COVID-19 Forces Closure of Lynas’ Malaysian Rare Earths Plant

The company’s Mt Weld mine and concentration plant in Western Australia continued to operate as of Monday.

Australia-listed Lynas (ASX:LYC,OTC Pink:LYSCF) is the latest mining company to at least partially call it quits due to the COVID-19 outbreak.

The company announced on Monday (March 23) that it has suspended production at its Lynas Advanced Materials Plant (LAMP) in Malaysia as cases and deaths in the country increase.

As of that day, the nation had reported 1,518 cases, 14 deaths and 159 recoveries; 212 new cases were announced on Monday, the highest increase in one day seen so far in Malaysia.

The move from Lynas comes after the government put a Movement Control Order in place that will run from last Wednesday (March 18) until next Tuesday (March 31).

The order prevents Malaysians from leaving the country and stops outsiders from entering. It also allows only essential businesses to remain open and encourages the public to stay home.

“As a responsible business, Lynas has taken steps to ensure the health and safety of our people and our communities and we support the government’s actions to control the outbreak,” the company said.

“Accordingly, we have initiated a safe temporary shutdown of our plant into care and maintenance mode,” Lynas continues in Monday’s release.

According to Lynas, it has retained some work-in-progress inventory and will be able to ramp up quickly once the LAMP is able to come back online again.

Monday’s release doesn’t indicate how the LAMP shutdown could impact Lynas’ operations, and the company, which is known for being one of the few stable rare earths sources outside of top producer China, does not comment on the future of the Australian parts of its business amid COVID-19.

Before sending material to the LAMP, vertically integrated Lynas mines rare earths at its Mt Weld deposit in Western Australia. It processes them at a nearby concentration plant and then transports them to the LAMP in Malaysia for refining and concentration.

Mt Weld remains open at this time, but Australia closed off entry to most non-Australians last Friday (March 20), and states in the country are also locking down their borders. Western Australia was still open on Monday, but will reportedly close its borders on Tuesday (March 24).

There will be exemptions for essential personnel like health and police workers, but entries via road, air and sea will be restricted.

Other measures, such as business restrictions, are also in place in the state. As of Monday, Western Australia had 140 cases and one death. In total, Australia had 1,709 cases and seven deaths.

As mentioned, the vast majority of rare earths are produced in China, a situation that has caused supply chain problems in the past — most recently during the US/China trade war, when concerns were rife that China would restrict exports to the US.

The COVID-19 pandemic, which began in Wuhan, China, has heightened worries about rare earths supply, although a recent note from Roskill largely dispels those worries.

According to David Merriman, manager of the firm’s battery and electric vehicle materials division, rare earths processing facilities in China are already beginning to come back online, and suppliers’ ability to meet demand has seen little impact.

Lynas’ latest results are for the half-year period ended on December 31, 2019, and they show that the company produced 7,518 tonnes of total rare earth oxide during that time; NdPr (neodymium and praseodymium) output came in at 2,512 tonnes.

Sales revenue was AU$180.1 million and the company’s cash balance was AU$111.8 million.

As of 11:22 a.m. PDT on Monday, Lynas’ share price was down 12.89 percent at AU$1.12. Globally there were over 370,000 COVID-19 cases, plus more than 16,000 deaths and over 101,000 recoveries.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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WHAT'S IN STORE FOR THE RESOURCE SECTOR IN 2022?

The Investing News Network (INN) spoke with analysts, market watchers and insiders about which trends will impact this sector in the year ahead.
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Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha. Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local …

Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha.

Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local people to connect with our busines.

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Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions. Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic …

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Work at the company’s Cancet project is building toward a maiden resource in Q1 2023, said Managing Director Chris Evans.


Although prices have cooled off from the highs seen earlier this year, the lithium market remains in focus and investors are interested in how to get exposure to the green energy transition.

