Lynas, a potential winner in US-China trade war?Tuesday, August 13th, 2019 at , Business
By BERNAMA / Graphic By ANIS SHAMSUL
LYNAS Corp Ltd, which operates a controversial rare-earth processing plant in Gebeng, Pahang, can potentially emerge as a “winner” in the protracted trade war between the US and China.
A recent statement by China’s rare-earth producers on their readiness to use their dominance of the industry as leverage in the trade war with Washington could force their customers in the US to look elsewhere for the precious minerals.
Being the largest rare-earth producer outside China, Lynas and its US$800 million (RM3.35 billion) processing plant in Malaysia could reap various benefits should Beijing decide to turn its rare-earth exports to the US as a trade weapon.
The Australia-listed company could potentially see a surge in demand for its products if Chinese rare-earth producers make good on their threat to pass any tariff imposed by Washington to the buyer in the country.
“Although things are not clear yet, the move by rare-earth producers in China will benefit Lynas. They (customers of Chinese rare earths) will start looking for another supplier,” said RHB Research Institute Sdn Bhd chief Asean economist Peck Boon Soon.
The statement by the Association of China Rare Earth Industry — representing miners, processors and manufacturers — on Aug 5 came after a strongly worded piece in the ruling Communist Party People’s Daily newspaper in May on the country’s ability to strike back in the trade war with the US.
“Will rare earths become a counter weapon for China to hit back against the pressure the US has put on for no reason at all?
“In today’s world where different industrial labours are divided globally, no development and progress can be achieved without cooperation,” Peck said.
China is the world’s largest rare-earth producer, producing over 80% of the global output.
About 80% of the US’ rare-earth imports were from China, with reports stating that the country’s giant defence contractors are among the main customers.
Lynas has been embroiled in controversy since operating its Kuantan plant in 2012 due to the low-level radio- active water leach purification residue produced. Its licence to operate the Lynas Advanced Materials Plant will expire on Sept 2.
Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin said the government will announce its decision on Lynas’ licence renewal status in the country by Aug 15.
Prime Minister Tun Dr Mahathir Mohamad had said Lynas could keep rare-earth processing residue from its Gebeng plant if it builds and maintains a facility to dispose of its residue. — Bernama
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