32 | FORBES ASIA DECEMBER 2017
and Australian telecommunications leader Telstra, where she
worked as marketing director. It was her marketing and man-
agement skills that persuaded Lynas to hire her as CEO in 2014.
Those skills have been instrumental in smoothing relations
with the Malaysian government, particularly on the thorny
issue of preventing leaks of radioactive waste. Lynas is required
to report regularly to the Malaysian Atomic Energy Licensing
Board, as well as pay a security deposit.
Lynas’ rare earths come from the Mount Weld mine in
Western Australia. It’s an unusual mine because it does not
operate continuously. Instead, roughly two “campaigns” a
year lasting a few months each are all that’s required to extract
enough ore for a year of processing in Malaysia.
Richer in rare earths than most Chinese mines, Mount
Weld is a competitive advantage for Lynas, while the modern
Malaysia processing plant and its strong customer support, es-
pecially from Japanese manufacturers keen to support a non-
Chinese source of supply, are also key assets. Because some
rare earths have military uses, such as in precision-guided
weapons, they have sometimes been at the center of diplo-
matic disputes. One time was in 2010, when China banned
exports to Japan after a Chinese fishing boat was detained by
the Japanese coast guard.
Electric cars are the biggest driver for rare earths today, with
each requiring 2 kilograms of rare-earths magnets for power
steering, power train and chassis components; the small electric
motors that operate windows, wipers and seats; and other uses.
The average electric car uses ten times more permanent mag-
nets—ones that never lose their magnetism—than a traditional
car. Wind turbines generating energy are another significant
growth area for rare earths, with
a turbine gear box requiring 220
pounds of rare-earths magnets.
Notoriously tricky in every
way, the 17 elements that make
up the rare-earths family not
only have tongue-twister names
such as dysprosium, ytterbium
and gadolinium, but are neither
rare (just hard to produce and
pronounce) nor earths (they’re
minerals).
In addition to their use in
long-life, high-strength magnets,
rare earths find their way into a
wide variety of products, such as
oil refining (lanthanum), glass
production (cerium), X-ray ma-
chines (thulium), naval sonar sys-
tems (terbium), aerospace equip-
ment and golf clubs (scandium, as
an alloy with other metals). None
of the rare earths are required in
large quantities, which means that
the market can be quickly satis-
fied. This presents a challenge for achieving a balance between
supply and demand, a test made more difficult by the nature of
China’s centrally planned economy.
Extreme price moves and a very thin market have been a
feature of rare earths for decades. A 2006 story in Forbes Asia
(before Lynas started mining rare earths) chronicled an earlier
surge in demand, when the rare earth europium was expected
to be the big profit earner. But demand for europium, which is
used in lasers, never developed as expected.
Lacaze acknowledges the importance of Chinese production
controls in lifting rare-earths prices and cautions that it would
be unwise to assume this will become a permanent feature of
the market. “The next trap is believing the market will look like
it does now forever,” she says.
That view means that Lacaze remains focused on cost
controls at the Malaysia plant and in expanding its range of
products. In its latest quarter Lynas produced 1,442 metric tons
of NdPr, up 99 tons on the previous quarter. Lacaze said in her
quarterly report that demand for NdPr was being driven by
factors that included magnet makers stocking up as a hedge
against future price rises, speculation about China building a
strategic stockpile and “intensification” of environmental com-
pliance investigations by Beijing.
More work is required for Lynas to rid itself of the memories
of its near-death experience, including the continued retire-
ment of debt and a one-for-ten share swap to shrink a bloated
stock register. It’s also developing new products, including
new grades of cerium. And its lanthanum product has been
approved for purchase by two new customers. Commercial
shipments are scheduled to start next month. MUNSHI AHMED FOR FORBESFORBES ASIA
REBOUND
Trays of rare earths on a conveyor belt being processed at the Lynas plant in Malaysia.
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