News

Lacaze puts struggling Lynas back on track

The Australian, page 21
Posted on MAY 17, 2016 by Glenda Korporaal

It has almost been two years since former Telstra executive Amanda Lacaze moved from Sydney to Kuantan on the east coast of Malaysia to run troubled rare earths company Lynas.

Lacaze, whose corporate challenges have included turning around telecoms company Commander Communications, laid off about 300 of Lynas’s 1000-strong staff, closed its Sydney head office, renegotiated debt facilities, slashed operating costs and revamped its Malaysian processing operation.

She has worked through initially difficult issues with some Malaysian interest groups, boosted production levels. By all accounts she turned a company heading for collapse into an efficient, viable business.

The situation would be looking a lot better but for continued falls in the world prices of rare earths, which have seen the company’s shares trading around 7c this week.

At the height of the boom in rare earth prices in 2011, when China was restricting exports of its rare earth products, Lynas shares were trading as high as $2.25.

But when China, the world’s largest producer of rare earths, eased export restrictions the market collapsed, sending Lynas’s share price down to about 14c in June 2014, when Lacaze took over.

While Lacaze has turned the company’s operations around, she is still battling continued falls in the market prices of rare earths, which are used in the production of smart phones, hybrid cars, wind turbines, magnets, lasers and other specialist industrial products.

“The turnaround is largely complete,” she says.

“Now my task is to find a path forward for the company, so if by year end the price of rare earths is still in the toilet, as it is now, it isn’t just scraping by.” Lacaze has been able to cut back the company’s operating loss of $89 million in the six months to the end of December 2014 to $40m for the six months to the end of December last year, on the back of a 43 per cent rise in sales to $93m.

But the continued fall in prices in the volatile market has been a challenge.

Lacaze has delivered seven quarterly reports as Lynas chief executive. “About half of them have been positive or break-even,” she points out.

The company reported negative cash flow of $7.4m for the three months to the end of March as a result of the start-up of the its final production train at its mine in Western Australia and lower sales revenue due to falling prices.

“If the market price of NdPr (neodymium-praseodymium) was where it was 12 months ago we would be throwing off millions of dollars of free cash every month,” she said.

“This time last year it was selling for $US47 a kilo, but for the nine months of this financial year it has been below $US30 a kilo. That’s why we have been a break-even business rather than a profitable business”

The straight-talking mother of three has thrown herself into the difficult task of restructuring Lynas. With its mining in Mount Weld, in inland WA, and processing operations in Malaysia, Lynas is now the only producer of rare earths outside China, following last year’s collapse of US-based Molycorp.

Lacaze, whose corporate career has also included stints with Nestle, ICI and Orica, is one of 12 corporate women who has talked about her business career with author Gillian Fox in a book called Woman of Influence to be launched this week.

Lacaze talks about she juggled her high-flying job as marketing director with Telstra with motherhood, with Telstra paying for her mother to fly on some business trips to help, so Lacaze could breast-feed her third child who was 10 weeks old.

“It meant I would go to work, pop out at lunchtime, feed him, go back to work, pop out about five o’clock, feed him and go back to work,” she said.

Lacaze has taken her husband, Wayne, to live in Malaysia with her. He has become involved in charity work in the local community, including helping to raise funds for a school for disabled children.

In her interview with The Australian this week, Lacaze says her aim is to boost ties with the company’s customers.

She sees emphasising Lynas’s high environmental standards as one way of becoming more attractive to international buyers.

“We are promoting our position of being a 100 per cent credible alternative supplier,” she said.

She says the challenge ahead includes becoming a “champion” for the use of rare earths in manufacturing. When prices skyrocketed in 2011, manufacturers found ways of using alternatives.

Watch a video interview with Amanda Lacaze at theaustralian.com.au/businessreview