Lynas Clears Hurdles, Secures Malaysian Operating Permit

The world’s largest rare earths producer outside of China, Lynas (ASX:LYC,OTC Pink:LYSCF), has secured the medium-term future of its processing capacity in a deal with Malaysian authorities.

The Atomic Energy Licensing Board in Malaysia has given the Australian company a three year operating licence up until March 2023 in a development that clears away uncertainty for the producer.

The company’s future in Malaysia has been under a cloud for the past few years due to local opposition to the refinery and its operation on environmental and public health grounds.

Lynas announced on Thursday (February 27) that the permit has been secured. To get it, the company has agreed not to import raw materials containing naturally occurring radioactive material into Malaysia starting in July 2023.

To comply with this ban, Lynas must ensure that its cracking and leaching plant, currently under construction in Western Australia, is in operation before July 2023.

By removing radioactive materials, Lynas will be addressing the concerns that caused its previous woes.

The other requirements that the company expects to be able to satisfy include the development of a permanent disposal facility that the Atomic Energy Licensing Board will sign off on.

In order to ensure the company complies, Malaysia will be holding onto a financial deposit.

After the news, Lynas CEO Amanda Lacaze praised the Malaysian authorities for awarding the renewed permit. The demands that Lynas needs to meet were first set out back in August 2019.

“We thank the AELB for its decision to renew the operating licence for three years. This follows Lynas Malaysia’s satisfaction of the licence renewal conditions that were announced on 16 August 2019,” she said, before launching into a pitch on how valuable Lynas is to the Malaysian economy.

“Over the past eight years we have demonstrated that our operations are safe and that we are an excellent foreign direct investor. We have created over 1,000 direct jobs, 90 percent of which are skilled or semi-skilled, and we spend over 600 million RM in the local economy each year.”

Lynas moved quickly to select the processing site in Western Australia, announcing in December last year that it would be building the new plant in Kalgoorlie, near its Mt Weld mine.

The company has had plenty of motivation to ensure it can continue its refinery operations since it is one of the few rare earths companies with a supply chain completely independent from China.

Governments worldwide — such as Japan, a supporter of Lynas — have been casting about for alternative supplies of rare earths as the trade war between the US and China continues.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.