PERTH (miningweekly.com) – The share price of ASX-listed Lynas fell by 22% on Wednesday after the Malaysian government imposed new conditions on the Lynas Advanced Materials Plant (LAMP), despite the outcome of the recent review into the company’s operations in that country.
The Review Committee report was posted online overnight, and found that the LAMP operations were low risk and compliant with the applicable laws.
Despite noting the positive aspects of the LAMP, the Review Committee made a number of recommendations, including the building of a safe storage facility for neutralisation underflow (NUF) residue and preparing an environmental impact assessment for this purpose, building a permanent disposal facility for the water leach purification (WLP) residue, with a site for the disposal facility to be identified before the renewal of the next licence.
The report also recommended that Lynas should be prepared to export WLP residue if a location for a disposal facility was not identified or approved.
Furthermore, the company has been urged to continue all studies on recycling the NUF residue, while also carrying out studies to reduce the residues produced by looking at process improvements and modifications. Lynas has also been advised to conduct groundwater monitoring and devise a more effective communication strategy to provide the public and nongovernmental organisations with more accurate and up-to-date information.
Lynas told shareholders on Wednesday that the company would voluntarily seek to implement these recommendations.
Meanwhile, the report also recommended that the government establish a Lynas-funded independent research and development committee to look at the development of downstream industries, as well as other areas of health, social sciences, socioeconomic, entrepreneurship and others.
The government has also been urged to create a community health surveillance system, and to establish a monitoring committee.
Meanwhile, the Minister for Energy, Science, Technology, Environment and Climate Change (MESTECC) has notified the company to two new pre-conditions for its licence renewal in September 2019, and for future permission renewals in relation to residue management.
The first condition was the export of WLP residue before September 2, 2019, while the second was for the submission of an action plan on the disposal of NUF.
Lynas expressed its disappointment at the Ministry’s intention to impose the new conditions, which contradicted previous statements by MESTECC that stated the Cabinet would review the Review Committee’s report before any decisions were made.
“We are surprised by the Ministry’s decision to impose a pre-condition that does not follow the process outlined in October, and which is inconsistent with the science, inconsistent with the expert Review Committee’s recommendations and is contrary to international best practice,” said Lynas MD and CEO Amanda Lacaze.
“This appears to be policy based on politics, not policy based on science. It is very disappointing to receive this on the same day that the Review Committee report was released.
“However, we are confident we are well placed to manage potential changes and our long-term investment thesis remains strong,” she added.
Lacaze noted that Lynas had already submitted an action plan for the disposal of NUF, and would now accelerate its work with the Department of Environment to allow the execution of this plan, including having the LAMP designated as prescribed premises for the management and disposal of the NUF residue.
In the case of exporting WLP residue before September 2 next year, Lynas said that it would consider “all options available” to achieve an appropriate outcome, including legal options.
The ASX-listed company argued that the planning and site selection of the permanent disposal facility for the WLP residue had already been approved by Malaysia’s Atomic Energy Licensing Board (AELB), with the company having complied with all the AELB licence conditions.
These conditions stated that the WLP residue should be recycled, and if that failed, that it should be stored in a permanent facility. Export, Lynas said, should only be considered if the storage facility was not possible.
Lynas' share prices tumbled to a low of A$1.56 a share on Wednesday, down from a high of A$1.76 a share.