Lynas Rare Earths may need to partially shut down its Malaysia downstream operations, which could have wider ramifications for the battery supply chain.
The biggest rare earths producer outside of China has announced that Malaysia’s Atomic Energy Licensing Board (AELB) has chosen to renew its Malaysia operating licence without removing conditions that prohibit the import and processing of lanthanide concentrate.
The renewed operating license is effective from March 3, 2023 for three years, and the lanthanide concentrate ban would come into effect from July 1, 2023.
Lynas said this means the cracking and leaching component of its Malaysia plant would need to be closed from July.
“Lynas applied to the Malaysian regulator for the removal of these conditions as they represent a significant variation from the conditions under which the previous four operating licences were issued and under which Lynas made the initial decision to invest in Malaysia,” the company said in a statement.
Concerns have been raised about the low-level radioactive waste produced from Lynas’ cracking and leaching processes, however four independent scientific reviews, including two reviews from the International Atomic Energy Agency, have endorsed Lynas’ Malaysia operations to be “low risk and compliant with relevant regulation”.
The company has also safely operated in Malaysia for the past ten years.
A partial shutdown of Lynas’ Malaysia plant, the largest of its kind in the country, could interrupt production and affect global supply to renewable energy manufacturers.
This could see rare earths prices rise, while also increasing the world’s reliance on China, which goes against the grain of geopolitical diversification.
Other processes at Lynas’ Malaysia plant would be able to continue while cracking and leaching is prohibited, and the company is also constructing a cracking and leaching plant in Kalgoorlie, however that might not be ready by July 1.
Lynas said it has appealed to the Minister of the Ministry of Science, Technology and Innovation under the Atomic Energy Licence Act 1984, where it is “seeking administrative review” of the AELB’s failure to consider the company’s application to remove licence conditions that prohibit lanthanide import and processing from July 1.
Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.