Suddenly there’s a lot of money in rare earth prices, and after promising a lot and delivering little for years, Lynas has proved that solid hard work can end up realising all that potential in a patch of dirt in WA.
Thanks to tough cost controls and a rising fear of being beholden to China for this increasingly vital group of minerals, Lynas delivered a record $157 million net profit for the year to June 30 despite COVID restricting its production of the ore.
At the same time better relations with the government and people around its Malaysian refinery helped take pressure of management time.
Revenue soared more than 60% to $489 million as the average selling price for its ores jumped by more than $8 a kilo to $29.80 while cost of sales rose just $45 million to $302 million.
It resulted in the company rebounding from a $19.4 million loss for the 2020 financial year to a $157 million profit.
“Strong cost controls were maintained as we benefited from favourable market conditions for Rare Earth materials,” Lynas CEO Amanda Lacaze told the market on Friday
“The effects of the COVID-19 pandemic, especially in Malaysia, continue to present significant operational challenges … we continue our extensive testing programme and isolation of staff that have been exposed to positive cases which may, from time to time, affect our production outcomes.”
Ms Lacaze said the market rebound – despite the ongoing pandemic – reinforces the global importance of rare earths, especially as the world heads towards a renewable future.
Rare earths are 17 elements crucial to the manufacture of many hi-tech products such as magnets, mobile phones, electric cars, wind turbines and in defence applications.
Lynas, the only significant rare earth producer outside of China.
It produces rare earth ores from its Mount Weld mine West Australian mine and processes the ore in Malaysia. The company is investing heavily in processing in both WA and the US.
Lynas had debt of $156 million at June 30 and total cash of $680 million.
Lynas did not offer any guidance for the current year. There was no dividend.
