Lynas Corp. (LYC), developing the world’s largest rare-earth refinery in Malaysia, climbed the most in more than three years in Sydney trading after receiving a permit to start production following months of delays.
The Malaysian Atomic Energy Licensing Board yesterday granted a temporary operating license for the company’s plant in Pahang, Sydney-based Lynas said yesterday in a statement. This will enable the transportation of rare earths concentrate ahead of first production that’s expected in October, it said.
The refinery has been held up by protests and legal delays amid community concern over radiation risks. Lynas, which was initially granted permit approval in February, rose 41 percent to 84 Australian cents, its biggest gain since May 2009.
“Many in the market were skeptical that the license would get issued because it seemed to be heavily politicized,” Andrew Harrington, resource analyst at Patersons Securities Ltd., said yesterday by phone from Sydney. “It’s going to be extremely positive for the share price which has been suffering from a lot of shorting because of the doubts.”
Lynas, which said last week it would export waste material from the plant to ease community concerns, is still down 20 percent this year, under-performing a 6.3 percent gain in the S&P/ASX 200 Index.
Rare earths, 17 chemically similar elements, are used in Apple Inc.’s iPod music players, flat-screen televisions, magnets and hybrid cars. The materials are also used to make goods such as Boeing Co. (BA) helicopter blades, Nokia Oyj mobile phones and Toyota Motor Corp. wind turbines.
Lynas has thousands of tons of unprocessed raw materials piled up at its Mount Weld mine in Western Australia ready for export, Chief Executive Officer Nicholas Curtis said June 29. The processing hold-up has had repercussions for clients with some reversing plans to open factories near the Malaysian refinery. Instead they set up in China, which currently supplies 90 percent of the world’s rare earths, he said then.
The licensing board will monitor operations and safety standards, Lynas said in yesterday’s statement. A permanent license may be granted during the next two years should standards be met, it said.
Maximus Johnity Ongkili, Malaysia’s minister of science, technology and innovation, rejected in June an appeal by local residents to cancel Lynas’s permit. Protests have included a march on parliament, court challenges and social media campaigns.
“I am very angry,” Fuziah Salleh, opposition member of parliament for Kuantan, Pahang, said by phone yesterday. “We will have to consult our lawyers.”
The temporary operating permit is valid for two years through to Sept. 2, 2014, the licensing board said yesterday in a statement on its website. The permit will enable Lynas to conduct trial processing of lanthanide concentrates in stages and in limited quantities under close and continuous surveillance by the authorities, it said.
Save Malaysia, Stop Lynas!, a protest group, has two outstanding applications in court to review the minister’s decision, said Tan Bun Teet, its chairman.
“It looks like they have beaten the gun,” he said by phone. “We will ask our lawyers to put in an intervention to ask for a stay.”
Phase one has been completed with capacity of 11,000 tons per annum, Curtis said yesterday. The second phase should start in the second quarter of next year with the plant capable of running at full capacity by the end of next year processing 22,000 tons per annum, Lynas’s CEO said.
“Malaysia has a healthy legal system,” said Curtis. “I’m not going to prejudge the outcome of the appeals, but in the Malaysian system they are entitled to do that.”