Could these troubles benefit ASM?
Article in Financial Review. Hopefully of help for new posters who may wonder what the upcoming appeal is about.
Feb 14, 2023 – 10.50am
Lynas Rare Earths boss Amanda Lacaze says she is disappointed with a Malaysian government decision that threatens to disrupt the company’s ability to produce and supply critical rare earth minerals and will appeal against a ruling that has put Australia at odds with its South-East Asian neighbour. Malaysia’s Atomic Energy Licensing Board has confirmed it will ban Lynas cracking and leaching rare earth on its shores from July 1, despite lobbying from Australia, the US, Japan and the European Union to give the company more leeway. Amanda Lacaze will travel from Western Australia to Malaysia for scheduled meetings over the decision. The $1 billion Lynas plant in Malaysia is the world’s largest single rare earth processing facility and the only scale producer of separated rare earth outside China. Rare earth are an essential component for electric vehicles, mobile phone batteries, computers and medical imaging.The decision to uphold the ban is likely to be popular in Malaysia, where Prime Minister Anwar Ibrahim’s government is viewed as sticking to conditions it set out to Lynas three years ago. However, Canberra does not see it that way. The Albanese government, through Resources Minister Madeleine King, made it clear that it supported Lynas and its operations in Malaysia. “A drop in production from Lynas’ Malaysian facility will have an impact on global rare earths supply chains, Ms King told The Australian Financial Review. “While this is ultimately a decision for the Malaysian government to determine in accordance with its own laws, the Australian government supports Lynas’ continued operations in Malaysia.” Lynas had been fighting to preserve all of its production capacity for critical minerals in Malaysia but faced stiff opposition from a core of influential politicians and some conservation groups. Malaysia’s Science, Technology and Innovation Minister Chang Lih Kang will respond to the statement from Canberra at a press conference in Kuala Lumpur on Wednesday. Ms Lacaze was on her way from Western Australia to Malaysia on Tuesday for scheduled meetings.“Malaysia offers administrative and legal avenues for the review of the licence conditions, and Lynas will seek a review through these processes in respect of the conditions,” the company said. The Pakatan Harapan-led government’s hard-line raises the prospect that Lynas may have to shut down for a time. Such a move would disrupt the non-China supply of the rare earth that are essential for the production of electric vehicles, wind turbines, electronic devices and in the defence industry.Lynas warned the closure of a key part of the plant would put at risk further investment in the facilities, the Malaysian rare earths industry and foreign investment. Low-level radioactive waste The company is racing against the clock to have a $575 million cracking and leaching plant still under construction at Kalgoorlie in Western Australia up and running by July 1 to avoid disruption, but declined to provide an update on progress on Tuesday.The cracking and leaching processes leave behind low-level radioactive waste and the process and storage of the residue – about 500,000 tonnes to date – has been a bone of contention in Malaysia.Lynas mines rare earths near Laverton in Western Australia and would perform cracking and leaching at Kalgoorlie before sending the intermediate product to its Malaysia facilities for final-stage processing under revised licence conditions.Lynas also plans to send the intermediate products to a rare earths refinery it will build in Texas with the financial backing of the US Department of Defence. Lynas announced to the market its operating licence had been renewed for three years with no change to the licence conditions that were first applied when it was last renewed in March 2020.The conditions prohibit the import and processing of lanthanide concentrate (for cracking and leaching) after July 1.The Lynas share price was up almost 3 per cent to $8.58 by midday on Tuesday after trending downward since February 1, when it closed at $9.70.Lynas said it had applied to the Malaysian regulator for the removal of these conditions as they represent a “significant variation from the conditions under which the previous four operating licences were issued and under which Lynas made the initial decision to invest in Malaysia”. “After 10 years of safe operation in Malaysia, we are disappointed that the conditions that were applied to our 2020 operating licence remain,” Ms Lacaze said.“This is our sixth operating licence and the four licences granted prior to 2020 did not include these conditions. “While these conditions do not come into effect until July 1, they are inconsistent with the conditions upon which Lynas was invited to invest in Malaysia and the recommendations of four independent scientific reviews, each of which has found our Malaysian operations to be low-risk and compliant with regulations.”Ms King also pointed to Lynas’ record of safe operations and investment in Malaysia.“Lynas has been safely operating its rare earths facility in Pahang for over 10 years, supporting Malaysia’s pivotal position in the global supply of separate rare earth elements,” she said. “Over this time, Lynas has invested over $1.5 billion in Malaysia, and currently employs over 900 people.” Hard lobbying Lynas confirmed that under the conditions, it would need to shut down the cracking and leaching component of its plant near Kuantan, in the heart of Malaysia’s petrochemical industry.“ Other processes at the Lynas Malaysia plant are not covered by these conditions and will continue with new feedstock sourced from Lynas’ Kalgoorlie rare earths processing facility once operational,” the company said. In Malaysia, those who have campaigned to shut down cracking and leaching by Lynas do not expect the company to give up without a fight.“ The parties involved have been lobbying hard, and I don’t think they will give up now this decision has come down,” activist Tan Bun Teet said.He described the Malaysian decision as fair, in that it upholds the conditions and timeline imposed by the previous Pakatan Harapan government three years ago.The prime minister, Mr Ibrahim, and the science, technology and innovation minister, Mr Chang, were part of that government.“ To some extent, our campaign has borne some fruit. Hopefully by July 1, when they stop cracking and leaching, there will be no toxic waste generated,” Mr Tan said. The Straits Times reported on Monday that a permanent disposal facility for the Lynas waste, being built by a company controlled by Pahang Regent Hassanal Abdullah – the son of Malaysia’s King Abdullah Ahmad Shah – was about 30 per cent complete.Lynas was required to build the permanent disposal facility under another condition in its 2020 licence renewal.Mr Tan said the Save Malaysia campaign would continue its efforts to change the location, design and future management of the waste disposal facility.
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