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JARE investing AUD200M in Lynas Rare Earths; heavy rare earths for Japan

Australia-based Lynas Rare Earths Limited has signed new agreements with Japan Australia Rare Earths B.V. (JARE). The new agreements will further strengthen the Lynas balance sheet and support funding of capital projects designed to meet accelerating global demand for rare earth materials.

JARE was co-founded in 2011 by Sojitz Corporation and Japan Organization for Metals and Energy Security (JOGMEC); Lynas and JARE are parties to a long-term senior loan facility. Under the new agreements, JARE will provide a contribution of AUD$200 million (US$132 million) and forego the historic US$11.5 million interest due under the loan facility for the period from 1 January 2016 to 31 December 2016, which has previously been deferred by JARE.

JARE’s contribution will support Lynas’ ambitious growth agenda, and may include current and planned projects designed to increase production of Light Rare Earth and Heavy Rare Earth materials. As market demand increases, this funding will assist Lynas to meet its objective to grow with the market.

Lynas operates the Mt Weld rare earths mine in Western Australia as well as the world’s largest single rare earths processing plant in Malaysia where it produces high-quality separated rare earth materials for export to manufacturing markets in Asia, Europe and the United States.

Rare earth oxides are mined and initially processed at the Mt Weld Concentration Plant. The materials are then shipped to a 100-hectare advanced materials plant in Gebeng, Malaysia, where the concentrate is separated and processed into high quality Rare Earth materials.

Sojitz and JOGMEC have entered into an agreement with Lynas to supply up to 65% of the HRE (dysprosium and terbium, DyTb) produced by Lynas from Mt. Weld feedstock to the Japanese market. This will be the first company to produce HRE from mine to finished product with a Japanese company involved.

Rare earths, divided into light and heavy rare earths, are used in various industries including the production of magnets for motors for electric vehicles and wind turbines.

LRE supplied to Japan by Lynas from Mt. Weld in Australia is used as the main ingredient to produce magnets for motors. Lynas will expand its LRE production capacity to stably supply LRE in the long term in light of the expected increase in the magnet demand to meet the decarbonization targets.

In addition, Lynas will start the production of the HRE, namely dysprosium and terbium, which is used to enhance the heat resistance of the magnets. The production will support the stable supply of HRE to Japan by diversifying the supply sources which are currently concentrated to China.

In 2011, Sojitz became the sole distributor of Lynas’ rare earth products in Japan and stably provides rare earths to Japanese customers for various purposes, including magnets. Sojitz aims to deliver adequate rare earths to Japanese markets through this additional contribution, which will enable the company to cater to the domestic HRE demands.

JOGMEC has decided to invest further in Lynas as these projects will contribute to ensuring a stable supply of rare earths to Japan.


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