Shares in rare earths processor, Lynas Corp were smashed, losing more than a quarter of their value at one stage after the Malaysian government said it would impose tough new conditions on its licence to operate in the country.
In a statement to the ASX Lynas Corp said it was considering taking legal action against the government over the decision.
Investors didn’t listen, preferring to jump ship as the shares fell to a day’s low of $1.56 before settling at $1.645, down more than 22%.
“This appears to be policy based on politics, not policy based on science. It is very disappointing to receive this on the same day that the Review Committee report was released,” said Amanda Lacaze, Lynas, chief executive.
“This is disappointing as the Ministry’s intention to impose new conditions contradicts a media statement issued on 30 October 2018 by MESTECC (Minister for Energy, Science, Technology, Environment and Climate Change) which stated that Cabinet would review the Review Committee’s report before any decisions were announced. This process does not appear to have been followed,“ Lynas said.
“Lynas is pleased that the Review Committee’s report has finds Lynas Malaysia’s operations are low risk and that Lynas Malaysia complies with applicable laws. We welcome the opportunity to continue to improve our business by based on the Review Committee’s recommendations.
“We are surprised with the Ministry’s decision to impose a pre-condition that does not follow the process outlined in October, and which is inconsistent with the science, inconsistent with the expert Review Committee’s recommendations and is contrary to international best practice.
“However, we are confident we are well placed to manage potential changes and our long-term investment thesis remains strong,” Lynas said in yesterday’s statement to the ASX.
Malaysia’s ministry for energy revealed late Tuesday that it would impose two new pre-conditions for its licence renewal in 2019, including that the rare earths miner must export radioactive waste generated by Lynas its processing plant in Kuantan, Malaysia.
“The Ministry views seriously the current accumulation of the two primary residues at the Lynas Advanced Materials Plant (LAMP) site namely, Water Leached Purification Residue (WLP) totaling 451,564 metric tonnes and Neutralization Underflow Residue totaling 1.113 million metric tonnes,” it said.
The ministry said it was concerned with the increased risk arising from the continued accumulation of residue without a viable solution to manage its accumulation in the near-term.
The ministry said that for this reason, it will not allow the unlimited accumulation of residue at the Lynas facility.
Lynas has previously been the subject of a review by a parliamentary committee over its radioactive waste management practices and its impact on the environment.
The committee’s report found its operations were “low risk” and compliant with applicable laws.
