Lynas CEO Digs In as Rare-Earth Prices
Slump
CEO Amanda Lacaze says it is time
for Lynas to invest more in sales and marketing to grow the
business
SYDNEY—As rare-earths miner Molycorp
Inc.
looks to wind down production at its U.S.
mine,
Lynas Corp.
Ltd., the
only other producer outside of China, hopes to do the opposite and
raise its output of elements used in batteries, magnets and other
high-tech products.
To accomplish that goal, the Australian-listed miner plans to do
one crucial thing: “Go out there and sell,” said Chief Executive
Amanda Lacaze, in an interview.
Lynas, a former market darling, has found it tough to become a
major competitor in the global rare-earths market.
The company was founded with an eye to breaking China’s
stranglehold on the industry: The world’s second-largest economy
has accounted for more than 90% of world-wide supply in recent
times. But it took nearly a decade of development before Lynas
began operations at its refinery in Malaysia’s Pahang state in late
2012.
Start-up of its processing plant in Malaysia was delayed by
repeated legal challenges, and the ramp-up of the plant has since
been hindered by technical setbacks and a relentless tumble in
rare-earths prices.
Now, after working through reliability issues at its processing
facility and restructuring its debts, Ms. Lacaze says it is time
for Lynas to invest more in sales and marketing to grow the
business.
“When this company was conceived, the idea was: Build it, and
they will come,” she said. “But Lynas was born when prices were
high, and the market has well and truly moved on.”
Lynas—which currently sells most of its resources to customers
in Japan—intends to pursue wind turbine manufacturers in Europe and
auto makers in North America as part of an aggressive strategy to
widen its customer base. It also plans to court more Japanese
customers, specifically for its lanthanum and cerium products, used
in petroleum refining and catalytic converters respectively.
‘Lynas was born when prices were high, and the market has well and
truly moved on.’
—Lynas Chief Executive Amanda Lacaze
.
Last month, the miner announced a restructuring of its long-term
debts, including extending the time it has to fully repay the
loans. Ms. Lacaze said that was a pivotal moment for the company,
which is now valued at roughly 135 million Australian dollars
(US$96 million) versus A$3.5 billion just a few years ago when rare
earth prices peaked.
She said many manufacturers had cut rare earths from their
products when prices ballooned five years ago -- after China
restricted its exports -- but hadn’t yet reintroduced them despite
sharp price declines.
“Now we need to convince end-users we are stable and financially
viable, and that it is time to engineer rare earths back in,” Ms.
Lacaze said.
The end of one of the biggest commodity bubbles in economic
history recently pushed U.S.-based rival Molycorp to file for
chapter 11 bankruptcy protection and suspend its Mountain Pass mine
on the California-Nevada border.
Lynas has been slashing costs to keep afloat. That has included
layoffs and relocating its headquarters to Malaysia from Australia,
in what Ms. Lacaze—who took the reins of the company 14 months
ago—described as “effectively a turnaround of a startup.”
At full steam, Lynas’s Malaysian facilities could produce up to
one-fifth of annual global output, according to previous company
estimates.
Ms. Lacaze said she now expects that Lynas can push the
Malaysian plant to full capacity—22,000 metric tons—by 2017. The
company projects output above 3,000 tons this quarter, from about
2,600 tons the quarter prior.
To be sure, hitting that long-run target rate won’t happen if
demand remains weak.
“I am not of the mind to use up our resources to sell at low
prices,” she said. “But we are certainly comfortable that it can be
achieved.”
By Rhiannon Hoyle Sept. 1, 2015 Wall Street
Journal