Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — J.P. Morgan London, 29 and 30 November 2010
40 slides from Lynas Rare Earths's conference presentation, Nov 29, 2010
Slide 1: Rare Earths: We Touch Them Everyday
Rare Earths For personal use only WE TOUCH THEM EVERYDAY J.P. J P Morgan London 29 and 30 November 2010
Slide 2: Disclaimer
Disclaimer For personal use only • The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe
Slide 3: Today's Agenda
Rare Earths,, we touch them everyday y y For personal use only TODAY’S AGENDA 1. Rare Earths, we touch them everyday 2. Rare Earths in short supply – the demand and supply equation 3. Rare Earths price escalation 4. The Lynas Story – online in 2011, expansion and beyond 3
Slide 4: Rare Earths cannot be substituted in many applications
Rare Earths cannot be substituted in many applications For personal use only RARE EARTHS EARTHS: LANTHINIDES PLUS YITTRIUM – UNIQUE PROPERTIES • Chemical Unique electron configuration • Catalytic Oxygen storage and release • Magnetic g High magnetic anisotropy and large magnetic moment • Optic
Slide 5: Rare Earths underpin new materials technology
Rare Earths underpin new materials technology required to sustain the needs of today’s society For personal use only Energy efficiency through Environmental protection Smaller yet more powerful lower consumption through lower emissions digital technology • Compact Fluorescent Lights • Wind turbine •
Slide 6: Demand for Rare Earths is driven by the underlying applications
Demand for Rare Earths is driven by the underlying d l i applications li ti For personal use only 2010 DEMAND FORECAST BY APPLICATION Application Demand (%) Demand (t) Others 5% Others, • Magnets 26% 35,000 Phosphors, 10% • Battery Alloy 14% 18,600 Glass • Metallurgy ex batt 9% 11,700 Additive, 4% M
Slide 7: Magnets and battery alloy are forecast growth drivers to 2014
Magnets and battery alloy are forecast to be the growth drivers for Rare Earths demand to 2014 For personal use only GROWTH FORECAST BY APPLICATION 2014 DEMAND FORECAST BY APPLICATION Application Growth rate p.a. (%) Demand (t) Other 5% Other, Phosphors, • Magnets 12% 55,100 10% • Battery Alloy 15%
Slide 8: Looming crisis - Rare Earths supply will be outstripped by demand
Looming crisis - Rare Earths supply will be outstripped t ti d by b ddemand;d 115kt REO iin 2010 For personal use only CHINESE SUPPLY SOURCES NON CHINESE SUPPLY SOURCES (2010 CAPACITY, REO) (2010 CAPACITY, REO) Baotou 55,000t India 3,000t By product of iron ore mine Subsidiary y of Indian AEA
Slide 9: Global supply at 170kt by 2014 compared to demand of 190kt
Our assumptions show global supply at 170kt by 2014 compared 2014, d tto d demand d off 190kt For personal use only 2014 FORECAST SUPPLY ASSUMPTIONS SUPPLY SOURCES KEY UNDERLYING ASSUMPTIONS • B t Baotou 60 000t 60,000t • Sichuan 20,000t • Baotou – 10% production increase 2010 / 2014 • Ionic Clay Re
Slide 10: Chinese supply unlikely to meet Chinese demand within five years
Chinese supply is unlikely to meet Chinese demand within the next five years years, reducing For personal use only exports to the growing non-China market CHINA DEMAND, SUPPLY AND EXPORTS DEMAND FORECAST, NON-CHINA REGIONS Year China Demand China Supply For Export • 2010 72 000 72,000 103 000 103,00
Slide 11: As supply tightened in 2008 prices increased, now soaring
As supply tightened in 2008 prices increased, in 2009 demand dipped, prices are now soaring For personal use only HISTORIC AND FORECAST SUPPLY, SUPPLY DEMAND AND PRICING US$67.05/kg US$67 05/kg 22 Nov 2010 11
Slide 12: Applications use different Rare Earths; supply does not match demand
Applications use different Rare Earths, the supply distribution does not match demand distribution For personal use only RARE EARTHS USAGE BY APPLICATION Application La Ce Pr Nd Sm Eu Gd Tb Dy Y Other • Magnets 23.4% 69.4% 2% 0.2% 5% • Battery Alloy 50% 33.4% 3.3% 10% 3.3% • Metallurgy ex batt 26% 5
Slide 13: Elemental Pinch Points for 2010
Elemental Pinch Points based on Lynas estimated Demand and Supply for 2010 For personal use only SUPPLY VS DEMAND SUPPLY/DEMAND IMBALANCE (REO, SEPARATED PRODUCTS) (REO, SEPARATED PRODUCTS) Demand vs Supply • Lanthanum 42,800t 28,200t • Lanthanum -14,600t -34% • Cerium 43,500t 38,200t • Cerium -5,30
Slide 14: 2014 Elemental Pinch Points - shortages remain
2014 Elemental Pinch Points, maximum China supply plus two new resources– shortages remain For personal use only SUPPLY VS DEMAND SUPPLY/DEMAND ESTIMATED IMBALANCE (REO, SEPARATED PRODUCTS) (REO, SEPARATED PRODUCTS) Demand e a d vs s Supp Supply y • Lanthanum 57,100t 43,400t • Lanthanum - 13,700t -2
Slide 15: Global supply at 170kt by 2014 compared to demand of 190kt
Our assumptions show global supply at 170kt by 2014 compared 2014, d tto d demand d off 190kt For personal use only GROWTH FORECAST BY APPLICATION 2014 FORECAST SUPPLY ASSUMPTIONS APPLICATION GROWTH RATE P.A. DEMAND SUPPLY SOURCES SUPPLY Magnets g 12% % 55,100t , • Baotou 60 000t 60,000t Battery All
Slide 16: Environmental impact not sustainable, illegal smuggling not sustainable
Environmental impact not sustainable, ill illegal l smuggling li nott sustainable t i bl For personal use only Southern Clay 16
Slide 17: China aims to improve return on resources and environmental performance
China aims to improve “return on resources” as wellll as ttackle kl environmental i t l performance f For personal use only COMPETITION – CHINA POLICY Production Quota (Tonnes REO contained within concentrate) 100000 80000 Ionic Clays • No prospecting or mining licences 60000 for Rare Earths until J
Slide 18: Lynas is the leader in defined Rare Earths resources outside China
Lynas is the leader in defined Rare Earths resources in i d development l t outside t id Chi China For personal use only COMPARING SIZE AND PROGRESS OF GLOBAL RARE EARTHS PROJECTS Source: the data for non-Mount Weld deposits is based on public statements by the relevant resource holders except for D
Slide 19: Lynas will offer the first new source of supply outside China - Q3 2011
Lynas will offer the first new source of supply of R Rare E Earths th outside t id off Chi China - Q3 2011 For personal use only LYNAS VITALS AT A GLANCE VISION: To be a global leader in Rare Earths for a sustainable t i bl ffuture t EXCHANGE: ASX Top 100 (as at 30 Nov 2010); code LYC Mount Weld SHA
Slide 20: Lynas is on track for production in Q3 2011
Lynas is on track for production in Q3 2011 For personal use only KEY MILESTONES TO ENSURE A RELIABLE SOURCE OF RARE EARTHS • Lynas raised A$450 million in the equity markets to fund the completion of its project • All approvals in Australia and Malaysia in place to complete construction of processi
Slide 21: Products set for Phase 1; flexibility in Phase 2
The products are set for Phase 1; Lynas has product flexibility in phase 2 For personal use only PHASE 1 11,000t REO PRODUCTS VOLUMES (tpa) Ce carbonate 2,600 La carbonate 1 350 1,350 Ce / La carbonate 4,000 Nd / Pr oxide 2,700 SEG + Heavy Rare Earths 480 PHASE 2 ADDITIONAL 11,000t REO PRODUCTS Ce c
Slide 22: 15% more resources in Mount Weld; 1.4 million tonnes REO
As at September 2010, 15% more resources in The current mining operation is within the Mount Weld; New Total Resource of 1 1.4 4 million C t lZ Central Zone Pit For personal use only tonnes of REO CENTRAL LANTHANIDE DEPOSIT AND DUNCAN DEPOSIT RESOURCES Central Lanthanide Deposit & CLD & Duncan Miner
Slide 23: Mount Weld initial mining campaign complete, injury-free, on budget
Mount Weld Rare Earths initial mining campaign complete, l t lloss-time-injury-free, ti i j f on budget b d t For personal use only MOUNT WELD STOCKPILES WITH RARE EARTH OXIDE PERCENTAGES DUNCAN DEPOSIT (DD) Offices 773,000t on stockpiles 8% 13% DD CLD 17% DEPOSIT 26% 15% 13% 21% 20% Conc. Conc DD P
Slide 24: Schematic - Concentration Plant process at Mount Weld
Schematic - Concentration Plant process at Mount W ld which Weld, hi h hhas b been ffully ll pilot il t plant l t ttested t d For personal use only 24
Slide 25: Concentration Plant commissioning on schedule for February 2011
Concentration Plant commissioning is on schedule h d l ffor F February b 2011 For personal use only CONSTRUCTION OF THE CONCENTRATION PLANT Flotation section under construction 25
Slide 26: Concentration Plant commissioning on schedule for February 2011
