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AFR Business people of the year: Amanda Lacaze steers Lynas to recovery

The Australian Financial Review ​
15 December 2017, by Peter Ker

Lynas shareholders had already enjoyed a stellar 2017, but the cream on the cake arrived on December 8 when the rare earths producer returned to the ASX 200.

Admission to the index capped an amazing recovery for a company that was urgently renegotiating its debt obligations barely a year ago as it fought for survival.

While 2017 was the year investors woke up to the Lynas turn-around story and spurred a tripling of the company’s value, Lynas chief executive Amanda Lacaze says it was just reward for years of hard work.

“It has not really just been this year, it has really been the result of three years of heavy lifting, but it is nice that this year we started to get the benefit,” she said, after being named one of the Financial Review’s Business People of the Year.

“There will be some index play in that [return to the ASX200] … but I am not sure it will immediately translate into significant new buying.”

Like Nev Power at Fortescue, Lacaze has proved to be the methodical hand that transformed a company set up by an entrepreneur with big visions into a reliable producer of global scale.

When Lacaze arrived in June 2014, Lynas’ Malaysian processing plant was producing its flagship product, Neodymium and Praseodymium (NdPr) at just 60 per cent of capacity.

“Two years later we had 100 per cent operating … today it runs at about 110 per cent of nameplate, so we have actually trebled our production during that time, and at the same time we have significantly reduced our costs,” she said.

“In the first three years of my tenure we really focused on getting the settings inside the business right; running the plant well.”

Equity growth

Unlike Fortescue, Lynas is yet to turn that operational discipline into profitability, but losses have narrowed in the each of the past three years, and a tailwind emerged in 2017 in form of rising prices for NdPr.

Lacaze delegates much of the credit for Lynas’ recovery to her staff, loyal shareholders and significantly, the company’s lenders, who in late 2016 agreed to lower interest rates and to push debt maturities back to 2020.

“If our lenders had been different, then maybe the outcome would not have been as positive,” she said.

From $225 million in June, debt has fallen to about $96 million.

“Now with debt that is much more manageable for a business of our size, that has been a key part of seeing the equity growth,” said Lacaze.

A marketer by background with experience at Nestle, Telstra, ICI and AOL, Lacaze had to learn the rare earths game upon joining Lynas and describes herself as a “good listener and a relatively fast study”.

EV-charged growth

She says convincing customers to build their businesses around rare earths ranks as the company’s biggest opportunity, and biggest risk, in 2018.

“The biggest growth driver that we see for our business over the next 10 years is the growth in electric vehicles,” she said.

“For us the important thing is to ensure those in the automotive supply chain feel confident about making a technology choice using rare earths.

“We are prepared to enter into long-term contracts so that decisions on technology choice can be made on technology, not on concerns about availability of the raw material and there are still some residual concerns about the dominance of suppliers from China in this market.”

So having returned to the ASX 200, could 2018 be the year Lynas pushes even higher?

“If we were sitting there saying we are quite happy to just be a little stock without aspirations to grow, be stronger, be bigger, be better than we would probably stay there,” she said.

“We are delighted to be back in the ASX 200 … we look forward to achieving the next milestone, which would be the ASX 150.”