Source:Forbes
Chinese producers of rare earths, a family of minerals essential in a range of commercial and military technologies, were the only winners in a confusing ruling by a Malaysian Government committee reviewing the future of a plant which processes ore imported from Australia.
While approving most aspects of the plant, which generates low-level radioactive waste, it also ruled that a permanent safe storage site must be built by the owner of the plant, Australia-based Lynas Corporation, or export all waste to another country.
Shares Down 23%
The decision, especially a tight timetable of next September for compliance, was received badly by investors who knocked 25% off Lynas's share price in early trade today (Wednesday) before a modest recovery left the stock down by 23% at $1.20.
The Lynas plant, located in the Kuantan area of east Malaysia, is the world's biggest source of rare earths outside China. Its production of neodymium, praseodymium, dysprosium and other rare earths is keenly sort in Japan as well as the U.S., two countries trying to ween themselves off Chinese material which accounts for 80% of global supply and 78% of U.S. imports.
If Lynas cannot meet the new requirements of the Malaysian Government the Chinese grip on rare earths will become even tighter, a possible development at a touchy time in the tit-for-tat tariff war being waged by China and the U.S.
Lynas chief executive, Amanda Lacaze, said the Malaysian Government review committee had identified many positive aspects of the rare earth plant, including the fact that operations were based on controlled low-risk procedures and technologies, and that employee exposure to radiation and non-radiation hazards were below permitted levels.
However, the requirement to build before next September a permanent safe storage facility or export all waste took Lacaze by surprise and appeared to be a variation on a process outlined less than two months ago.
"We are surprised with the Ministry's decision to impose a pre-condition that does not follow the process outline in October, and which is inconsistent with the science, inconsistent with the expert review committee's recommendations and is contrary to international best practice," Lacaze said in a statement filed at the Australian stock exchange.