Shares in Lynas Corporation Lrd [ASX:LYC] once again fell this morning by nearly 7% after the announcement of the half-year results. The fall is the latest in a series of rollercoaster-like changes for the company.
At time of writing, shares for the rare earth miner are valued at $1.67, down 6.7%.
Lynas Corp’s main production is based at their Mt Ward mine in Western Australia. The company also runs a successful — and controversial — chemical processing plant in Malaysia, where they are the world’s largest producer of Neodynium-Praseodymium (NdPr).
Production up, but barriers remain
Overall, Lynas remains in a strong position, but management admitted there were significant barricades to further growth during the last six months of 2018.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 39%, from $83 million to $50.8 million. Net profit fell by 63% to $19 million, although this is still above the $11 million profit initially projected by UBS.
Lynas Corp continues to face issues surrounding regulatory constraints, as well as low global prices for rare earth metals.
The company faced a shutdown of the chemical plant in December 2018, after they failed to secure approval for an increase in NdPr production following the call from the Malaysian government to remove 450,000 tonnes of radioactive waste from the site in September.
NdPr is a key ingredient in industrial magnets, which are used in the industrial and automotive industries. It’s a product Lynas Corp believes will be invaluable to production in the future.
What does the next half-year spell for Lynas?
The producer has revealed a deal has been made in the removal of the waste, which has continued to divide Malaysian authorities and residents for some time.
On the other hand, there is still no word on whether Lynas will be able to increase production — despite an independently appointed review committee finding operations to be ‘compliant’ and ‘low-risk’.
And even though the price of NdPr has stayed low, the report points to stable production of NdPr the Lynas NEXT project in the months leading up to the shutdown, as well as continued customer demand.
The pivotal tell in the next six months could come from Lynas’s ability to combine increased production of higher-grade NdPr with sustainable conditions as part of the Lynas NEXT project — assuming they can meet the Malaysian governments waste conditions.
For Markets & Money