Company Background In the 1983, Yilgangi Gold NL was founded by Nicholas Curtis in Sydney, Australia. The company took the name Lynas on 1985 and become publicly listed on Australian Securities Exchange (ASX) on 1986. On the year 2001, Lynas sold off it gold division and become more focused on rare earth. Nicholas Curtis were former executive director at Mcquarie Ltd (company involve in banking and finance and also an Australia company). Lynas company vision: Be the leader in Rare Earths for a sustainable future Lynas company values: Excellence in safety, health and the environment Learn from our differences and be open to change Operate in an honest, candid and transparent manner Inquire and innovate Deliver high quality products through excellence in processes Always respect and contribute to the communities in which we live Respect, support and empower our employees
Lynas main headquarter is situated in Sydney, Australia and its mining plant concentrated at Mount Weld located at western Australia. Lynas also have refining facility under constructions in Kuantan, Pahang, Malaysia. Lynas also own a rare earth deposit in Malawi in Africa. Although, now the deposit ownership is being fought between Michael Saner and Malawi Government. The rare earth that being mention above are a moderately abundant group of 15 metallic elements known as the Lanthanide series (atomic numbers 57 through to 71) plus Yttrium (39). Although Scandium (atomic number 21) is not a Rare Earth element, it is commonly included with the Lanthanides because of its similar properties.The 15 lanthanides are represented by the single square of lanthanum in the main part of the periodic table and listed in a separate sub group below the main groupings. In the periodic table:-
They range in crustal abundance from cerium, the most abundant, at 60 parts per million, which is in fact more abundant than nickel or copper, to thulium and lutetium, the least abundant Rare Earth element at about 0.5 parts per million. Rare Earths are not found as free metals in the earths crust, rather within a mixed cocktail of Rare Earth elements that need to be separated for their individual or combined commercial use. Despite their name, Rare Earths are relatively abundant in the earths crust, however are often of low quality and rarely presented in economic concentration. The first point to note about Rare Earths prices is that there is significant variance in the relative market value for selected Rare Earths oxides. Secondly, the price of Rare Earths depends on the purity level, which is largely set by the specifications for each application. The table below shows the average annual price for a 'standard 99% purity of individual elements and for the generic composite of Rare earths equivalent to the Rare Earths distribution at Mt Weld. Prices are quoted in US$/kg on an FOB China basis. Note that higher purity oxides and other value added properties will attract higher prices than those shown. FOB China Prices Rare Earth Oxide Lanthanum Oxide Cerium Oxide Neodymium Oxide Praseodymium Oxide Samarium Oxide Mt Weld Distribution 25.50% 46.74% 18.50% 5.32% 2.27% 2009 4.88 3.88 19.12 18.03 3.40 2010 22.40 21.60 49.50 48.00 14.40 2011 104.10 102.00 234.40 197.30 103.40 Q3 2011 117.68 118.65 338.85 244.73 129.45 Q4 2011 66.46 59.31 244.23 209.62 95.31 5/03/12 32.00 33.00 160.00 160.00 70.00
Dysprosium Oxide Europium Oxide Terbium Oxide Av. Mt Weld Composition
0.124% 0.443% 0.068%
115.67 231.60 1449.80 2262.31 2032.31 1370.00 492.92 559.80 2842.90 4900.00 3800.00 3420.00 361.67 557.80 2334.20 3761.54 2973.85 2520.00 10.32 31.35 147.96 193.21 123.69 82.72
The table below shows the domestic Chinese price (the price inside China) for Rare Earths in US$/kg; the domestic price is related to the FOB price and can be calculated by taking FOB price less VAT, less export taxes (which range for 15% to 25%), the export quota cost; there may be some timing differences between the movements of internal and external China prices. The average price shown is based on the Mt Weld distribution. China Domestic Prices Rare Earth Oxide Lanthanum Oxide Cerium Oxide Neodymium Oxide Praseodymium Oxide Samarium Oxide Dysprosium Oxide Europium Oxide Terbium Oxide Av. Mt Weld Composition Mt Weld Distribution 25.50% 46.74% 18.50% 5.32% 2.27% 0.124% 0.443% 0.068% Oct 2011 19.78 22.47 151.90 126.58 15.82 Nov 2011 18.43 20.47 113.39 105.51 14.96 Dec 2011 16.64 19.02 103.01 88.75 12.68 Jan 2012 16.69 19.08 103.34 89.03 12.72 953.90 Feb 2012 13.51 13.51 85.85 74.72 12.72 715.42 Mar 2012 13.02 13.33 82.54 73.02 12.70 666.67
1265.82 1039.37 950.87
2531.65 2283.46 1870.05 1875.99 1510.33 1460.32 2065.96 1653.54 1584.29 1589.83 1112.88 1111.11 65.52 54.30 48.25 48.40 38.65 37.44
Whilst China dominates the production of Rare Earths, the Chinese resource base is fragile. On 15 July 2011 the Ministry of Commerce of the Peoples Republic of China released 15,738 tonnes of approved Rare Earths export quota for the second half of 2011. The total
