Business Commentary

Covid-19: Relief as Lynas restarts at 70 per cent

The Lynas Advanced Materials Plant in Gebeng, Kuantan, which processes rare earths is the biggest of its kind outside China.

Syndicated News
Written by Syndicated News

By Bevis Yeo

stockhead.com.au

May 4 2020

With the Covid-19 pandemic highlighting just how vulnerable the supply chain for rare earths – indeed most materials – are to disruptions, it must come as some relief that Lynas Corporation (ASX:LYC) will restart its Malaysian processing plant today.

The company, which is the only significant rare earths producer outside of China, was forced to halt production at the plant in late March to comply with the Malaysian government’s movement control orders that were put in place to arrest the spread of the virus.

Malaysia’s Prime Minister announced at the beginning of May that almost all economic sectors, including manufacturing, will be allowed to operate from May 4.

Lynas says it has already implemented strict health and hygiene protocols that comply with government requirements.

It will restart its plant at about 70 per cent of its production rates, allowing the company to refill its supply chains and restock depleted inventories of critical minerals.

The Covid-19 outbreak, which first shut rare earths production in China before the Lynas shutdown, has really brought the need to diversify rare earths supply up to the attention of governments and companies worldwide.

Rare earths are essential for a range of applications particularly neodymium-praseodymium (NdPr) being key for the production of permanent magnets that are used in the motors of electric cars and offshore wind turbines.

While the pandemic has undoubtedly hurt short-term demand, the mid to long-term outlook for rare earths remains strongly positive due to growing populations and the continued move towards the green economy.

Junior Australian companies such as Arafura Resources (ASX:ARU)Hexagon Energy Materials (ASX:HXG)Ionic Rare Earths (ASX:IXR) and RareX (ASX:REE) have all ramped up their efforts to bring their projects closer to fruition while Northern Minerals (ASX:NTU) recently completed a $22m placement to continue development of its projects and for expenditure relating to the care and maintenance of its Browns Range pilot plant.

Meanwhile, Pensana Rare Earths (ASX:PM8) has secured a new exploration licence prospective for NdPr mineralisation adjacent to its Longonjo project in Angola.

The award of the 7,456sqkm Coola project comes just a week after it was awarded the mining title for Longonjo.

Coola contains two known carbonatites with reported NdPr mineralisation. It also hosts five additional alkaline intrusive complexes and five strong geophysical anomalies that provides the company with a range of “walk-up” exploration targets.

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