Lynas slumps on feared plant delays

Posted on July 1, 2011. Filed under: Pollution |

thewest.com.au-

Shares in rare earths supplier Lynas Corporation plunged by more than 11 per cent after the company denied reports that a planned Malaysian plant could be delayed by one to two years.

The denials followed a favourable report from the International Atomic Energy Agency about the company’s controversial proposed rare earth refinery in Kuantan.

Public protests have been growing about the risk of radioactive waste from the planned plant in eastern Malaysia.

The IAEA report found that the plant was safe and fully compliant with international standards.

However, it said Lynas should provide a long-term waste management plan and improve its communication about the plant with the Malaysian community before a pre-operational licence was granted.

The report raised particular concerns about the management of water leach purification and disposal of solids.

Lynas released two statements, denying media reports that the project would be delayed and that engineers were worried about construction problems at the Lynas Advanced Materials Plant.

“We have received confirmation from the Malaysian government that no spokesperson for the government stated a one to two-year delay as quoted by some media articles,” Lynas said in a statement.

“Neither Lynas, nor our construction team, are facing any unusual construction difficulties.

“We acknowledge that not enough has been done to engage with the community and we will correct that now.”

Despite Lynas’ statement, the media reports spooked investors, which sent the company’s share price down by 23 cents, or 11.62 per cent, to $1.75 shortly before the close of trade.

Mine Life senior resources analyst Gavin Wendt resources consultant said the market was surprised and concerned about the prospect of delays in Malaysia.

“When you’re talking about environmental considerations and local populations, these things can drag on,” Mr Wendt told AAP.

“The market wasn’t expecting this delay, that’s why the market is right to be concerned about the timing.”

It was hoped Lynas’ proposed plant could curtail China’s monopoly of more than 95 per cent of global supply of rare earths.

Rare earths prices are booming because of strong global demand for the commodity, which is used in electronics, computers and other high-technology applications.

The plant in Malaysia is being built to process ore concentrate from Lynas’ rare earths deposit at Mount Weld in WA.

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