Lynas shares plunge after Malaysian review
Lynas says it’s disappointed with new Malaysian demands over its rare earths plant, saying they appear to be based on politics.
Australian rare earths producer Lynas says it is surprised by the decision by the Malaysian government to impose a precondition on its operations there, saying it is inconsistent with science and contrary to international best practice.
Lynas shares plunged more than 26 per cent when they resumed trading in the wake of the Malaysian report, and the company’s response, and at 11.10am (AEDT) were 19.6 per cent lower at $1.71.
Malaysia’s Ministry of Energy, Science, Technology, Environment and Climate said following a review that Lynas should determine the location of, and build, a permanent disposal facility for water-leached purification residue, which contains radioactive materials.
That would need to be built before the renewal of Lynas’s licence in September next year, the ministry said overnight.
Lynas said in a statement that the precondition does not follow a process outlined in October, and was inconsistent with the review committee’s recommendation.
“This appears to be policy based on politics, not policy based on science,” said Lynas chief executive Amanda Lacaze.
“It is very disappointing to receive this on the same day that the review committee report was released.
“However, we are confident we are well placed to manage potential changes and our long term investment thesis remains strong.”
Lynas said the potential construction of a permanent facility for the residue was always part of its planning and is provided for in financial statements and by way of a bond in excess of $US34 million that is held by the Malaysian regulator.
The Malaysian government is demanding action from Lynas after the review committee report raised health concerns about waste residue at its processing plant at Kuantan, in Malaysia’s east.
However Lynas said today the review committee report found that its operations in Malaysia are low risk and compliant with applicable laws.
Still, the Malaysian ministry concerned said waste residue had been accumulating for six years at the company’s facility, and was exposed to the threat of natural disasters such as flooding.
It also posed a risk to the surrounding communities, the review found.
“The ministry is concerned with the increasing risk arising from the continued accumulation of residue without a viable solution to manage its accumulation in the near-term,” it said in its report overnight.
“For this reason, the ministry will not allow the unlimited accumulation of residue at Lynas’s advanced materials plant.”
While the review acknowledged that Lynas was conducting research into the potential recycling of water-leached purification residue and neutralisation underflow residue as a soil conditioner named Condisoil, the committee said the duration of the studies was insufficient to make conclusions about its safety.
The ministry concluded that water leached purification residue, which contains radioactive materials, must be removed from Malaysia.
Lynas said today that its licence conditions state that residues should be recycled and only stored in a permanent disposal facility if that fails.
The existing temporary storage licence expires in September next year, the ministry said.
The International Atomic Energy Agency has said the minerals processed by Lynas at Kuantan are considerably less radioactive than other plants.
Still, critics accuse Lynas of having no long-term management plan to deal with the waste.
Lynas had presented letters of undertaking in 2012 indicating its commitment to remove residue from the Lynas plant, if necessary.
The company would be required to submit an action plan on the disposal of its accumulated wastes before it will be considered for future applications for the non-radioactive neutralisation underflow residue scheduled waste, the ministry said.
“The ministry is confident that this decision will help further ensure the wellbeing of the community and the environment,” the review said.
Lynas said it has already submitted an action plan and will seek to accelerate work with the Department of Environment to allow its execution, including having the plant designated as prescribed premises for the management and disposal of the neutralisation underflow residue.
Lynas’s plant at Kuantan became a target for political campaigning about its environmental and health impacts in the lead up to the country’s 2012 election.
A review into Lynas’ operations there was announced in September.