Lynas putting Malaysian opposition to its operations behind it: analysts
Australian analysts from Foster Stockbroking say confidence in rare earths miner Lynas Corporation (ASX:LYC) is returning after the Malaysian High Court dismissed an appeal against the company's Advanced Materials Plant (LAMP).
In a document published this morning, Foster Stockbroking say Lynas is on track to put community opposition to its operations behind it.
"We feel momentum and investor sentiment is turning in LYC with the recent appeal dismissal by the Malaysian High Court removing any risk and uncertainty regarding the approval of the temporary operating licence (TOL)," it says.
In a statement distributed yesterday, Lynas said the outstanding appeal against its plant to the Malaysian Minister of Science, Technology, and Innovation was heard yesterday and that the Government should be deciding soon. This verdict is separate from the High Court’s last week resolution.
Although there is no exact date determined for the government’s ruling, Foster Stockbroking believes that following the High Court ruling the minister would likely rule in the company's favour.
"We believe the Malaysian High Court has set a firm and clear precedent and the appeal which is expected to be heard later this month will have the same outcome," say the brokers.
Lynas stocks are on the rise and the analysts believe the company would rate well in the future.
In the last five days, the company’s shares have been up almost 13%, but the monthly performance is still poor.
"Lynas shares have been up strongly over the last week (+15%) on the back of the decision made last Thursday …" they say.
"Development of the LAMP has also been on schedule and is forecast to be completed this month."
Foster Stockbroking adds that Lynas’ temporary licence would last two years and Lynas would be handed a permanent licence if it complied with all the requirements.
Critics of the project believe that allowing the US$230 million refinery will jeopardize Malaysian’s well being and the environment. Supporters, on the other hand, remark it is set to become one of the few sources outside China to process rare earths and produce metals used in high-tech equipment from weapons to cell phones.
“This concerted political campaign, which is based on misinformation, is sabotaging the science- based, regulatory process established in Malaysia and confidence in that process,” Lynas chairman Nicholas Curtis said.
He added that LAMP is “safe for everyone” and that his company looks forward to the day when that will be recognized.
Malaysia’s government recently instituted a Parliamentary committee in relation to the controversial plant, aimed at raising awareness of the project, rather than deciding on matters such as the approvals process and ongoing operations.
The group is expected to report by the end of June.
Currently, more than 90% of rare earths metals are processed in China, country that has increased export restrictions on these elements as, it claims, needs to guarantee supplies for the internal market and protect the environment. The policy has generated protests from foreign manufacturers who rely on Chinese rare earths. They argue China's restrictions aim to raise rare earth prices artificially to give its own producers higher profits.
LAMP, originally scheduled to start processing rare earths in the third quarter of 2011, could help stabilize rare earth prices.