Lynas Gets Green Light for Rare Earth Plant in Malaysia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Malaysia's Atomic Energy Licensing Board granted Lynas Corporation Limited (ASX:LYC) (Sydney, Australia) a temporary license to operate a rare earth processing plant in Pahang, Malaysia. However, the plant must operate under certain conditions to help allay residents' fears of radioactive waste.

Production at the Lynas Advance Material Plant (LAMP) is scheduled to begin in the second quarter of this year, provided that Lynas constructs a permanent disposal facility for solid-residue material waste and pays the government $50 million. The security bond guarantees remediation provisions and is payable in installments within 10 years, according to a statement.

Lynas stated that the temporary operating license will be valid for two years, and the company's compliance with the license's requirements may result in a permanent operating license issued within two years.

The $225 million LAMP Phase I project, which is 90% complete, is scheduled to be finished this March near Kuantan, the capital city of the state of Pahang. Construction on the final phase is set to begin this month and be completed by the fourth quarter of this year.

Lynas' plant is poised to become the world's largest rare earth refinery, with a capacity to process 22,000 tonnes per year after the second phase goes online. The facility was supposed to begin production in September, but residents and some government officials opposed its construction. Thousands of Malaysians held protests last October, citing the dangers of the radioactive ores' waste to human health and the environment. A member of Malaysia's political opposition even threatened to shut down the project when elected into office.

The LAMP project, planned to process rare earths exported by Lynas's Mount Weld project in Australia, is key to breaking China's dominance on the supply of rare earths metals.

During the past decade, there has been an explosion in demand for rare earth metals because of their crucial roles in high-tech and green products, ranging from precision-guided weapons to hybrid cars. China, the predominant supplier, has strained the market by imposing stringent regulations and tightening restrictions on exports of rare earth metals.

Lynas agreed last week 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 followed by the balance, after due diligence occurs.

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