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- The Lynas Corporation (LYC) has temporarily ceased production at its Malaysian rare-earth processing plant
- Tighter movement controls due to the spread of COVID-19 in Malaysia have forced the shutdown
- The plant is now in care and maintenance mode, with the company saying the health and safety of its employees and the community are its top priority
- Lynas has taken actions to significantly reduce cash outgoings during the temporary shutdown, but the company will continue to pay all its staff
- Lynas has retained a stockpile ready for processing at the plant, meaning production can ramp up quickly when business resumes
- Lynas is down 16.4 per cent today, and shares are priced at $1.07 each
The Lynas Corporation (LYC) has temporarily ceased production at its Malaysian rare-earth processing plant, effective immediately.
Tighter movement controls in Malaysia have forced the shutdown. While the controls are set to be lifted on March 31, the continued spread of COVID-19 may mean the closure could be extended indefinitely.
The plant is now in care and maintenance mode, with the company saying the health and safety of its employees and the wider community are its top priority.
In a rare piece of good news — even though Lynas has taken actions to significantly reduce cash outgoings during the temporary shutdown, the company will continue to pay all its staff — at least until the March 31 date.
Lynas has retained a stockpile ready for processing at the plant, meaning production can ramp up quickly when business resumes. The Mt Weld rare earth project will continue to operate during this period, ensuring future supply lines.
Despite the increasing uncertainty around global economies and industries, the company is confident of its viability moving forward. As indicated when Lynas announced its results for the half-year ending 31 December 2019, the Malaysia plant has delivered strong production volumes during the March quarter.
Lynas also has significant cash reserves ($111.8 million as at 31 December 2019) and still expects positive cash flow from operations during the March quarter. The company is also expecting a $14 million payday via the Permanent Disposal Facility (PDF) project announced on 30 January 2020.
The company believes it is well-positioned to quickly resume satisfying its customers’ needs upon restart of the plant.
The company will keep shareholders updated as to its activities. Lynas is awaiting further advice from the Malaysian authorities as to when and if the movement controls will be lifted and normal business may resume.
Lynas is down 16.4 per cent in early trade, shares are priced at $1.07 each as at midday AEST.