Concentration Plant commissioning is on schedule h d l ffor F February b 2011 For personal use only CONSTRUCTION AT THE CONCENTRATION PLANT Flotation building Concentration thickener and packing area 26
Slide 27: Concentration Plant commissioning on schedule for February 2011
Concentration Plant commissioning is on schedule h d l ffor F February b 2011 For personal use only CONSTRUCTION AT THE CONCENTRATION PLANT Ball mill being installed 27
Slide 28: Containers of concentrate trucked to Fremantle for shipping to Malaysia
Containers of Rare Earths concentrate will be t k d tto Fremantle trucked F tl for f shipping hi i tto Malaysia M l i For personal use only • Mount Weld to Fremantle = 1000km • Transportation approx. 9% of total costs 28
Slide 29: Lynas will expand the Malaysian processing hub
Lynas will expand the Malaysian processing hub, with ith th the ability bilit tto ttake k multiple lti l sources off material t i l For personal use only PROCESSING HUB WITH EXCEPTIONAL INFRASTRUCTURE Gebeng Industrial Estate, INDUSTRIAL INFRASTRUCTURE East Coast Malaysia KNOWLEDGE INFRASTRUCTURE GO
Slide 30: Schematic - Lynas Advanced Materials Plant core process
Schematic - Lynas Advanced Materials Plant core process, which hi h uses mature t iindustry d t ttechnology h l For personal use only 30
Slide 31: Lynas Advanced Materials Plant (LAMP)
Lynas Advanced Materials Plant (LAMP) For personal use only Phase 1 : 11,000t , REO Phase 2 : 22,000t REO 31
Slide 32: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Pl t iis scheduled Plant h d l d ffor Q3 2011 For personal use only FEATURES OF CONSTRUCTION AT THE LAMP Prefabricated Bluescope steel buildings Working on the foundations at the LAMP 32
Slide 33: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Pl t iis scheduled Plant h d l d ffor Q3 2011 For personal use only FEATURES OF CONSTRUCTION AT THE LAMP Lynas-constructed stormwater detention pond Concrete Batch Plants 33
Slide 34: Expansion driven by customer requirements and commitments
Expansion beyond first production will be driven b customer by t requirements i t and d commitments it t For personal use only HOW LYNAS WILL COST-EFFECTIVELY COST EFFECTIVELY EXPAND • Lynas y plans to at least double production. • Product range within the Lynas product suite will also be expanded.
Slide 35: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Plant is scheduled for Q3 2011 For personal use only CONSTRUCTION AT THE LAMP Foundation works and steel reinforcement in place ready for further concrete pours 35
Slide 36: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Pl t (LAMP) iis scheduled Plant h d l d ffor Q3 2011 For personal use only CONSTRUCTION AT THE LAMP Rotary kilns foundations Rotary kilns bodies 36
Slide 37: Industrialising our operations to meet customers' expectations
We are industrialising our operations to meet our customers’ t ’ expectations t ti For personal use only FOUR PILLARS UNDERPINNING LYNAS’ OPERATIONS Marketing and Sales • Serving long-term long term customer requirements and commitments commitments, and thus providing input for plant extensions and
Slide 38: Eight customer agreements signed; Strategic Alliance with Sojitz
Eight customer agreements have been signed; Strategic Alliance with Sojitz to provide stable For personal use only supply to Japanese customers Rhodia Customer Agreement - 8th Customer Agreement – Supply Contract S Supply l Contract C t t Strategic Alliance with Sojitz • Long term contract • >US$200
Slide 39: Lynas - online in 2011, delivering Rare Earths globally
Lynas – online in 2011, delivering R Rare E Earths th globally l b ll For personal use only Our vision is to be a global leader in Rare Earths for a sustainable future. We are close to realising this vision. Lynas will be online in 2011, delivering Rare Earths globally. This is the first new product
Slide 40: Note - Competent Person statement
NOTE For personal use only The information in this report p that relates to Exploration p Results,, Mineral Resources or Ore Reserves is based on information compiled by Brendan Shand, who is a member of The Australasian Institute of Mining and Metallurgy. Brendan Shand is an employee of Lynas Corpo
Lynas Rare Earths — J.P. Morgan London, 29 and 30 November 2010 on 6ix