3-nation alliance involving Lynas set to break China’s rare earth dominance, says report

Lynas is the only rare earth producer outside China. (AFP pic)

PETALING JAYA: Australian rare earth producer Lynas has inked a deal with US and Japanese companies, setting up a “three-nation alliance” to break China’s dominance in the sector, the Nikkei Asian Review reports.

The report noted that the three nations are also allies in efforts to counter Chinese military expansion in the Asia Pacific region, and that this time China’s dominance in the rare earth industry is set to be challenged when a plant opens in the US by 2021.

That plant, to be set up in Texas, will be the only separation plant outside China, Lynas CEO Amanda Lacaze told Nikkei.

China supplied 80% of the rare earths imported by the US from 2014 to 2017, when it accounted for 81% of the world’s rare earth production, data from the US Geological Survey showed.

Lynas, the only rare earth producer outside China, recently signed a deal with Texas-based Blue Line.

The Nikkei report said it has also been expanding ties with Japan, which is looking outside China for its rare earth needs following Tokyo’s dispute with Beijing over the Senkaku Islands in Okinawa.

The report said Japanese trading house Sojitz and the Japan Oil, Gas and Metals National Corporation injected US$250 million capital into Lynas. In return, they get a stable supply of rare earths. Japan is now Lynas’ largest customer, where it gets one-third of its rare earths needs.

China has made its dominance in rare earth production, which is seen as risky in most countries, a weapon in its trade war with the US.

Lynas and Malaysian authorities have been locked in a dispute over the disposal of radioactive waste produced by the company from its plant in Gebeng, Pahang.

Putrajaya set a licence-renewal condition on Lynas that more than 400,000 tonnes of waste produced at its Malaysian plant should be sent to Australia. However, Australia has refused to accept the waste.

In May, Lynas unveiled a detailed expansion costing A$500 million (RM1.4 billion) to boost production and help allay Malaysian concerns about the waste disposal at its plant.

The licence for its RM3.3 billion rare earths processing plant in Pahang is due for renewal on Sept 2.