Shares in rare earths group, Lynas Corporation rose yesterday, despite news that the company is planning a temporary shutdown production at its rare earths plant in Malaysia.
The shares rose 2.9% to $2.10 in the wake of reports that the company had failed to secure regulatory approval to increase annual production levels from local authorities in Malaysia.
That was after an early 2% slide on the news which was the usual kneejerk reaction from investors in this company to ‘bad’ news.
Perhaps Australian investors are inured to the company hitting roadblocks in Malaysia. Certainly, the news, delivered to the AGM in Sydney had little negative impact in the wider market by the close of trading.
This latest regulatory block comes as a Malaysian parliamentary committee is due to release a report on the Australian-listed miners’ radioactive waste management practices and its impact on the environment. The findings could be announced at any time soon.
Lynas said on Tuesday the temporary shutdown and associated activities would potentially reduce productions volume of NdPr, a substance widely used in the electronics industry, by about 400 tonnes.
It said the calendar year limit on the volume of material that Lynas can process in Malaysia would be reset on January 1 next, enabling production to resume.
Company CEO, Amanda Lacaze told shareholders at the company’s annual meeting in Sydney that 400 tonnes of NdPr was worth about A$16m in terms of gross revenues. “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,” she said.
The Lynas plant in Kuantan is one of the few suppliers of processed rare earths outside of China, serving customers in Japan, Europe and North America.
The parliamentary committee which has drawn up the report is expected to hand it to Malaysia’s minister for the environment later today. Lynas has been the subject of complaints by some local people and environmental activists since it opened its plant in 2012.
Australian analysts do not expect the finding to be too adverse to Lynas, but there is always the chance the company could be caught up in Malaysian political currents.