Chris Evans, managing director at Winsome Resources (ASX:WR1), said Australian investors in particular are aware of the lithium opportunity, and reacted well to the company’s ASX listing this past November.

The company initially came to market with three lithium assets in the James Bay region of Quebec, and has since acquired two additional lithium projects in the province.


Speaking to the Investing News Network, Evans explained that Cancet is the company’s main focus. Recent assay results released during the Prospectors & Developers Association of Canada (PDAC) convention build on previous drilling at the property, and have increased the known pegmatite strike length to 1,200 meters from 600 meters.

Looking forward, Evans said that two geological teams are now on the ground at Cancet, and are investigating targets identified through geophysical surveys to figure out which of them require drilling.

Known pegmatites that have already been drilled are also being stripped and cleared so that the company can complete field mapping and decide where to drill next.

“Really all that’s working towards a maiden resource in the first quarter of 2023,” said Evans.

In terms of the overall lithium market, he said a recent Goldman Sachs (NYSE:GS) report saying the battery metals bull market is “over for now” put a damper on sentiment, but is generally not thought to be a major concern.

“I think that probably initiated a bit of a correction in the market, which may have been needed because lithium prices and stocks were at all-time highs,” he said. “But in terms of an oversupply like Goldman Sachs is predicting, I haven’t heard anyone agree with that since I’ve been here at PDAC.”

Watch the interview above for more from Evans on Winsome Resources and its plans for the next six months. You can also click here for our recap of PDAC, and here for our full PDAC playlist on YouTube.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Winsome Resources is a client of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

person using credit card to pay for something on their phone

Revenue from Australia's mobile sector is expected to grow from AU$9.6 billion in 2021 to AU$11.2 billion in 2026. Here's what to know about this industry.

After lagging behind for a prolonged period, Australia's tech sector is ramping up at an accelerated pace. The tech sector is now equivalent to 8.5 percent of the country's GDP as of the end of 2021, an increase of 26 percent since the onset of COVID-19 through June 2021 and a massive 79 percent increase over the past five years. Tech contributes AU$167 billion to the Australian economy, trailing only the mining (AU$205 billion) and financial/insurance (AU$169 billion) sectors.

Australia's characteristically resilient economy — which had not experienced a recession in nearly 30 years prior to COVID-19 lockdowns — has provided a sturdy backdrop for its growing tech sector. The growth in the tech sector’s contribution to the GDP has outpaced average growth of other industries by more than 400 percent, a gain partly attributable to accelerated digital technology adoption during the pandemic.

This dramatic expansion is largely in response to Australia's need to catch up to the rest of the world and assert itself in the global tech marketplace. Should the tech sector continue to grow at its current rate it will eventually surpass the relative GDP contribution of the long dominant mining sector. This will also complete the process of bringing Australia more in line with other western economies such as the UK, and notably Canada, which is comparable to Australia in terms of its dominant mining and agricultural industries.


In terms of digital innovation earnings as a percentage of GDP, for example. Australia stands at 7.4 percent, significantly behind the 11.2 percent average for companies that are part of the Organisation for Economic Cooperation and Development (OECD). According to its September 2021 Policy Primer report, the Australian Academy of Sciences called for the federal government to place greater emphasis on supporting emerging digital technologies.

"Australia risks falling behind as a technologically-driven nation unless we recognise emerging digital technologies as a central, independent sector in its own right, warranting investment in the core aspects of research, innovation, and workforce development," the report stated.

Understanding Australia's mobile tech landscape

One of the drivers of Australia's tech sector expansion is its booming mobile telephone industry. This expansion has taken many forms ranging from expanded use of mobile telephony, adoption of blockchain technology for supply chain management and the rise of the cryptocurrency market. The application of mobile tech to the banking industry is just one space where mobile usage has become key and is expected to continue developing. According to research firm KPMG, digital platforms will become the preferred and dominant business model form.

Chase Bank completed a survey revealing that the COVID-19 pandemic has accelerated the adoption of mobile banking technology. Banking apps allow users to deposit cheques, pay bills and perform transfers from their mobile device.

One critical side effect of COVID-19 has been the way lockdowns and related restrictions on behaviour has changed the way people live and work. Remote working conditions and enforced isolation has triggered increased demand for improved connectivity and internet speeds to facilitate this transition in corporate culture during the pandemic.

As a result, Australia's leading mobile telephony giants have been obliged to improve data capacity and speed, especially in regional areas that have badly lagged behind urban coverage. Some people have relocated to regional areas — where connectivity remains a challenge — and others are requiring more data capacity and fast speeds to allow them to work more efficiently from home.

The Australian mobile sector is dominated by three main players: Telstra (ASX:TLS), Optus — a subsidiary of Singapore-based Singtel (SGX:Z74) — and TPG Telecom (ASX:TPG). Telstra is the largest provider of mobile services with 48.7 percent market share followed by Optus at 26.3 percent.

In 2022, there have already been several major new developments in the Australian mobile sector. One such event has been the tentative network sharing agreement announced in February between Telstra and TPG Telecom, which brings an end to the bitter rivalry between the two competitors. The agreement provides a comprehensive framework for the two telecom giants to share mobile telecommunication infrastructure across Australia.

TPG and Telstra will both enjoy significant savings and benefits from this arrangement. Telstra will reap up to AU$1.8 billion in added revenues while gaining access to TPG's spectrum that expands Telstra's fixed wireless services in regional areas. Correspondingly, TPG gains access to 3,700 Telstra towers in regional areas; this means TPG does not have to spend significant money to duplicate the infrastructure for its own use.

In addition, Telstra announced earlier in the year that it will spend up to AU$1.6 billion on new infrastructure intended to improve connectivity and internet speeds as part of its response to the overall need to accommodate rising consumer demand in the wake of the pandemic.

What's the outlook for mobile tech in Australia?

One of the positive side effects of the pandemic has been the increasing adoption of wireless services by Australians and the ownership of internet-of-things devices that are prevalent in nearly all households.

According to GlobalData, a data and analytics company, mobile sector revenue in Australia is expected to grow from AU$9.6 billion in 2021 to AU$11.2 billion in 2026 at a compound annual growth rate of 3 percent. This revenue growth will mainly accrue from growth in the mobile data subsector.

Meanwhile, the three leading telephone companies will not only be expanding their 4G services but rolling out 5G networks across the country. 5G allows for improved and additional smartphone services and also enhances fixed wireless services that are competitive with higher speed National Broadband Network (NBN) connections.

In addition, low earth orbit satellite services are beginning to roll out in Australia led by Elon Musk's SpaceX's Starlink service that offers broadband connections delivered via its satellite network.

Overfall, the winding down of restrictions due to COVID-19 will likely see the big three companies enjoy higher revenues in 2022 after declines in earnings owing to the pandemic. Telstra, Optus and TPG Telecom all experienced significant earnings drops between 2020 and 2021 due to reduced international roaming fees, softening demand for headsets and ongoing adoption of NBN services.

But the outlook for 2022 is positive given overall improved economic prospects as Australia emerges from the pandemic, which actually increased overall consumer use of communication services in 2021.

Lockdowns resulted in increased consumer uptake of online services such as online shopping, data-intensive video streaming and the additional household usage of communication services. Indeed, in 2021, data traffic reached record highs as Australian consumers demanded improved internet speeds and unlimited data plans. Remote work will likely continue to remain elevated in 2022 and beyond, which should reinforce increased consumption of home communications services.

Telstar and TPG Telecom in particular are embarking on long term strategies that will drive future earnings growth via accelerating 5G adoption, expansion in dark fibre, and increased adoption of new services such as edge/cloud computing.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Harold Von Kursk, hold no direct investment interest in any company mentioned in this article.

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