Licence hopes buoy Lynas share price

Lynas Corp’s latest regulatory nightmare in Malaysia appears to be heading for a positive resolution.

Shares in the rare earths producer shot up almost 8 per cent yesterday to $2.74 on what was an otherwise bloody day for Australian stocks after reports from Asia suggested that a long-awaited licence extension for its Malaysian processing plant was imminent.

Lynas chief executive Amanda Lacaze late last month said she expected to receive the new licence by the middle of August. Reuters yesterday reported that the Malaysian government had decided to grant the extension.

Citing unnamed sources, Reuters said the new licence could be shorter than the usual three-year permit Malaysia had granted in the past.

But a new licence — even a shorter one — would tackle the biggest uncertainty that has weighed on Lynas and which left it exposed to an opportunistic takeover approach from Wesfarmers earlier this year.

The current licence for its Kuantan processing plant expires on September 2. The latest licence renewal period has been particularly fraught for Lynas given the Malaysian government includes at least two MPs opposed to the project.

Energy and Environment Minister Yeo Bee Yin, who has been an outspoken opponent, said at the weekend that cabinet had made a “less-than-ideal decision” on the plant, while Kuantan MP Fuziah Salleh said the plant should not be allowed to operate.

The government’s final decision on the plant is also likely to determine whether Wesfarmers continues to pursue Lynas. However, the lack of engagement to date and the fact Lynas shares are trading well above Wesfarmers’ proposed price of $2.25 a share suggests that the conglomerate will most likely walk away.