MELBOURNE, Feb 14 — Malaysian regulators renewed an operating license for Lynas Rare Earths’ unit, the Australian company said on Tuesday, but they retained conditions that will prevent Lynas from importing and processing rare earths concentrate after July 1.
Lynas, the world’s biggest producer of rare earths outside China, will need to close the cracking and leaching part of its rare earths processing plant if the conditions are not removed before then, it said in a securities filing to the stock exchange.
Malaysia’s government has raised concerns about radiation levels from the process of cracking and leaching.
“Lynas is not allowed to carry out any activities that will produce radioactive waste in Malaysia after July 2023,” Malaysia’s Science, Technology and Innovation Minister Chang Lih Kang said in a statement on Facebook on Tuesday.
But two International Atomic Energy Agency reviews found the plant to be low risk and compliant with relevant regulations, Lynas noted.
The decision raises the prospect of an interruption to the supply of neodymium and praseodymium (NdPr) which are used in magnets as crucial components of everything from iPhones to weapons systems, later this year.
“After 10 years of safe operation in Malaysia, we are disappointed that the conditions that were applied to our 2020 operating licence remain,” Chief Executive Amanda Lacaze said in the statement.
“We will now proceed with administrative and legal appeals to ensure that Lynas is treated fairly and equitably as a Foreign Direct Investor and a significant employer and contributor to the Malaysian economy.”
Under its new permit, Lynas will be able to continue other parts of processing until March 2026.
Lynas had applied to Malaysia’s regulator for the conditions to be removed because they “represent a significant variation from the conditions under which… Lynas made the initial decision to invest in Malaysia,” it said.
The decision puts a greater focus on the construction timeline for Lynas’ cracking and leaching facility in central Australia, broker Canaccord said in a report, with Lynas able to use stockpiles for a time if the plant is not ready by July 1.
Lynas ships rare earths concentrate to Malaysia from its Mount Weld operations in Central Australia where it is building the processing plant in the town of Kalgoorlie to add capacity and mitigate Malaysia’s regulatory risk.
“After the market fully digests this news, we see the investor focus return to the significant long-term value LYC offers, its strategic asset base and market leading position (ex-China) in the NdPr market,” Canaccord said, maintaining its buy rating.
Lynas shares traded up 2.5 per cent at A$8.50 (RM25.74) on Tuesday after falling as much as 8.2 per cent on the previous day after a news report at the weekend suggested its operating licence would not be approved.
— Reuters
