Rare earth: Lynas plant risks partial closure

Malaysian regulators renewed the operating licence for Lynas’ Rare Earths unit but retained conditions that will prevent Lynas from importing and processing rare earth concentrate after 1 July.

Lynas, the world’s largest producer of rare earths outside China, will have to shut down the cracking and leaching part of its rare earths processing plant if the conditions are not removed before then.

The government of Malaysia has expressed concerns about radiation levels from the cracking and leaching process.

“Lynas is not allowed to carry out any activity that produces radioactive waste in Malaysia after July 2023,” Chang Lih Kang, Malaysia’s Minister of Science, Technology and Innovation, said on Tuesday.

However, two reviews by the International Atomic Energy Agency found the plant to be low-risk and compliant with relevant regulations. The decision raises the prospect of a disruption in supplies of neodymium and praseodymium (NdPr), used in magnets as crucial components of everything from iPhones to weapons systems, later this year.

Weekly Rare Earth price list – Oxide – euro/ton

“After 10 years of safe operations in Malaysia, we are disappointed that the conditions applied to our operating licence for 2020 remain,” said CEO Amanda Lacaze.

“We will now proceed with administrative and legal appeals to ensure that Lynas is treated fairly and equitably as a foreign direct investor and a major employer and contributor to the Malaysian economy.”

Under the new permit, Lynas will be able to continue with the other processing stages until March 2026. Lynas had asked the Malaysian regulator to remove the conditions because they ‘represent a significant change from the conditions under which…Lynas made the initial decision to invest in Malaysia’.

Lynas is shipping rare earth concentrate to Malaysia from its Mount Weld operations in Central Australia, where it is building the processing plant in the town of Kalgoorlie to add capacity and mitigate Malaysia’s regulatory risk.

Once the market has fully digested this news, we will see investors’ attention return to the significant long-term value Lynas offers, its strategic asset base and its position as a market leader (excluding China) in the NdPr market.

Weekly Rare Earth price list – Metal – euro/ton