Lynas Rare Earths (ASX: LYC) Faces Supply Disruption as BHP (ASX: BHP) Suspends Nickel Operations

2 min read | July 12, 2024 03:34 PM AEST | By Team Kalkine Media

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Lynas Rare Earths (ASX: LYC) Faces Supply Disruption as BHP (ASX: BHP) Suspends Nickel Operations — Image source: © Transversospinales | Megapixl.com

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Lynas Rare Earths (ASX: LYC) has raised concerns over potential disruptions to its sulphuric acid supply following BHP Group's (ASX: BHP) decision to suspend its Western Australia nickel operations starting October. BHP, the world's largest-listed miner, announced the suspension citing low metal prices and global oversupply issues.

Lynas, the largest, rare earths producer outside China, disclosed on Friday that it has a contractual arrangement with BHP Nickel West for sulphuric acid supply to its Kalgoorlie rare earth facility in Western Australia. This supply is sourced either from the Kalgoorlie nickel smelter or alternative sources.

The suspension of mining activities at BHP's Kalgoorlie nickel smelter, among other operations, is expected to disrupt the supply of sulphuric acid to Lynas' facility in Kalgoorlie. Despite this, Lynas indicated that BHP has committed to making "reasonable efforts" to provide imported acid to meet its needs during the disruption period.

Summary

BHP Group's decision to suspend its Western Australia nickel operations has raised concerns for Lynas Rare Earths regarding the supply of sulphuric acid crucial to its Kalgoorlie rare earth facility. Despite potential disruptions, Lynas remains optimistic as BHP commits to sourcing imported acid to mitigate the impact. The situation underscores the interconnectedness of industrial supply chains, and the strategic measures companies must take to navigate market fluctuations and operational challenges.

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