Malaysian government gives Lynas Rare Earths green light on refinery
Lynas Rare Earths has won a reprieve from Malaysia to operate its flagship refinery which produces key ingredients for wind turbines, electronics, and military applications.
After a long-running battle, the Malaysian government on Tuesday overturned its ban on Lynas importing and processing a crucial substance which generates low-level radioactive residue at its refinery in Kuantan, Pahang. Lynas shares rallied more than 12 per cent to $6.82.
“Lynas Malaysia has been issued with a variation to its operating licence which allows the continued importation and processing of lanthanide concentrate from Lynas’ Mt Weld mine in Western Australia at the Lynas Malaysia facility,” Lynas said on Tuesday.
Amanda Lacaze, chief executive of Lynas. Louie Douvis
Lynas is the biggest supplier of rare earths outside of China, which has at least 85 per cent of the world’s capacity to process rare earth ores.
Malaysia’s decision comes during Prime Minister Anthony Albanese’s visit to Washington, where he is expected to ink further partnerships with the US to support critical minerals development without China.
The ASX-listed miner, which has plans to build a refinery in Texas for the US Department of Defence, has gained a heightened profile from the reorientation of the green metals supply chain.
The US and China are engaged in a tit-for-tat trade war that spans semiconductors to raw materials. Beijing on Friday announced export controls on graphite, restricting supply of one of the key battery minerals, and earlier this year placed restrictions on gallium and germanium which are crucial to the semiconductor, EV and weapons industries.
Beijing’s move to block graphite exports from December 1 comes after the US widened curbs on Chinese companies’ access to semiconductors, including stopping sales of more advanced artificial intelligence chips made by Nvidia.
“As the leading producer of rare earths outside of China, Malaysia plays an important role in the global rare earths supply chain,” said Lynas CEO Amanda Lacaze.
“This decision provides a strong foundation for further development of the Malaysian rare earths industry.”
Lynas will now be permitted to import and process the material until March 2026, but its licence is conditional on Lynas investing 1 per cent of its gross sales in Malaysia each year to undertake research with the Malaysian nuclear authorities to reduce radioactive waste.
Its existing research and development investment in Malaysia is 0.5 per cent of Lynas Malaysia’s gross sales.
“The R&D program will be overseen by the Malaysian Atomic Energy Licensing Board (AELB) and will be directed towards developing methods for removal of naturally occurring radioactive material (NORM) from residues.”
Lynas had been preparing for the Malaysian government to stand by its initial ruling to prohibit importing and processing of lanthanide concentrate after January 1. It said last week it was in the process of “ramping” up its facility in Kalgoorlie to operationally compensate for the ban.
Lynas said on Tuesday it was still preparing to shut down all bar one of its operations in Malaysia in the December quarter, announced on October 20.
As part of the shutdown, Lynas will upgrade its downstream operations in the south-east Asian country to increase production of neodymium-praseodymium (NdPr) to about 10,500 tonnes per annum.
Lynas said on Tuesday it forecasts lower production rates during the March 2024 quarter, when the company expects maximum production rates of approximately 300 tonnes per annum growing to 750 tonnes per annum in the June 2024 quarter.
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