Monsters of Rock: Lynas still in rare (earths) form as cash build continues for critical mineral darling
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Despite some price headwinds amid China’s COVID-lockdowns, the boss of Australia’s top rare earths company says the market remains buoyant for the collection of critical minerals used in electric vehicles and wind turbines.
Lynas Rare Earths (ASX:LYC) is sitting on almost a billion dollars in cold hard cash after producing 3650t of rare earths oxides in the June quarter, raking in $294.5m in revenue and $351m in sales receipts.
It now has $965.6m in the bank as its heads into the pointy end of the construction of a new $500 million cracking and leaching facility at Kalgoorlie in WA, not far from Lynas’ world class Mt Weld mine.
Lynas saw its production fall sharply at its Malaysian processing plant from 4945t in the March quarter due to water supply issues and has seen inflation increase the costs of chemical reagents used in its processing by around 20%.
But the output of its highest value product, neodymium-praseodymium oxide remained strong, down slightly from 1687t in the previous quarter to 1579t in the three months to June 30.
Despite a dip in Chinese NdPr prices in April which saw quarterly VAT excluded prices fall from an average US$139/kg in the March quarter to US$120/kg in the June quarter, Lynas’ overall selling price lifted to $79.2/kg, more than double the $39.1/kg it pulled in back in the fourth quarter of FY2021.
Lynas boss Amanda Lacaze said on a conference call the company remains focused on growing ‘at least as fast as the market’.
Despite China’s internally combusting economy, Lynas expects demand for NdFeB permanent magnets to double in scale from 130,000t in 2020 to 265,000t in 2030.
Most of Lynas’ production is sold outside the Chinese market, making it one of the few sources of rare earths outside the manufacturing powerhouse.
“I think China continues to be unpredictable for as long as the zero-COVID policy persists, but generally speaking, demand is strong and we’re not expecting to see any reduction in demand growth,” Lacaze said.
“And particularly not in outside China consumers and our customers’ demand has continued to grow.
“Bearing in mind, as everybody knows, most of our NdPr is sold outside of China and that demand has continued to be very strong and to grow right through the last year and customers are forecasting continued growth.
“We also have much more interest from magnet buyers in outside China areas seeking to secure their raw materials so we see that it’s a very robust sort of source of growth for the business as we move forward.”
Investors have been cooked with bad news for the past few days, what with copper on the nose and iron ore drifting below US$100/t.
They needed a feel good day and Monday had all that and more.
Was there much to underpin the positivity, or was this all some sort of buy the dip cultism?
Iron ore was looking better, with Singapore futures up 2.86% to US$99.25/t.
Dalian lifted from what was looking like a weak morning to cross to a 1.8% bump at 4.25pm AEST.
China’s financial regulator reportedly told banks to bail out property developers who were facing heat from home builders refusing to pay mortgages unless they got back to work on their apartments.
Investors in copper and battery metals stocks were jubilant, with OZ Minerals (ASX:OZL) up 4.98%, IGO (ASX:IGO), Mineral Resources (ASX:MIN) and Allkem (ASX:AKE) all in the green, and coal miner Whitehaven (ASX:WHC) lifting 5.17% after announcing a potential 15x lift in 2022 earnings with its quarterly today.