Malaysian election result puts Lynas back on track
Australian rare-earths miner Lynas has continued its positive start to the year, with its shares rising sharply after the re-election of Malaysia's ruling coalition, reducing the likelihood the company could face further regulatory hurdles at its controversial plant.
Malaysia's opposition party had said it would consider reviewing Lynas' permit for the Kuantan plant because of local campaigners' protests that it might be an environmental hazard.
Lynas shares closed 16 per cent higher at 58¢ on Monday. Shares in the company have fallen nearly 80 per cent since reaching a peak of $2.60 in April 2011.
JPMorgan resources analyst Mark Busuttil said the re-election of the ruling party meant the regulatory headwinds for Lynas had "significantly diminished".
"Now I think the market can focus on the underlying business of the company, which is the commissioning and ramp-up of phase one and two of the [Lynas Advanced Materials Plant] and the state of rare-earths markets."
Mr Busuttil said Lynas' commissioning appeared to be going to plan, with the company targeting to reach capacity for its first phase by the end of this quarter. "So things seem to be going in the right direction for the company," he said.
A Lynas spokesman said the company would not comment on the outcome of the election.
Lee Tan, the technical adviser of one of the main Malaysian activist groups campaigning against the plant, "Save Malaysia, Stop Lynas", said the opposition's election defeat would not put a halt to its actions. "We have yet to work out what chances there are for us to do anything in Malaysia to shut down the plant," Ms Tan said.
"But the 'Stop Lynas' campaign is more international and we'll be campaigning a lot more on the customer side."
Lynas started production at its $900 million rare-earths plant in December after extensive delays because of legal action by environmentalists. One of the few non-Chinese rare-earths miners, it has rejected the environmentalists' claims and fended off their legal challenges so far.
Lynas said last month it was on track to meet its target of producing 11,000 tonnes a year of rare-earths oxides by the end of the second quarter of this year.