Ann: Review Committee Report and Regulatory Update, page-16

AUST TODAY (Excerpt)

Malaysia’s tailings call hits Lynas shares 

Rare-earths producer Lynas could consider exporting waste from its Malaysian processing plant back to Australia, after the company was rocked by Malaysian ministerial orders that threaten the viability of its operations. Shares in Lynas plunged more than 26 per cent when they resumed trading yesterday following the decision by Malaysia’s Ministry of Energy, Science, Technology, Environment and Climate Change to introduce strict new conditions around Lynas’s Advanced Materials Plant at Kuantan in Malaysia. The conditions include a requirement that Lynas removes radioactive tailings material at the plant from Malaysia, a move that would represent a significant challenge to the operation. 

Lynas says it is surprised by the decision, describing it as inconsistent with science and contrary to international best practice.....Asked if Lynas would consider exporting the material back to Australia, or even consider building a new plant here, a spokeswoman for Lynas said the company would work through all its options. “Lynas is working through various scenarios related to the ministerial statement and it is too early to comment further,” the spokeswoman said. “We will consider all available options to achieve an appropriate outcome, including legal options.” 

Lynas has had a torrid history in Malaysia, where its operations have been plagued by complaints from local stakeholders and activists. The new government announced earlier this year that a review committee would carry out a fresh investigation into the

Malaysian plant. The ministry said the review committee’s report had raised “many issues”, and managing waste residue from the processing plant should be given priority. 

The ministry noted that Lynas had previously given undertakings back in 2012 to remove the residue from Malaysia if necessary. “The ministry is confident that this decision will help further ensure the well-being of the community and the environment,” the ministry statement said. But Lynas said the review committee report found that its Malaysian operations were low risk and compliant with applicable laws, and chief executive Amanda Lacaze said the new conditions were inconsistent with the review committee’s recommendation. “This appears to be policy based on politics, not policy based on science,” Ms Lacaze said. “It is very disappointing to receive this on the same day that the review committee report was released. “However, we are confident we are well placed to manage potential changes and our longterm investment thesis remains strong.” 

Lynas said the new conditions did not follow a process outlined when the review was announced in October. “Lynas is one of a number of industries in Malaysia with feedstock that produces residues with low-level radioactivity. Malaysia has strict regulations in place for residue management and there should not be one rule for other industries and one rule for Lynas,” the company said.