Lynas Corp. Ltd. (LYSCF)

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Amanda Lacaze did not make it into The Australian Financial Review's list of outstanding business people in 2015 but there is every chance she will in 2016 given her achievements at rare earths company Lynas Corporation.

She has successfully turned around a company that two years ago looked headed for receivership. After two consecutive quarters of cash-flow positive production reports, Lynas looks like it will survive what has been a catastrophic collapse in rare earth prices.

The rare earths market is notoriously opaque because of the involvement of so many Chinese producers willing to use their power to manipulate markets.

Despite that tough market environment, Lacaze has managed to steer a steady upward course. Lynas, which employs about 650 people at operations in Malaysia and Western Australia, has suddenly come on to the radar of investors.

It has received numerous speeding tickets from the ASX for rapid share price rises in the past three months. The sharemarket is coming to realise that the company is not only going to survive but it might actually prosper.

Institutional investors have yet to rejoin the register in force but that is distinctly possible in the months ahead if the quarterly cash-flow reports continue.

Lacaze's experiences at Lynas provide an ideal case study because she was forced to rethink every aspect of the company's operations.

Eighteen months ago she inherited a company with bloated costs and too much debt.

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LYNAS FPO (LYC)
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Last updated: Tue Dec 29 2015 - 4:15:35 AM
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Company Profile
Project development, mineral exploration and investment.

http://www.lynascorp.com/

Metals & Mining (151040)

ASIC 009066648

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The company had built an $800 million rare earths processing plant at Kuantan, Malaysia, on time and on budget but it had not been able to make it work profitably.

There was little to show for a total capital investment of $1.3 billion in Malaysia and at the company's mine at Mt Weld, north of Kalgoorlie in Western Australia.

The company had a management structure suited to a top 100 company without realising that its market capitalisation was only in that league because of a bubble in the rare earths market.

FALSE REALITY

Lacaze approached the task of rethinking the way everything was done at Lynas by recognising that you should never waste a crisis. She says it is a shame that too often a crisis is needed to make people realise that they were living and working under a false reality.

The bubble in rare earth prices had led management to believe the expensive offices in Sydney were sustainable and that excessive operating costs were tenable.

Lacaze has cut head office overheads by 40 per cent and operating costs by 25 per cent. Instead of continuing with the swish offices in Sydney, Lacaze moved with her husband to live in Kuantan, where the company's rare earth processing plant is on a 100-hectare site. Her senior managers are also in Kuantan.

Lacaze freely admits that the past 12 months have been the most difficult in her 30-year career in senior management positions in manufacturing, marketing, telecommunications and rare earths processing and supply.

Lynas is the only non-Chinese miner and separator of rare earths. It was able to survive the collapse in rare earth prices thanks to the support of its main Japanese customers.

Japan is keen to maintain reliable supplies of rare earths and price predictability from a non-Chinese source.

A 30 per cent decline in the key rare earth and major product from the Kuantan plant, NDPR, over the past six months did not stop Lynas reporting cash-flow positive operations.

Lacaze describes what has happened at Lynas over the past 18 months as a "turnaround/start-up".

"I know that sounds like an oxymoron but either one is difficult," she says.

A symbol of Lacaze's human touch was when she bought a pair of bright pink gumboots to wear around the manufacturing plant in Malaysia. It prompted lots of comments from women who worked in the administrative office at the plant. That was soon followed by a request from a woman working in the plant for a similar pair.

But the cost-conscious culture inculcated by Lacaze meant that the request was about to be refused. The CEO had to intervene. She said that it would not break the bank if the nine women out of 600 employees in the plant were allowed to go pink.