Lynas gets $200m boost

Lynas Rare Earths has secured a major funding boost from a Japanese government-backed entity on the proviso that Japanese customers are given priority in future.

The new agreement reflects mounting global competition to secure supplies of rare earths and ‘critical minerals’.

Japan Australia Rare Earths BV has agreed to subscribe for $200 million in new Lynas shares at current market prices.

JARE has also agreed to forego $US11.5 million in interest due under an existing loan facility.

This payment has previously been deferred by JARE.

JARE is a special purpose company jointly established by government entity Japan Organization for Metals and Energy Security (JOGMEC) and Sojitz Corporation.

Lynas said JARE’s contribution would support its growth agenda, and may include current and planned projects designed to increase production of rare earth materials.

To that end, Lynas is investing more than $1 billion to expand its Mt Weld mine in the Mid West and to establish a rare earths processing plant at Kalgoorlie.

As part of the new agreements, Lynas will update the existing priority supply rights in the JARE loan facility.

In the event of competing demands with other markets, the Japanese market will receive priority supply rights over Lynas’ growth capacity until 2038.

Where Lynas’ annual production is less than 9,600 tonnes per annum, priority supply up to 7,200tpa will go to Japan “to the extent that Lynas will not have any opportunity loss”.

Further terms were specified in today’s Lynas announcement.

Managing director Amanda Lacaze said Lynas had a huge appetite for growth and a large capital investment plan.

“This $200 million capital investment from the Japanese government, through JARE, will boost our balance sheet and assist in assuring the delivery of our major growth projects,” she said.

“JARE has been a valued and strategic partner to Lynas since 2011 and we welcome these new agreements which better reflect demand forecasts from the Japanese rare earths market.

“We also thank JARE for agreeing to forgo the historic interest payment of $US11.5 million from 2016.”