Lynas secures better loan terms with Japanese backers

MELBOURNE: Australia’s Lynas Corp said it has signed a 10-year loan extension on easier terms with its long-time Japanese backers, increasing its commitment to supply rare earths to Japanese customers.

The extension to 2030 to repay US$147mil will help Lynas, the only major producer of rare earths outside China, follow through on its 2025 expansion plans, with greater cashflows available thanks to the improved terms.

Under the new agreement, Japan Oil, Gas and Metals National Corp (JOGMEC) and Sojitz Corp will reduce principal payments due and the interest charged on the loan.

Japanese customers stand to benefit from the new agreement, with Lynas promising to supply up to 7,200 tonnes a year until 2038, doubling the supply priority for Japan from their previous agreement which covered the period to 2025.

“The biggest achievement for Japan from the latest deal is to secure priority supply rights until 2038 in return for extending the loan and relaxing payment requirements,” an official at Japan’s Agency for Natural Resources and Energy, an arm of the industry ministry, told Reuters.

Last week, Lynas said it was stockpiling neodymium and praseodymium (NdPr), key ingredients in permanent magnets used in electric vehicles and wind turbines, for “strategic customers”. The move comes as markets are concerned that Beijing may use the minerals as a weapon in its trade war with the United States.

The miner and its Japanese backers started talks on the loan extension last year. Since then, the company has been hit by worries over a licence renewal for its processing plant in Malaysia and rebuffed a takeover offer from Australia’s Wesfarmers, while benefiting from rising NdPr prices due to the US-China trade war.

“Japan is continuing its efforts to secure long-term supply of rare earths used in cars and consumer electronics through diversifying supply sources, developing alternatives and reinforcing recycling processes,” the Japanese official said. He declined to be named as he is not authorised to talk to media. — Reuters

Source: TheStar