Lynas Seeking to Lure Auto, Wind Customers to Boost Plant Output

Lynas Corp., one of only two major rare earths producers outside China, is in supply talks with auto and wind-turbine makers in a bid to reach full production at its A$1 billion ($737 million) plant in Malaysia.

Lynas held discussions this month with a carmaker that turned its back on rare earths after prices surged in 2011, Chief Executive Officer Amanda Lacaze said in an interview, declining to identify the company.

“As energy efficient cars become the norm, rare earths are the best technical solution,” Lacaze said. Wind turbines are another “very large potential growth sector,” she said.

Prices of rare earths, 17 chemical elements used in products from smart phones and cruise missiles as well as electric cars and turbines, soared in 2011 as China, the largest producer, restricted exports. Lanthanum oxide, used in hybrid-car batteries, and neodymium, in magnets, both jumped fivefold during 2011. Cerium, for glass polishing, soared sixfold.

Some consumers, including magnet maker Hitachi Metals Ltd. and General Electric Co., scaled back their use of the materials or, like Toyota Motor Corp., switched to cheaper alternatives. Lanthanum plunged 93 percent since it reached a high of 164,000 yuan a metric ton on June 13, 2011.

Lynas, which supplies the majority of its rare earth oxides to Japanese customers, is currently using only about 75 percent of capacity at its plant amid the weak prices, she said.

Molycorp Bankruptcy

“We have a plant that’s capable of producing 22,000 tons of rare earths products by design, and we want to get to there,” Lacaze said in the July 17 interview. “We are looking to grow the market, and to grow our share of market, because clearly we want to use that capacity.”

Molycorp Inc., the other major supplier outside China, this month won bankruptcy court approval to take out a short-term loan to keep operating while it reorganizes and decides whether to close its only mine.

Lanthanum closed Friday at 12,000 yuan ($1,933) a metric ton, according to Shanghai Steelhome Information prices.

Lynas is seeking to update investors over a potential recapitalization within “weeks and not months,” according to Lacaze. “We are in active and positive discussions with both of the debt holder groups,” she said.

The producer, which has a market value of A$128 million, has a $225 million loan facility with Sojitz Corp. and Japan Oil, Gas and Metals National Corp., with repayments scheduled through June 2016, according to a March filing. It also has $225 million in convertible bonds due in July 2016, the filing said.

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