PERTH (miningweekly.com) – Rare earths miner Lynas has reported a solid end to its 2022 financial year, with sales revenue reaching A$294.5-million, down from the A$327.7-million reported in the third quarter.
Lynas on Monday reported that total rare earth oxide production for the fourth quarter declined to 3 650 t, down from the 4 945 t produced in the previous quarter, while neodymium praseodymium (NdPr) production declined from 1 687 t to 1 579 t in the same period.
Production during the quarter under review was affected by ongoing and unpredictable water supply interruptions from the company’s local supplier in Malaysia.
“Lynas has continued to realise the benefits of robust market pricing and demand despite continued challenges in the external environment. Our year-end cash balance of A$965.6-million provides a confident basis for funding continued growth as demand grows,” said CEO Amanda Lacaze.
“Record sales receipts of A$351-million were achieved in the quarter. Sales revenue of A$294.5-million was the second highest quarterly result recorded reflecting slightly lower production primarily due to water shortages in Malaysia.”
Lacaze noted that during the period under review, rare earth prices were sustained at recent high levels, especially the NdPr price, which remained between 70% and 80% higher than at the same time last year.
The average China Domestic Price for NdPr during the quarter was $120/kg.
“Demand for Lynas’ products remained strong in the quarter, with the majority of our products sold in the outside China market,” she added.
Lacaze noted that in terms of production issues, Lynas has, over the past five years, implemented several mitigating strategies to deal with the frequent interruptions to water supply including additional process water storage on site and use of other natural local water sources.
However, she noted that the frequency and severity of the outages this quarter necessitated several partial or complete temporary production halts which affected production volumes.
“As a further improvement our team has now designed a process modification with the objective of decreasing fresh water consumption by 40% at the Lynas Malaysia plant. This modification will be implemented during next quarter and is expected to substantially reduce exposure to water supply issues going forward while being consistent with best practice sustainability principles,” she said.
During the quarter, Lynas continued to use both commercial shipping and charter shipping to transport concentrate from Fremantle to Lynas Malaysia, mitigating the risk of unforeseen delays in commercial shipping schedules.
“As has been reported across industry, various cost categories have seen significant increases over the past 12 months. Royalty cost increases follow price increases in the market, freight costs were approximately double due to global shipping cost increases and the addition of charter ships to mitigate the impact of port and shipment delays. Chemical input costs have increased by approximately 20% with some specific chemicals seeing changes of up to 70%.
“More recent shipping and chemical cost developments indicate a moderation of the price pressures and in some instances even show prices retreating from their most recent highs. Notwithstanding these recent trends, we have redoubled our focus on opportunities to improve efficiency, recognising the continued uncertain external conditions,” Lacaze said.