Rare earths: Malaysian Government urged to undertake ‘fair, objective and transparent’ review of Lynas Corporation licence at Kuantan rare earth facility

2018-10-16

Rare earths: Malaysian Government urged to undertake ‘fair, objective and transparent’ review of Lynas Corporation licence at Kuantan rare earth facility


Posted on 11th October 2018 in General News.



Lynas Corporation published a press release in early October calling for a fair, objective and transparent review at the Lynas Advance Materials Plant (LAMP) in Kuantan, Malaysia, after the Government formed a committee to assess the facilities operating licence. The committee is headed by Fuziah Salleh, the member of Malaysian parliament for Kuantan and a critic of Lynas’ operations since the initial licence to develop the plant was approved in 2010. The Prime Minister Mahathir Mohamad has stated that the review will not be dictated by the views of historically anti-Lynas members, though the uncertainty continues to worry both shareholders and off-take partners in Japan who have become increasingly reliant on Lynas’ output as an alternative to Chinese production.  


The review of the Lynas plant will focus of the waste disposal and management of tailings residue, which has above background radioactivity. The existing tailings residue plan in place has previously been approved by government and third-party regulators in Malaysia, though there has been continued opposition to the plant despite the International Atomic Energy Agency stating that the risk to both public and environment was intrinsically low. 


Roskill View:


After production was suspended at Molycorp’s Mountain Pass mine in the USA, Lynas remained the only new, major rare earth operation to survive the prolonged decline in rare earth prices between 2012 and 2016. The supply of rare earth materials from Lynas, particularly to Japanese partners, has become a crucial alternative to Chinese production. Lynas expects to provide 65% of the rare earth raw materials used in Japanese NdFeB magnet production in 2018, increasing from <20% in 2014. It also expects to provide >30% of the rare earth raw materials used in Japanese production of auto catalysts and NiMH battery production. Rare earths from China will, however, still account for over 80% of global production in 2018.


If Lynas were to experience a negative outcome from the licence review, Japanese consumers would be forced to turn to alternative sources of rare earths. Rare earths production is largely concentrated within China which has, historically, used its dominance of rare earth raw material supply as a geopolitical tool. Japanese investors, mainly JOGMEC and Sojitz which supported Lynas through the period of declining rare earth prices, are also likely to remain nervous during the review period. 


Uncertainty over the operating licence at the LAMP will create marketing and promotional opportunities for other rare earth operations under development. Ultimately, however, reduced confidence in the rare earths industry to support a non-Chinese producer will likely impact the availability of project financing.


To discuss the rare earths market with Roskill, contact David Merriman: merriman@roskill.com, or Nils Backeberg: nils@roskill.com              


Powered by CloudDream
<em id="dlfswq723"><legend id="yhfioe285"></legend></em><th id="rnlkdb866"></th><font id="tcvdnd583"></font>