Despite having a momentous year, Australian rare earths producer Lynas (ASX:LYC) has announced it will likely halt production in Malaysia as it awaits increased output approval.
In her annual address to shareholders today (November 27), Lynas CEO, Amanda Lacaze, highlighted the company’s increased output and revenues, however, the positive news was overshadowed by her announcement that production would cease in Malaysia for the rest of the year.
The rare earths company had filed for an extension to its production caps in Malaysia and is yet to hear from officials.
“One of the business as usual applications that we have lodged is for an increase in the annual volume of lanthanide concentrate that can be processed at Lynas Malaysia this calendar year,” noted Lacaze.
“As it is now late November, and we have not received that approval, we are prudently planning for a temporary shutdown of production in December.”
Lynas estimates the unexpected production freeze will prevent the company from producing roughly 400 tonnes of NdPr.
“However, it’s important to note that the calendar year limit on the volume of material that Lynas can process in Malaysia will reset on 1 January 2019,” she added.
Lynas has had a contentious relationship with the Malaysian government. The company was subject to a public hearing earlier this month, and is currently being reviewed in relation to its operating practices and the environmental toll of production.
The Australian company, which has operated in the Asian nation since 2008, has also come under fire by local politicians for the same reasons.
Lynas is one of the world’s leading rare earths producers, and operates the largest rare earths refinery, the Lynas Advanced Materials Plant located in Malaysia, which produced 300 million tonnes last year.
“We recognize that having a social license to operate is essential to our success and our view is that as we prosper, so too should our people and our communities,” said Lacaze. “We apply this approach at our operations in both Australia and Malaysia.”
Even if Lynas can no longer produce REE in Malaysia for the rest of the year, the company has already recorded a significant revenue increase for 2018. In its yearly financial report released in September, the critical metals miner posted a gross profit of AU$121 million.
Shares of Lynas were down 3.65 percent on Tuesday, trading at AU$2.10.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.