PETALING JAYA: An analyst says investors jumped the gun in their reaction to news of a government review of the Lynas rare earths plant in Pahang as the Australian miner has many other options if its Malaysian operations are shut down.
CLSA analyst Dylan Kelly told The Australian Financial Review that Lynas had “no shortage of third party refiners” to which it could sell rare earths concentrate from its mine in Mt Weld.
“China would gladly accept it almost overnight, as they have a growing supply deficit from domestic sources that increasingly relies on imports to make up for the short fall,” he was quoted as saying.
He added that other “juniors” such as Alkane Resources and Hastings Technology Metals were also setting projects “based on the same premise”.
Lynas shares dropped nearly 25% following news earlier this week that Deputy Minister in the Prime Minister’s Department Fuziah Salleh, a long-time critic of Lynas, would head a government committee to examine the plant in Pahang and whether it had met regulatory requirements when it was set up.
The factory began processing rare earths sent from Australia in 2012. The Pakatan Harapan coalition, which swept to federal power in the May 9 general election, had long expressed concerns over the refinery which environmentalists claim is environmentally hazardous.
Lynas’ main products, neodymium and praseodymium, are used in magnets for motors that drive automated seats and windows in cars, motors for hybrid vehicles and as magnets in electronic products, like DVDs and hard disk drives.
Lynas has pledged to cooperate with any review, saying its operations have already been extensively scrutinised.