The Malaysian Atomic Energy Licensing Board has issued a temporary operating license for Lynas Corporation, a Sydney-based miner and processor of rare earths, near the eastern coastal town of Kuantan.
Lynas says it will begin operations for its delayed $800 million rare earths facility in Kuantan, in October this year. The delay is due to protest by environmental protestors questioning the corporation’s safety credentials and residents’ concerns of radiation. In answer to this, a parliamentary committee has declared the facility to be environmentally safe, two months ago.
According to an article by James Grant in the Financial Times, Malaysia’s Prime Minister Datuk Seri Najib Tun Razak is keen on the project as he sees it as a way of attracting high-technology projects as well as helping to propel the country of 28 million people out of a middle income trap.
“China accounts for more than 90 per cent of rare earths mining and processing, a dominance that has caused concern around the world since it halted supply to Japan in 2010 after a diplomatic dispute. Lynas plans to ship rare earth ore mined in Western Australia – the largest such deposits in the world – to Kuantan, where it will be trucked to a nearby processing plant. Environmentalists last staged protests near the plant in June, angry about the possibility that waste material from the refining process might be disposed of by burying it in land near the plant,” Grant wrote in his article.
A reply by Executive Chairman of Lynas, Nicholas Curtis says that Lynas has no intentions of disposing waste material from the refining process by burying it in the land near the plant.
According to the article by Grant, Nicholas Curtis said “the license provides additional validation of the safety of Lynas’ operations in Malaysia. That supported a previous assessment by the International Atomic Energy Agency, that the Kuantan plant was safe and fully compliant with international standards.”
“Malaysia’s opposition has opposed the Lynas plant and is expected to fight a close election against Mr Najib’s ruling coalition when a poll is called within months,” the article wrote. Curtis replied saying that he didn’t think that a new government will change the Malaysian constitution and the way Malaysia works.
“The news will surprise analysts who thought Lynas would have to wait until after Malaysia’s elections to receive a license. It will also ease the pressure on the company’s balance sheet – Lynas is estimated to be burning cash at the rate of A$10m a month – and prevent changes to the terms of a debt instrument that could have resulted in significant dilution for Lynas shareholders,” Grant wrote.
“I expect Q1 next year to see us in a cash positive position”, even though the company would now have “double the [current] working capital requirement,” said Curtis.
“The announcement came after the stock market in Australia had closed, but in trading on Frankfurt stock exchange shares in the mining company rose almost 50 per cent to 89 cents.”
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