Malaysia Approves Temporary License for Lynas Rare Earths Plant

(Reuters) – Malaysian authorities approved a temporary operating license for Australia’s Lynas Corp.’s $200 million rare earths processing plant, a move seen as crucial to easing China‘s grip on the supply of minerals used in products from smart phones to hybrid cars.

The approval by the country’s Atomic Energy Licensing Board on Wednesday eases uncertainty for Lynas and investors after speculation that the licence could have been rejected in the face of opposition from political parties and residents near the plant ahead of national elections expected within months.


“The temporary licence has been approved with conditions. If these conditions are not met, the temporary licence can be suspended or cancelled and subsequent applications for the licence will not be considered,” the atomic licensing board and the Ministry of Science said in a joint statement.

Malaysian government officials have said the final decision on the so-called pre-operating licence will be made by Prime Minister Najib Razak and his cabinet, but an opposition politician has already called for a judicial review .

“I am disappointed, but I expected this move from the Malaysian government,” said Fuziah Salleh, an opposition member of parliament for Kuantan in Pahang state where the plant is being built.

She said opponents would file for a judicial review of the decision, especially to voice their concern that radioactive residue from the plant’s operations could contaminate the environment.

“The main issue is the permanent disposal facility, the government has asked for the waste to be shipped back to the source — which is Mt Weld but Australia has said it will not take the waste back. So Malaysians are stuck with it at the expense of profits for Lynas.”


The plant on Malaysia’s east coast will process rare earths mined in Australia at Lynas’ Mount Weld project with the company responsible for managing residue, including “returning waste to its original source if necessary,” the statement said.

The company would also have to submit a plan for a permanent disposal facility for residue within 10 months and pay $50 million to the Malaysian government as a financial guarantee.

The atomic board would also have the right to select an independent consultant to assess Lynas’ adherence to the conditions, the statement said.

Lynas received a favourable report from the International Atomic Energy Agency (IAEA) but the world body told it to provide a long-term waste management and safety plan.

Lynas says that its plant is safe and is not comparable at all to a rare-earths plant in Malaysia that was shut by a unit of Mitsubishi Chemicals in 1992, after residents there blamed the plant for birth defects and a high rate of leukemia cases.


The Malaysian plant will process rare earths mined in Australia at Lynas’ Mount Weld project. The operation is key to relieving China’s dominance of the supply of rare earths metals, crucial in a range of products from mobile phones to computer hard drives.

Japan is counting on Lynas to supply 8,500 tonnes a year of rare earths by early 2013 to curb its reliance on China, under a deal involving trading house Sojitz Corp and state-run Japan Oil, Gas and Metals National Corp.

China has said that other countries should ramp up production of rare earth minerals and reduce their reliance on Chinese exports. Its government has rolled out measures in the past year such as mining and export quotas as it aims to conserve its rare earths resources.