it mines at Mt Weld.

The company had been in talks with Wesfarmers about a processing joint venture in WA last year which led to a hostile $1.5 billion bid by the conglomerate in March.

The company is due to give an update to investors on this (Tuesday) morning.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →