The feeling that mining is dead in Australia, is one that is more doom and gloom than reality, especially when you look at what Lynas Corp is doing in the rare earth sector. Jonathan Jackson spoke with Lynas Corp CEO Amanda Lacaze about what is behind supplying high quality rare earths.
As the world strives to become more energy efficient, rare earths have become essential inputs to high technology, high growth, future-facing industries.
At this stage it’s probably best to have a quick look at what rare earths actually do.
According to Geoscience Australia, the most significant increases in demand for REO is attributed to a predicted expansion in hybrid cars, followed by petroleum catalyst, glass manufacturing and polishing and multi-level electronic components. The smallest sector by volume, but largest by value, is europium and terbium, which are used in the production of phosphors for televisions and energy efficient light globes.
Lynas has a portfolio of aligned assets to explore, develop, mine and process rare earth minerals. These assets are:
• Mt Weld – one of the world’s highest grade rare earths mines, located 35km south of Laverton in Western Australia;
• Mt Weld Concentration Plant – commissioned in 2011 and located 1.5km from the mine site;
• Lynas Advanced Materials Plant (LAMP) – an integrated manufacturing facility, separating and processing rare earths materials, located in the Gebeng Industrial Estate (GIE) near the Port of Kuantan in Malaysia.
Overseeing all of this is Lynas Corp CEO Amanda Lacaze, who prior to the minerals space spent time in marketing. She says her business grounding came in her five years spent in the marketing department.
“I learnt most of the basic rules about how a business should work at Nestle,” Amanda says.
“Nestle became the biggest and most successful food company in the world by having an unrelenting focus on customers – because they are the lifeblood of your operation.”
Amanda learnt a lot of her basic commercial skills there. She says the best place for any business to be in a market is at a premium quality and premium price … “that way you should actually make the most money of anyone in the market.”
From there Amanda took positions with ICI in an industrial marketing role and Telstra, where it was a back to basic approach to customer delivery and determining her skills in managing people and money.
It is managing people, however that as at the forefront of Amanda’s own work ethic.
“It’s very strong in my belief that as CEO there is nothing that I can do, no matter how smart I am or how hard I work, which is as powerful as getting every person in the organisation to do their best work every day.
“To be able to do that I need to properly engage with everyone in the organisation. They need to know me because I need them to trust me when I ask them to do things.
“Most people want to do something which is valuable and which is valued. If you take the time to be crystal clear in that, people will give you their best work every day.”
It is this method of management that informs how she runs Lynas Corp and the fact that as Peter Drucker once said, ‘the purpose of business is to make money. To make money what you need to do is that you need to be aware of what your customers want’.
“I say this to my guys,” Amanda says. “There’s people out there and they are called customers and they’ve got money. If we make or do what they want at the price that they want, they’ll hand their money over. Our job inside is to make sure that we make it for less than we can sell it and that’s the way that we make money. I’ve worked across a variety of industries: consumer goods, industrial, agricultural, IT&T and now resources. It’s the same in every industry. You need to focus on what it is that your customers want, you need to do it better than anybody else and then you will be successful.”
With this attitude Amanda has been able to turn the fortunes of Lynas Corp around.
When she came into the organisation 14 months ago, production was unstable and inconsistent.
“Our cash management was poor, our cost structure was top heavy and middle heavy and bottom heavy and every way heavy,” Amanda says.
“Our focus on customers was almost non-existent other than it was words which were spoken. When I run a business you will never find posters saying these are our values or this is our vison because there is a difference between what you say and what you do and you can’t have slogans unless what you say and what you do is aligned.
“If you say that customers matter but you spend all of your time sitting in your office and not engaging with them then they don’t believe you. If you say people matter, but you spend all of your time sitting in your office not actually engaging with your staff, they don’t trust you. If you say hard work matters but they see you spending a long day with long lunches and not much else going on, then they spot the difference between the stated values and the lived values. To turn this business around, it was about being really crystal clear about these things.”
This is especially crucial in an organisation with high risk factors.
Take the manufacturing plant in Malaysia for instance.
“We have a very large manufacturing facility in Malaysia which has a high, inherent risk in operation. If we say safety matters but we take shortcuts on processes or equipment or we don’t investigate incidents appropriately then they don’t believe safety matters. I don’t do a whole bunch of posters that say safety matters, but I do go in and inspect every time that we have even a high potential incident. I go in and inspect so that they can see it actually matters enough to me to go and look at it. That is the same of the other managers in the production area.”
So Amanda came in and integrated simple rules around simple values. She identified the things that drive the business success and relayed those back to staff. That in turn allowed her to create stability within the organisation and to create an inclusive culture.
Some hard decisions were made, as they always are in a restructure, but they have worked out for the best and the company is now doing well again in this very niche rare earths sector.
Without going into a full explanation of rare earths in Western Australia, it can be said that Lynas Corp’s deposit at Mt. Weld in Western Australia is recognised as probably the highest quality known deposit.
“The rare Earths are valuable because of a series of properties that they have including their conductivity and their connectivity and the way that they interact with other materials,” Amanda says.
“They are a functional material. We have what are called light Rare Earths primarily in our deposit and there are four and we also have some heavy Rare Earths and each of the different elements behaves differently.”
Interestingly rare earth was used in colour TVs because it gave the red colour.
“If you talk about applications, if you think about your car, every car that drives around has typically between about one and five kilos of rare earths in it, in a variety of different applications: all of the things that move in your car typically have little motors in them,” Amanda says.
“Motors use permanent magnets. Rare earth’s permanent magnets are good because they are light. If you’re talking about energy efficient cars, the weight matters. Therefore if you use rare earths as the permanent magnets in these little motors, then the car weighs less and it’s more fuel-efficient.
Rare earths are no longer used in televisions, but as technology has changed so too has the use of functional materials. Amanda says people would be surprised by what rare earths are used for.
“One of the big growing segments for Lynas is wind turbines where they are moving from a gearbox operation to a direct draw operation which uses four to six tonnes of rare earths and makes that one wind turbine work a whole lot more efficiently.”
In essence the rare earth market is a changing beast, which is a plus for producers such as Lynas Corp. This is especially the case as the cost of rare earths is currently quite low and end users keen to have an independent and reliable supplier of rare earth’s products.
Lynas Corp has just done a deal with a Japanese company for this very reason.
While the largest manufacturer and commercial market is China, Japan is second in the pecking order and are focused on ensuring supply to their automotive industry which is one of the most important industries in Japan.
“That’s the market that we operate in and it’s not as orderly as I would like it to be. Certainly we’ve spent the last 14 months really focusing on getting our house in order and we have built good, strong relationships with a number of customers.
“Our task now is to really be working much harder on the market side. The second thing which I think is quite important is that a lot of the applications for rare earth products are going to be environmentally sensitive products. If you’re buying a Prius because you think you’re doing well for the environment, you don’t want the rare earths to have come from a difficult environment. Certainly there are some Chinese manufacturers who manage the mining and processing in a very responsible way. There is also a lot of illegal mining that goes on in China.
“One of our strong points is that we can assure the provenance of our product in an environmental sense right from the mine to the finished product.”
Some of the huge growth areas in this space are cars, technologies that reduce carbon emissions and wind and Amanda intends to put Lynas at the forefront of these.
Under her guidance the company is now in a strong position to push forward and the team is crystal clear on their mission.
They are guided by Amanda’s drive to create an achievement focused organisation. Which she has done well to create in the 14 months she has had to turn the business around. BFM
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