Lynas Corporation Ltd’s [ASX:LYC] share price is just keeping afloat after yesterday’s disastrous crash, as it fell as much as 22.4% to $1.64 apiece by close yesterday. At time of writing, the current price is $1.67, having risen by 1.82% this morning.
Lynas Corporation is an Australian-owned rare earths company with two significant operations: a Mount Weld mine in Western Australia, as well as a refining facility based in Malaysia.
Investors hit hard after Malaysia hits the pause button
Investors reacted poorly to the news that operations in Malaysia could only continue so long as certain new conditions were met, including the specific removal of excess radioactive waste from the Kuantan site.
In a statement made on Wednesday (5 December), a spokesperson for Lynas said they were weighing their legal options after the government’s amendment to the conditions could potentially affect their ability to operate. Their licence is set to be renewed in September 2019.
In their same statement, the company also confirmed that their operations were deemed to be low risk and compliant with local laws, according to the latest review, making the decision even more of a surprise.
‘This appears to be policy based on politics, not policy based on science,’ said Amanda Lacaze, Lynas MD & CEO.
‘However, we are confident we are well placed to manage potential chances and our long term investment thesis remains strong.’
What does Lynas’ investment future look like?
While the share price bounced back today, it does remain to be seen whether Lynas will have bigger problems implementing their plans in the long-term. There have been protests from locals and Malaysian MPs against the construction of the plant amid concerns about the environment impact.
Aside from the condition to remove radioactive waste, in order to have their licence renewed, Lynas will have to outline an action plan for the complete disposal of all non-radioactive waste.
In the meantime, Lynas may have to weather further political turmoil in Malaysia before they have a clear picture of the government’s final decision.
Resources Analyst, Money Morning
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