19/06/2023 (Kalgoorlie, Australia) - Lynas Rare Earths Ltd, the world's largest producer of rare-earth metals outside of China, announced on Monday that labor shortages and supply issues are impeding the final stage of its rare-earths processing facility commissioning process in Kalgoorlie, Western Australia. The news sent shares of the company down by 1.2% to 7.26 Australian dollars in early trading.
The company is currently focused on the completion of the plant designed for cracking and leaching processes, crucial for the production of neodymium and praseodymium (NdPr). NdPr is used extensively in the manufacture of magnets for various sectors, including electrified transport and defense.
The Stage 4 process commissioning is set for completion by the end of this month, with the exception of two critical path items - the waste gas treatment plant and on-site gas supply, according to Lynas. The first production of mixed rare-earths carbonate from the new facility is now expected in August.
Despite the current delays, Lynas has received some positive news recently. The company was granted an operating license extension for its Malaysia processing plant until 1 January 2024, which ensures that there will be no interruption in its production time.
The labor shortages Lynas faces are part of a broader trend affecting many sectors in Australia. The Australian Bureau of Statistics reports a 111.1% increase in job vacancies since February 2020, with the most significant shortages in healthcare, accommodation and food services, and professional scientific and technical services. Sectors heavily reliant on temporary migrants, such as food trade and preparation and hospitality, are experiencing the most severe labor shortages.
Despite the labor shortage, some market analysts remain optimistic about Lynas. Michael Gable, managing director of Fairmont Equities, recently recommended Lynas shares as a buy, stating that he expects the stock to attract more investors despite its recent "oversold" status.
Furthermore, the global market for rare earth metals is growing, with a predicted year-over-year growth of 8.1% in 2023. This growth is driven by the rising demand for electronic appliances and personal equipment, an increase in consumption from the Asia-Pacific region, and the development of new production capacities. However, challenges such as demand-supply outages, the rise of substitutes, and a lack of skilled professionals in the mining sector remain.
The Lynas Rare Earths share price has decreased by almost 10% in the past year, with a current market capitalization of about $7.1 billion. Despite labor and supply challenges, the growing demand for rare-earth metals indicates potential future growth for Lynas as it works to resolve its current issues.