Lynas Rare Earths, an Australia-listed company, has reported a significant decline in second-quarter production due to a temporary shutdown at its Malaysia plant for major upgrade works. The company's quarterly report for the period ending December 31 provides detailed insights into their mining and processing operations.

Mining Activities

During the quarter, there were no mining activities conducted at the Mt Weld site. This was following the completion of Mining Campaign 4 in the June 2023 quarter, where sufficient ore stockpiling for 12 months' production was achieved. However, exploration drilling into the fresh carbonatite beneath the current Mt Weld rare earth elements open pit mine has been successfully completed. The company has released a report on this accomplishment.

While mining operations were paused, Mt Weld continued steady operations at 80% of its nameplate capacity. The focus during this period was on unit cost optimization and recoveries. Moving forward, after the end of the quarter, Mt Weld plans to ramp up production to maximum rates to meet the feed stock requirements of both Lynas Malaysia and the Kalgoorlie Rare Earth Processing Facility.

Processing Operations

Details about processing activities are not provided in this extract.

Lynas Malaysia Production Update

During the recent temporary shutdown for upgrade works at Lynas Malaysia, the production of NdPr (neodymium and praseodymium) experienced a decline compared to the previous quarter, reaching 901 metric tons. However, the total rare earth oxide production for the quarter still reached a commendable 1,566 tons. These results highlight the impressive production performance achieved in the 1.5 months leading up to the temporary shutdown, which began in mid-November.

In the December quarter, lower production volumes were observed due to the temporary shutdown necessary for capacity upgrades at the Lynas Malaysia plant. However, this decrease in production was partly offset by the sale of inventory that had been accumulated while there was uncertainty surrounding the Malaysian operating license conditions. As a result, inventory levels have now returned to normal.

Production Outlook

Looking ahead, it is expected that production in the March quarter will be around 1,500 tons. Furthermore, over the next six months leading up to June 2024, production is projected to experience a modest increase from previous estimates, with expectations ranging from 3,200 to 3,400 tons.

Market Analysis

Aside from discussing production updates, it is crucial to assess the market landscape as well.

Rare-Earth Market Prices Remain Subdued in China

While the rare-earth market had a challenging quarter, prices continued to be suppressed mainly due to low demand in China. One sector significantly affected by the construction downturn is the appliance industry, particularly air conditioning. As a result, market pricing averaged at around $60 per kilogram (ex VAT) during this period, returning to post-Covid levels.

It is worth noting that China's ongoing economic recovery holds the potential to ignite a shift in the price trend. As the main player in the rare-earth industry, any notable changes in China's economy could have a significant impact on global market dynamics.

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