Malaysia has granted Australia’s
Lynas Corp (ASX: LYC) an extension on its operating licence for a rare earths
processing plant, subject to various conditions and valid only for six months, keeping
alive concerns about the miner’s fate in the Southeastern Asian country.
Among the requirements imposed by the Atomic Energy Licensing Board (AELB), an agency under the Ministry of Energy, Science, Technology, Environment and Climate Change, Lynas must outline a plan to set up its cracking and leaching facility overseas, within four years of the licence renewal.
The company, the world’s only major producer of rare earths outside China, will also have to identify a specific site, approved by Malaysia, for a permanent disposal location to store its low-level radioactive waste. Alternatively, Lynas will have to secure official written approval from a recipient country willing to take the waste, the regulator said.
Analysts reacted positively to the
news, saying that the four-year deadline suggested that a longer licence
renewal would be forthcoming if Lynas meets the imposed requirements. Licence
renewals in Malaysia are usually given for three years.
The Sydney-based company, which
extracts rare earths Western Australia, but processes them in Malaysia, has
faced several issues related to its six-year-old facility in the country —
known as the Lynas Advance Material Plant (LAMP).
LAMP was the centre of relentless
attacks from environmental groups and local residents while under construction
in 2012. They feared about the impact the low-level radioactive waste the
refinery generates could have on the health of those living nearby, and to
the environment.
Scrutiny escalated last year, with
Kuala Lumpur setting a committee to review Lynas’ operations. chief executive
and managing director, Amanda Lacaze, raised concerns about the impartiality of a couple of
committee members, as both are known for being long time opponents of having
the refinery located in Malaysia.
In December, the AELB told Lynas it had to remove 450,000 tonnes waste stockpiled at the local facility by Sept. 2., the day its licence was due to expire.
The miner ended up committing to build a first-stage processing plant in one of two
preferred sites in Western Australia, where its Mt Weld mine is located.
Downstream processing, however, was set to continue happening in Malaysia.
The licence extension comes amid concerns that the rare earths industry may get embroiled in the trade war between China and the US.
Lynas said in June that it had begun stockpiling output following Beijing’s threats to stop
exporting rare earths as a weapon against the US, which imports about 80% from
China.
The nation has used its rare earths
dominance to make a political point in the past. It blocked exports to Japan
after a maritime dispute in 2010, though the consequent spike in prices
triggered a race to secure supplies elsewhere.
Experts believe that would be the
risk again if Beijing follows through with its retaliation warnings.
Lynas’ main products, neodymium and praseodymium, are
key ingredients in permanent magnets used in electric vehicles, energy
efficient consumer devices, and in the aerospace and defence industries.