Embattled rare earths miner Lynas hit major milestone in March

MELBOURNE - Australia's Lynas Corp managed to achieve positive free cash flow in March for the first time since it began mining rare earths in 2011, a key milestone for the company battling to service A$430 million (S$574 million) in debt.

Lynas and US rival Molycorp are the world's only two rare earths miners outside China, the dominant supplier of the products used in everything from smart phones to wind turbines, and both companies are struggling to stay afloat.

"Based on recent performance, the business currently expects to continue to deliver positive free cash flow," Lynas said in its third quarter report, after achieving A$191,000 (S$200,000) in positive free cash flow in March.

Cost cutting drove the progress while Lynas tackled technical problems at its processing plant in Malaysia, with the company saying it achieved A$35 million in annualised savings, more than a third better than it had targeted.

Lynas shares jumped as much as 27 per cent to a nearly two-month high of A$0.056, but the stock is still trading at a fraction of its record high of A$2.70 hit four years ago after China imposed export tariffs on the elements and prices soared.

On the demand side, buyers have been drawing down their stocks and limiting purchases of new product, which has held back any rare earths price recovery amid uncertainty over regulations in China, Lynas said.

Beijing is expected to announce new regulations for rare earth mining, processing and exports, perhaps including a value-added tax to replace an export tariff, in early May.