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Australia

Lynas boss 'optimistic' political battles over after Malaysia breakthrough

Lynas chief executive Amanda Lacaze hopes the decision by Malaysia to allow it to keep operating in the country will bring an end to the political brawl that has dogged the rare earths company for months.

"We have a clear pathway to continuing operations," she told investors and analysts on a conference call on Friday.

"We are hopeful this will see a significant lessening in the politicisation (of the process).

Lynas boss Amanda Lacaze hopes the decision will end the political brawls over the company's future in Malaysia.

Lynas boss Amanda Lacaze hopes the decision will end the political brawls over the company's future in Malaysia. Credit:Peter Braig

The ruling coalition in Malaysia, led by Prime Minister Mahathir Mohamad, has been at loggerheads over the Lynas operation, but Dr Mohamad has consistently backed the ASX-listed company and offered compromises that would allow it to continue operating. Those compromises formed new conditions announced on Thursday evening.

Lynas welcomed the announcement saying it was based on the scientific recommendations of the government's review which was conducted after its shock election last year.

"We see this as a clear framework for the future regulation of the business," said the company's legal counsel Andrew Arnold.

On Thursday evening, Malaysia's Atomic Energy Licensing Board (AELB) released a statement confirming that Lynas Corp would not be required to export more than 450,000 tonnes of radioactive waste to keep its licence to operate in Malaysia.

As widely expected, Lynas was given a six-month extension to its licence while it details plans for a permanent disposal facility (PDF) for its radioactive waste.

It also requires that the company establish a cracking and leaching operation offshore so that the radioactive waste is removed before the rare earth ores reach Malaysia for processing.

The AELB statement said the company had been given a four-year time-frame for shifting the production of this waste out of Malaysia.

Mahathir Mohamad, Malaysia's prime minister, speaks during the Future of Asia conference in Tokyo in May.

Mahathir Mohamad, Malaysia's prime minister, speaks during the Future of Asia conference in Tokyo in May. Credit:Akio Kon

In May, Lynas said it would spend $500 million by 2025 on value-added processing in the US and Malaysia as well as setting up a processing plant in Western Australia, near its Mt Weld mine, to extract radioactive waste from its rare earths before it is shipped to Malaysia. Setting up the WA plant is expected to take years.

"We're not phased by the four-year timeline with respect to cracking and leaching," Ms Lacaze said.

She told reporters at the annual Diggers and Dealers Mining Forum in Kalgoorlie last week that Lynas expects to announce a WA site for processing within months. The plant is expected to start operating in early 2023, allowing the transition of processing from Malaysia to start.

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Lynas confirmed on Friday that the 0.5 per cent of gross revenue it was required to devote to research and development (R&D) - related to recycling the radioactive waste - will instead be paid to the government as a levy until the company establishes cracking and leaching operations offshore.

Lynas said the money would be used as "additional security" for the building of a PDF rather than income for the Malaysian government.

Lynas could not say how much of the $US42.5 million deposit it has with the AELB for the long-term management of its waste might be freed up to fund the PDF.

The permanent disposal facility had been flagged as a solution by Dr Mohamad to allow Lynas to keep its local operations without having to export the waste out of the country before September 3.

Earlier this month Lynas told the ASX it was scouting locations for a permanent disposal facility in Malaysia the day after Dr Mahathir suggested the compromise would secure its licence.

Lynas is looking at disused mines in the state of Pahang as potential sites.

Shares closed down 2.6 per cent to $2.61.

Lynas's Mount Weld mine in Western Australia, the richest known rare earths deposit in the world.

Lynas's Mount Weld mine in Western Australia, the richest known rare earths deposit in the world.

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