Lynas aiming for long-term offtake agreements

PERTH (miningweekly.com) – Rare earths producer Lynas said on Monday that the company was looking to implement long-term offtake agreements with a variety of pricing mechanisms.

MD Amanda Lacaze told shareholders at the company’s annual general meeting that Lynas already had a long-term contract in place for its cerium product, which had a mutually beneficial pricing mechanism that had been exercised in both directions.

“The greatest value to both our firms has been the guarantee offtake/supply. For Lynas, this has allowed us to grow production knowing that we have a key customer for our highest-volume, lowest-value product.”

Lacaze reported that Lynas was working with a number of customers, which were seeking price predictability up to 2017, to secure long-term offtake agreements. These agreements would make use of a variety of pricing mechanisms, including fixed pricing.

“We believe working in partnership with these customers and together focusing on value creation will deliver greater growth for their businesses and for ours, than continuing to play the rare earths price casino.”

Lacaze added that Lynas also had a number of other strategies lined up to improve the resilience of its revenue line in order to grow its business.

“We are facing a new set of challenges for 2016. Our focus last year was improving our internal operations. Our focus in 2016 is to continue to improve our operations while tackling the challenges of the market in which we compete.”

During the 2015 financial year, Lynas reduced its general and administrative expenses by A$84.2-million, while an impairment review on the carrying value of the Lynas Advanced Materials Plant, in Malaysia, and the Mt Weld assets, in Western Australia, narrowed to A$16.8-million, compared with an impairment of A$196.4-million reported last year.