Lynas Corp, the only rare land producer outside of China, has warned that the closure of a protracted processing plant in Malaysia would damage supply security for critical industries including medical equipment and automotive manufacturers.
Groups registered in Australia said on Wednesday that they asked the Malaysian government for an exception to reopen its facilities, which Kuala Lumpur closed last month because of social distance rules aimed at slowing the spread of the corona virus.
But Lynas said disruptions to production – which fell 18 percent in the March quarter from the same period last year – and weak prices could force him to use government funds to complete a separate capital project worth A $ 500 million ($ 317 million) that was vital for his company . operation.
Amanda Lacaze, chief executive, said the company was considering seeking support from Japan, Australia or the US, which considers the Lynas non-China facility to be strategically important, to complete an ore processing plant in Kalgoorlie, Australia.
“We always propose to fund it ourselves [plant] based on cash flow generated by the business. Now if there is a continuing decline in the industry it can affect our ability to do that, “Ms Lacaze told the Financial Times.
Kuala Lumpur has told Lynas that in order to maintain its operating license, he had to build facilities abroad in 2023 until handle radioactive waste generated during tillage is rare at its plant in Malaysia.
Ms Lacaze said she was optimistic Lynas would win approval to reopen the Malaysian plant, which supplies more than 10 percent of the world’s rare earth – a group of 17 unknown minerals widely used by the electronics and oil and gas industries and important for magnets used in turbines wind and electric cars.
But he said the disruption caused by the coronavirus pandemic again highlighted the need for diversification of supply chains away from China, which accounts for nearly 90 percent of the world’s rare earth production.
“This is a call to awaken many end users in the west, some of whom have a single geographic dependency on their supply chains,” he said. “Diversity of supply is very important.”
Last year, rising trade tensions between the US and China sparked fears that Beijing could use its rare domination to pressure President Donald Trump.
Ms Lacaze said supply chain diversification had begun, noting that Japanese magnet makers were investing at home and in Southeast Asia assisted by funds from the Japanese and US governments.
“This is a recognition that if you source all your products from one area just because it’s cheap if you can’t get the product it no longer looks cheap,” he said.
In the March quarter, Lynas supplied only one tenth of rare earth products to customers in China, down from 38 percent two years earlier.
Lynas too Take part in two US government tenders to build rare earth facilities in the state of Texas.
Andrew White, an analyst with Sydney-based broker Curran & Co, said Lynas competes with rival companies for US funding but can make a convincing case because of the reliability of existing operations.
“That will depend on how much the US government wants to comply with ‘Made in America by American type policies,” he said.
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