delays expected

Saturday, April 30, 2011
Down Under REE report: Lynas fallout, scandium report

Dominating the REE space in Australia over the past week has been the delay to the Mt Weld REE mine in terms of using its treatment plant now being built in Malaysia. The news sent shares in Lynas Corp (ASX:LYC) from $A2.45 at the Easter close to $A2.09 on Friday. But we also unearth a little history to the project that may be of interest as background to the Malaysia issue.



There is still no clarity on the proceedings of the investigation by the Malaysian government into the REE treatment plant being built in that country. The Malaysians have suspended the right for Lynas to import REE into the country while the investigation into health and safety concerns takes place. As RareMetalBlog readers know, the plant has been subject to a number of demonstrations as residents of Pahang state fear the potential for radioactive leaks. A person with close knowledge of the project says that the delay could be anything between one to six months, most probably two or three.

But here?s a twist: the original owner of the Mt Weld project, Ashton Rare Earths, actually obtained permission in 1992 for a processing plant in Western Australia. In its report, the West Australian Environmental Protection Authority - often seen by the mining industry as a roadblock to their plans - commented at the time that it considered ?Ashton?s site selection process was extremely thorough?. The authority said Ashton would mine the REE at Mt Weld, 35km southeast of the mining centre of Laverton, transport the concentrate 880km by road to the Meenaar Industrial Park outside the town of Northam (97km from Perth) where a plant would process the concentrate to produce REE compounds. The residues would then be transported back to Mt Weld for burial.

That?s water under the bridge now, but Deutsche Bank analyst Levi Spry still has a ?buy? recommendation on Lynas. He said recent publicity - about the controversial sale of part of Mt Weld to Forge Resources and the Malaysian environmental review - were distractions to the main game of bringing production on line at a time of higher spot prices for REE. Deutsche remains cautious about commissioning and has factored in an extra six months for both stages of the project.

In other news: