Lynas mulls processing in Australia as Malaysia ups pressure

[BENGALURU] Australian rare-earths miner Lynas Corp said on Monday that it was considering initial ore processing close to its Australian mine, as Malaysia stepped up pressure on the company in the midst of a takeover struggle.

Lynas, the world's only major producer of rare earths outside China, has been locked in a dispute with the South-east Asian nation, which has told it to remove years of accumulated waste as a condition of renewing its licence in September.

Malaysian Prime Minister Mahathir Mohamad said on Friday that companies interested in acquiring Lynas had pledged to remove low-level radioactivity before shipping raw materials to the country.

Mahathir did not specify which companies were interested in Lynas. The company last month rejected a US$1.1 billion takeover approach by Australian retail-to-chemicals conglomerate Wesfarmers.

Lynas said on Monday that for some months it has been developing detailed plans that would assist the company to mitigate risk from any regulatory changes in Malaysia.

"We see value in operating alternative cracking and leaching processing close to our resource," it said in a statement,

Lynas mines rare earths at Mount Weld in Western Australia and currently ships the concentrated material to an US$800 million processing plant in Kuantan, Malaysia, where it stores thousands of tonnes of waste.

Initial ore processing in Australia to lower levels of radioactivity would mean building a cracking and leaching plant at a cost of about A$100 million over three years, according to a research report by brokerage CLSA.

Mahathir said even Lynas could operate in the country as long as raw materials coming to Malaysia were cleaned.

"A partial resolution to the political uncertainty has been reached which will bring forward plans to build a cracking plant in Australia," CLSA said.

Wesfarmers said that it welcomed comments by the Malaysian government.

"It is consistent with prior public statements by the government and the views shared with us in meetings with senior Malaysian government officials since we announced our proposal to acquire Lynas," it said in a statement.

"We look forward to more detail from the government about Lynas' operating licence certainty, to assess the conditionality of our proposal."

Lynas said its Japanese lenders and customers had pledged their support for the company and its management. It was seeking further clarification from the Malaysian government.

In December, Malaysia's Atomic Energy Licensing Board (AELB) told Lynas that it must export stockpiles of a type of residue from its processing plant by Sept 2, when its full operating stage licence is due for renewal.

In February, Lynas said that exporting the residue within the mandated timeline was "unachievable". 

REUTERS