Dark Clouds Hover Around Lynas Malaysia Operations

Lynas Corporation Ltd

After getting lifted from the temporary trading halt placed yesterday morning, Lynas Corporation Limited (ASX: LYC) got hit by the massive sell off. The shares of Lynas Corporation Limited crashed more than 20% on 5 December 2018 after the company released Review Committee Report relating to Lynas Malaysia.

But no, the committee has talked about all the good things. The Review Committee Report stated that ‘Lynas Malaysia’s operations are low risk and compliant with applicable laws.’ With this, the company once again flagged high its ‘Zero Harm’ philosophy. 

The report further emphasized on the positive side of the company. The Review Committee confirmed that Lynas Malaysia voluntarily adopts the international standards and practices. The exposure of employees to hazardous radiations is well below the standard guidelines and the company duly meets the quality investment criteria of high technology industries.

Then, why did the Lynas shares nosedive?

That’s the clash between pre-conditions implied by MESTECC for the renewal of license and the recommendation made by the Review Committee. On 4 December 2018, The Minister for Energy, Science, Technology, Environment and Climate Change (MESTECC) stated that the company has to remove Water Leach Purification (WLP) residue from Malaysia before 2 September 2019, if it wants the Ministry to renew Lynas Malaysia’s license and grant other permissions in relation to residue management. But contradictory to the Ministry’s statement, Review Committee suggested that Lynas Malaysia should develop a Permanent Disposal Facility (PDF) for dumping WLP waste. The committee further said that if the PDF location is not identified or approved, then the company should be ready to export WLP residue from Malaysia.

Moreover, the Ministry has also demanded for the submission of an action plan of Lynas Malaysia on the disposal of NUF. Currently, the approval will expire on 15 February 2019. In respect of this second pre-condition, the company explained that an action plan has already been submitted and need to follow by with the Department for its execution. The plan includes the designated premises for the Lynas Malaysia plant management and disposal of the NUF residue.

Malaysia is a core exploration region for rare earth minerals explorer, Lynas. But now it seems difficult for the company to operate in Malaysia as the Ministry may refuse to renew the license of Lynas Malaysia if pre-conditions did not get satisfied by the company.

As a result, the uncertainty in Lynas Malaysia’s operation took the investors to press the red button on ASX. The stock price of Lynas Corporation Limited (ASX: LYC) last traded at $1.640, after dropping $0.005 or 0.304% on  6 December 2018.


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