Maximus Johnity Ongkili, Malaysia’s minister of science, technology and innovation, rejected an appeal by protesters last month, though set additional licensing conditions.
This included requiring Lynas to submit plans to immobilize any stored radioactive residue and an emergency response proposal for any dangerous dust accidentally released into the air.
The miner still needs to appoint and pay for a third-party assessor to continually monitor the plant, Noor Hasnah Mohamed Khairullah, a special adviser to the Atomic Energy Licensing Board, told reporters on June 28.
Lynas must also present an acceptable plan for a permanent disposal facility for radioactive residue within 10 months of a temporary operating license being issued, she said.
If none is approved, Lynas would have to export any harmful waste, Noor Hasnah said. A temporary operating license was awarded in February subject to conditions.
“Lynas will only be allowed to bring in the rare-earth into Malaysia after the temporary operating license is issued” and conditions are met, she said.
“It’s in their best interest to do so as soon as possible. We don’t impose any deadline.”
Radiation from the Pahang project should be “low and safe,” Higher Education Minister Mohamed Khaled Nordin reported to Parliament on June 19 after heading a select committee enquiry into the issue.
Costly Delays
Every month of delay costs as much as A$10 million ($10 million), Curtis said. Lynas has seen its shares tumble 51 percent in the past year in Sydney, tracking a 62 percent drop in New York by Molycorp Inc. (MCP), the U.S. owner of the largest rare-earth deposit outside of China. The Australian miner gained 1.8 percent to close at 86 Australian cents today.
Mining stocks have dropped 32 percent in the past year, according to the Bloomberg World Mining Index, as concern over the slowing global economy curbed demand for raw materials.
Average prices of rare earths have fallen more than half from record levels in 2011 as consumers reduced purchases or sought alternative materials.
The U.S., the European Union and Japan asked the World Trade Organization to form a dispute settlement board last week after complaining about a move by China to limit rare-earth exports.
China has said the restrictions are to conserve the materials and protect the environment.
Rare Commodity
Lynas’s production delay exacerbates difficulties some global manufacturers have experienced in sourcing the commodity.
“It reinforces the need for finding a solution outside of China,” Curtis said. “We are part of that market-based solution.”
The Malaysian refinery would be capable of processing 22,000 metric tons a year should a second phase be approved and completed, Lynas said Nov. 16.
The company plans to spend 2.5 billion ringgit ($788 million) on the two phases, Mashal Ahmad, managing director of the miner’s Malaysian unit, said April 20. At the time he also said the first phase of the plant would be start a fortnight later.
Malaysian Prime Minister Najib Razak has sought to boost investment as he strives to shore up confidence in the government before elections due by early 2013, unveiling in 2010 an Economic Transformation Program that identified $444 billion of private-sector led spending projects ranging from mass rail to oil storage for the current decade.
The nation is set to reach a foreign-direct investment target of 33 billion ringgit this year, International Trade and Industry Minister Mustapa Mohamed said May 29.
‘Special Case’
The Lynas experience “may make potential investors rethink their investment plans or existing investors to reassess their positions,” said Azrul Azwar Ahmad Tajudin, chief economist at Bank Islam Malaysia Bhd. in Kuala Lumpur.
“They should understand that Lynas is a special case and not an ordinary type of FDI. The project entails serious implications for the environment and people’s lives.”
Najib has supported the plant, in his home state, though has said it must meet all safeguards. Opposition leader Anwar Ibrahim said on May 30 he would review any license granted to Lynas if he comes to power.
The miner agreed in February to sell $225 million of convertible bonds to help fund its Malaysia project. New York- based Mount Kellett Capital Management LP agreed to buy $50 million of the bonds initially on behalf of funds it manages and the balance once conditions are met, the miner said in a Jan. 24 statement.
“Lynas is in a strong financial position at the moment and capable of working through the issues,” Curtis said.
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