Optimism Seen Around Lynas’ Malaysia Operations, Prime Minister Gives Positive Comments

Optimism Seen Around Lynas’ Malaysia Operations, Prime Minister Gives Positive Comments

Lynas Corporation Limited (ASX: LYC) receives Malaysian Prime Minister’s support for continuing the company’s operations in Malaysia that have been in regulatory conflict from long. The company forwarded the comments the Prime Minister has made at a press conference on Friday 5 April 2019.

The Prime Minister’s comments were as follows: “….With regard to Lynas, we(Malaysian Government)  have imposed an extra condition, that is they must take away the waste. But they(Lynas) want to take away the waste to where? They want to take it to Australia, but Australia doesn’t want to accept it, so they can’t do it anyway.

So what we (Malaysian Government) have done is we have opened up the business to other people, and there are other companies willing to buy up or somehow or other acquire Lynas, they have given us a promise that in future before sending the raw material to Malaysia they will clean it up first, they will crack it and decontaminate it in some way with regard to radioactivity, so that when the raw material comes here, the volume is less and the waste from that raw material is not dangerous to anybody.

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So, they, this company or even Lynas they can continue if they promise that the raw material from Australia would be brought here only after, what they call, cracking and cleaning it up.”

The issue relates to the Malaysian Government requirement under which the Minister for Energy, Science, Technology, Environment and Climate Change (MESTECC) issued the statement that if Lynas wants to continue its operations in Malaysia then it needs to remove Water Leach Purification (WLP) residue from the land of Malaysia before 2 September 2019. It underscores the license renewal requirement which is in contraction to the company’s ongoing waste removal practices involving a Permanent Disposal Facility (PDF) for dumping WLP waste.

However, Lynas is seeking clarification from the Malaysian government with respect to recent comments of the Prime Minister.

The company further stated that it has been developing detailed plans to grow with the market and deliver long term shareholder value. It believes that these plans will assist the company in mitigating risk from any regulatory changes in Malaysia.

Lynas’ Japanese lender, Japan Australia Rare Earths (JARE), has reportedly conferred its support to the company and its team. JARE is a special purpose company owned by Japan Oil, Gas and Metals National Corporation (JOGMEC) and Sojitz Corporation, a leading Japanese trading firm and Lynas’ exclusive distribution partner in Japan.

Sojitz Corporation commented: “The development of Lynas and its unique IP has supported the development of Japanese industry. Sojitz customers have confidence in Lynas as a valued supplier of sustainable rare earth materials.”

Lynas intends to disclose its further plan and progress in the coming weeks primarily relating to the operating alternative cracking and leaching processing.

LYC has edged up by 0.474% to last trade at $2.120 on 8 April 2019. The stock has closed at a price to earnings multiple of 172.950 x with a market capitalisation of $1.4 billion.

Also Read: Lynas Receives A Billion-Dollar Acquisition Offer From Wesfarmers


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