Will Malaysia Leave Lynas In Limbo?

By Glenn Dyer | More Articles by Glenn Dyer

ASIC is said to be interested, Wesfarmers keeps moaning, Lynas itself keeps making statement and leaks keep coming from Malaysia – the soap opera goes on.

But could the issue be settled, or a new development (episode) arise in Malaysia later today?

Given the ’they said/we said’ comments from Lynas and Wesfarmers, the interest from corporate regulator, ASIC is understandable.

Whether it will progress to anything more serious than a check of the various statements, the timing of their announcement and any share activity, remains to be seen.

Wesfarmers is still protesting its innocence in the matter and revealed that the discussions with Lynas have been going on for months and have been far more involved than previously disclosed to the market.

In fact from what Wesfarmers has said, the interest at its end moved from a joint venture to a $1.5 billion offer after Lynas walked away from the talks and rejected the approaches from Wesfarmers.

Now Australian media reports this morning say the Malaysian cabinet meets later today and Lynas’ plant and the processing or radioactive waste will be on the agenda.

Fairfax Media reported: “Malaysian government officials confirmed the conditions Lynas would be required to meet to keep its controversial $1 billion processing plant operating beyond September would be on the agenda when members of the five-party coalition government meet on Friday.”

The most immediate question for the government, Lynas (and Wesfarmers) and investors is the issue of the removal of more than 450,000 tonnes of low-level radioactive waste (from Lynas’ plant) from the country by September.

Lynas is the only rare earths processor outside China and mines produces ore at Mt Weld, east of Perth, ships it to Malaysia for processing. That leaves behind waste that is radioactive.

Lynas says its preference for handling the waste is a recommendation from the Malaysian government’s scientific review committee, released in December.

“The review committee recommended building a permanent disposal facility (PDF) for the WLP [radioactive] residue,” Lynas said.

It was a week ago that Prime Minister Mahathir revealed the future of the radioactive waste stokpile had become an issue when he said after a cabinet meeting that an unnamed company “willing to acquire Lynas” had given him the promise that it would decontaminate its ore of radioactive elements before shipping it to Malaysia.

The Prime Minister said a suitor, or Lynas itself, could continue to operate in Malaysia if they promised that raw materials coming to Malaysia would first be cleaned of radioactive material.

Investors took that to mean Wesfarmers, but the company was quick to try and avoid any involvement, especially when it was charged by some analysts and media with playing “dirty tricks” with Lynas’ future by interfering in Lynas’ talks with the Malaysian government on the waste future question.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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