export quota for 2011 is therefore 30,184 tonnes for both local and foreign owned companies. This is slightly lower than the total quota for 2010 of 30,259 tonnes. However in May this year the Ministry of Commerce and General Administration of Customs jointly issued a notice stating, from 20 May 2011 onwards, ferrous alloys containing Rare Earths elements greater than 10% by weight of the total content shall be included into the Rare Earths export quota license management system.Examples of ferrous alloys now under the quota system are ferro-dysprosium alloys and ferro-terbium alloys. Industry sources estimate that ferrous alloys with Rare Earths greater than 10% by weight would account for at least 2,000 tonnes of exports. Note that the customs code used appears to exclude magnet alloys at this time. The addition of ferrous alloys means the quota is actually being tightened because more products will compete for limited allowances. Therefore Lynas estimates the net result of the total 2011 export quota released, when taking into account the new material requiring export quota is, at a minimum, a 7% reduction compared to 2010. The total export quota available remains well below the demand for Rare Earths outside of China, and is likely to result in continued shortages of available Rare Earths. There has been much recent public discussion about the forecast imminent shortage of Rare Earths and the potential impact on industries that rely on Rare Earths. The looming supply deficiency has been apparent for the past decade.As demonstrated by the customers with whom Lynas has contracts to supply Rare Earths products, commercial solutions are available.
Lynas RED Brand Lynas have established and registered internationally their own RED brand (Rare Earths Direct). All Rare Earths product marketed by the company will be sold through this brand and the aim is to make the brand a global benchmark for quality and demonstrated continuity of supply. Lynas RED brand presents three key value propositions: Building a fully integrated supply system from mine to customer; Producing Rare Earths that meet the worlds environmental standards; and Marketing an international brand of guaranteed quality. Lynas development of the RED model ensures maximum profitability across the value chain through the entire business cycle, and creates a robust and enduring enterprise with the ability for further expansion.
Back to first location of Lynas mining plant Mount Weld, this location is the largest known high grade quality of rare earth deposit. The deposit is additionally unusual because it contains very low levels of thorium, a radioactive contaminant commonly found together with rare earth elements. The combination of large resource, high grades and low thorium contamination make it a particularly attractive commercial proposition. The ore produced at Mount Weld is concentrated onsite and is intended to then be shipped to the Lynas Advanced Materials Plant (LAMP) in Malaysia for refining.
Above view on Mount Weld There a few issues concerning the deposit on the Mount Weld. In May 2009 Lynas was offered funding of $252 million by the Chinese state-owned China Non-Ferrous Metal Mining (Group) Co., which would have taken a 51.6% stake in the company. However the deal was scrapped by Australia's Foreign Investment Review Board on concern it would threaten supply to non-Chinese buyers. Lynas later raised $450 million in a share sale. There also issues with Japanese company Sojitz. In November 2010 Lynas signed an agreement with Sojitz to export $350 million worth of rare earth minerals from Mount Weld. Also shipments of concentrate to Malaysia are expected to commence in 2012 once the Lynas Advance Materials Plant (LAMP) has been completed. In April 2011, Lynas was attempting to sell its Crown polymetallic deposit (which is particularly prospective for niobium) at Mount Weld to Forge Resources. Forge, a company listed on the ASX, also shares the one and only common Director and CEO of Lynas, Nicholas Curtis, although former Lynas executive director Harry Wang is also involved with Forge and the transaction. In a 2007 Company presentation, Lynas claimed that the Crown deposit was worth $50 billion but have valued it at $20.7 million for sale to Forge. Curtis as a director of Forge would receive a 24,000,000 performance shares if the deal between Lynas and Forge proceeds. Certain commentators and journalists have called into question the regulatory oversight of the Australian Securities and Investment Commission (ASIC) as to the legality of such a proposal, but were proven to have been uninformed or alarmist because the proposal was
always subject to the approval of independent shareholders at an Extraordinary General Meeting (EGM). The EGM was cancelled by Lynas after shareholder oppo