Lynas: New loan deal will help fund further investments in downstream processing in Malaysia

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KUALA LUMPUR (June 27): Rare earths mining company Lynas Malaysia Sdn Bhd said today that the 10-year loan extension agreement its Australian parent Lynas Corp secured from its Japanese backers will provide funding certainty for further investment in the group's downstream processing in Malaysia. 

Besides that, Lynas Malaysia managing director and vice president Datuk Mashal Ahmad said the loan facility will also be used for the relocation of its operation's first stage processing — cracking and leaching — from Malaysia to Western Australia over the next five years. 

"This agreement means we can fund further investments in downstream processing at Lynas Malaysia and relocate our first stage processing to Australia," he said in a statement today. 

Once the new cracking and leaching plant is operational, Mashal said the material shipped to Malaysia for processing will not include naturally-occurring radioactive material.

Earlier today, Lynas Corp announced the 10-year extension to its loan agreement with its long term partner Japan Australia Rare Earths B.V. (JARE), increasing its commitment to supply rare earths to Japanese customers.

The extension will help Lynas, the only major producer of rare earths beyond China, follow through on its 2025 expansion plans with greater cash flows available from the improved terms, Reuters reported.

JARE is a special purpose company established by the Japanese government’s Japan Oil, Gas and Metals National Corporation (JOGMEC) and Sojitz Corp — a Japanese trading firm and Lynas’ exclusive distribution partner in Japan. 

Under the new agreement, JOGMEC and Sojitz Corp will reduce principal payments due and the interest charged on the loan.

“Japan is a very important partner for Lynas. Since 2011, we have developed strong relationships with Japanese customers and the products we make here in Malaysia have supported the development of Japan’s rare earths processing industry.

"Japan recognises the importance of Rare Earths for its advanced manufacturing industry. Through this agreement, we will continue to work together to develop strong supply chains to meet growing demand," Mashal said.  

“Rare earths are also essential to Malaysia’s growing electronics industry in Penang and the Malaysian automotive industry. As the world’s second largest producer of Rare Earths products, Lynas can help to attract further investment in the downstream supply chain in Malaysia, which can position Malaysia as the manufacturing hub of products made from Rare Earths,” he added.