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Lynas seeks ‘plan B’ as Malaysia rare earths plant faces threat

The date of: 2018-10-17
viewed: 1

Source:Financial Times

Lynas, one of the world’s major suppliers of rare earths outside China, is searching for alternative locations in case it is forced to close the world’s largest processing plant of the material in Malaysia following a government review.

Amanda Lacaze, chief executive of the Australian-listed company, said she was confident Lynas would pass the environmental review ordered by the ruling coalition, which came to power in Malaysia in May after the surprise electoral victory of Mahathir Mohamad.

Ms Lacaze told the Financial Times in an interview that a negative review would alarm investors, customers and governments, who are sensitive to ensuring there is a reliable source of supply outside China of rare earths — a group of 17 elements used in high-technology products from smartphones to electric vehicles.?

“I don’t think it is likely to be the outcome but if we were forced to close [in Malaysia] it would be immediately felt in the supply chain throughout the world and it would be most significant in the Japanese, North American and European markets,” Ms Lacaze said.

She said Lynas was evaluating options in case a negative review forced the closure of its A$1bn (US$710m) plant in Kuantan, which has faced opposition from environmental campaigners ever since construction began in 2010.

“We could reorganise our assets with time in a way that would allow us to continue to serve our customers. Short term we may need to partner in China; longer term we would re-establish our operations outside of China. Australia is a pretty good place.”?

Last month Lynas shares slumped 27 per cent when Fuziah Salleh, a Malaysian MP and a deputy minister in the prime minister’s department, was appointed chairman of the committee reviewing the Lynas plant.

Ms Fuziah, a longstanding critic of the processing plant — which produces radioactive waste — told the FT she had resigned her committee chairmanship. She said she stepped down to avoid giving Lynas reason to question the committee’s impartiality. “It seems that they are using that as their defence right now,” she said.

It remains unclear whether Yeo Bee Yin, Malaysia’s energy minister, has accepted Ms Fuziah’s resignation or if she has appointed a replacement.Ms Yeo did not respond to requests for comment.

Ms Lacaze said the environmental review needed to be fair, transparent and scientific and the committee should be populated by people with technical and scientific competence, rather than pro- or anti- campaigners.?

The emergence of Lynas as a non-China supplier of rare earths has provided comfort to customers, particularly in Japan, who faced disruption to Chinese supply in 2010 following a dispute between the countries that caused prices to temporarily surge by up to 10 times.?

Lynas ships ore from its Western Australian mine for processing in Malaysia and has captured about 12 per cent of the global rare earths market over the past few years. It is a key supplier of neodymium and praseodymium — elements used in the motors of electric vehicles and wind turbines.?

Lynas is awaiting formal notification from the government on the scope, terms of reference and membership of the review committee and has begun a lobbying campaign aimed at ensuring the review is not driven by anti-Lynas campaigners. It published an open letter last week in The Star newspaper expressing that view.?

The Australian government is backing Lynas, with Australia’s high commissioner in Malaysia, Andrew Goledzinowski, saying last month that it would be a “tragedy” if the Lynas plant were closed.

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