Lynas’s Malaysian plant may be delayed for years

June 30, 2011 – 3:39PM

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Australian miner Lynas will only be granted licenses for a Malaysian rare-earth refinery after implementing recommendations made by a panel of experts which could take up to two years to complete, the government said.

Lynas, which suspended its shares today in Australia today, had planned to process ore from its Mount Weld mine in Western Australia from September at a plant under construction in Malaysia’s eastern Pahang state.

Delaying output may further tighten the rare earths market where prices have more than doubled as the biggest producer, China, cuts export quotas.

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The panel appointed by the International Atomic Energy Agency found no breach of radiation standards, the government said in a statement today. Even so, the miner must satisfy 11 conditions, including environmental monitoring and long-term waste management, Rebecca Fatima Sta Maria, secretary- general of the Southeast Asian nation’s international trade and industry ministry, told reporters in Kuala Lumpur.

“Until this is done, the status quo remains: there will be no importation of raw materials into the country, and no operational activities will be allowed on site,” said a joint statement from International Trade and Industry Minister Mustapa Mohamed and Maximus Johnity Ongkili, minister of science, technology and innovation.

‘Higher prices’

Lynas has fallen 3.9 per cent since the start of the year. Matthew James, a Lynas spokesman, declined to comment when contacted by e-mail today. The company will hold a briefing in Kuala Lumpur at 3 p.m. local time, according to a media invitation.

“Any project delays will just make the minerals more valuable and send prices higher,” Peter Strachan, who heads Perth-based independent advisory firm StockAnalysis, said by phone from Perth. “You would have expected Lynas to have ticked all the boxes and done all the appropriate feasibility, environmental and regulatory work.”

Prices of rare earths, 17 chemically similar elements used in lasers, plasma televisions and hybrid cars, have more than doubled since the first quarter. China, which controls over 90 per cent of the global market, further restricted rare-earth mining while cutting exports to conserve resources and protect the environment.

Local residents and non-governmental organisations have lobbied to stop Lynas from operating the plant over radiation fears. Risks arising from the project outweigh economic gains, Fuziah Salleh, a local member of parliament, said on April 22.

Televisions, hybrid cars

Lynas wants to tap growing global demand for its minerals that are used in Apple’s iPod music players, flat-screen televisions and hybrid cars.

The company said in a statement on April 22 its refinery is safe and presents no hazard to the public and its workers.
Protests over the past three months, including a march on Parliament and the Australian High Commission in Kuala Lumpur, took place following leakages at Japan’s nuclear power plants after the March 11 earthquake and tsunami.

It may take one to two years for all the IAEA’s recommendations to be completed Sta Maria said. A follow-up review should be conducted in this period, IAEA said in its report.

The trading halt will remain in place until Monday, July 4, or until the announcement is made.

Bloomberg, AAP
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