Lynas counts costs as plant held up

Lynas Corp, an Australian mining company, said it's "seriously" affected by delays in getting a refining license in Malaysia where it's near finishing the first phase of the world's biggest rare-earths plant.

"We are ready to fire in about a fortnight," Mashal Ahmad, Lynas Malaysia Sdn Bhd's managing director, told reporters touring the refinery in the Southeast Asian nation's eastern Pahang state yesterday. "We cannot delay our production because our customers are waiting for our product."

The Sydney-based company, which Mashal said has spent RM1.5 billion (US$489 million) on construction and equipment, can't start importing raw material from its Mount Weld mine in Western Australia until it's issued with a permit by Malaysia's Atomic Licensing Energy Board. The authority agreed to grant a temporary operating permit in February subject to certain conditions, though this has been held up due to appeals by protesters to government and in court.

Lynas shares fell 2.2 per cent to close at A$1.12 in Sydney trading while the benchmark SandP/ASX 200 Index was little changed.

Malaysia won't let Lynas operate if there is scientific proof that it's hazardous, the Malaysian Insider reported on March 22, citing Prime Minister Najib Razak on the Chinese-language radio station 988FM. Opposition leader Anwar Ibrahim said on Feb. 26 that his People Alliance coalition would move against the project if it wins the country's next general election, due by early next year.

"Yes, we will scrap the plant," Fuziah Salleh, an opposition member of parliament for Pahang's capital Kuantan, said in a text message to Bloomberg News. "We have the political will to do so."

iPod Players

Rare earths, 17 chemically similar elements, are used in Apple Inc's iPod music players, flat-screen televisions, magnets and hybrid cars.

Lynas's Pahang plant would be the world's largest rare-earth refinery with total capacity of 22,000 metric tons a year should a second phase be approved and completed, the company said on Nov. 16. The miner, which has seen its shares slide 51 per cent in Sydney over the past year, plans to spend RM2.5 billion on the two phases, Mashal said.

"For phase one, we have sold out 100 per cent for the next 10 years," he said. "This delay has impacted Lynas very seriously."

The company wanted to start production last September. This was delayed when the government imposed extra safety standards recommended by an international review panel after residents expressed fears over possible radiation and contamination.

Ministerial Review

Maximus Ongkili, Malaysia's minister of science, technology and innovation, heard an appeal this week by protesters concerned over health and safety. The minister said on April 17 he would announce the results of his review "as soon as possible."

Lynas maintains that the plant is safe. It doesn't plan to permanently store waste on site and has found a way to commercialize it by turning into hard-core for use in road construction and car parks, Mashal said.

The licensing board said in February that a temporary license would be subject to certain conditions, including a plan for permanent waste disposal. -- Bloomberg