KUALA LUMPUR(Dec 5): Australian stock exchange (ASX) listed Lynas Corp Ltd said it is “disappointing” that there are pre-conditions set by the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) for future licenses and permission renewals for its unit, Lynas Malaysia Sdn Bhd.

In an ASX filing today, Lynas Corp said that this is disappointing as the Ministry’s intention to impose new conditions contradicts its earlier statement that was issued on Oct 30, which stated that the cabinet would review the Review Committee’s report before any decisions were announced.

“This process does not appear to have been followed,” said Lynas.

The statement issued yesterday by MESTECC refers to the management of two solid residues by Lynas, Water Leached Purification Residue (WLP) and Neutralization Underflow Residue (NUF).

The two new pre-conditions set by the Ministry are for the export of WLP residue before Sep 2, 2019 and the submission of an action plan on the disposal of NUF, which current approval is valid until Feb 15, 2019.

On the export of WLP, Lynas said the pre-condition is inconsistent with the review committee’s recommendation that Lynas Malaysia should determine the location and build a permanent disposal facility (PDF) for the WLP residue, including identifying sites for the facility’s construction, before the renewal of the license.

“The Review Committee noted that Lynas should be prepared to export WLP residues from Malaysia only if the PDF location is not identified or approved.

“Lynas’s PDF planning framework and site selection plan have already been approved by Malaysia’s Atomic Energy Licensing Board (AELB) and the Pahang state government has given an undertaking to site the PDF in Pahang, should it be required

“The potential construction of a PDF for WLP residue has always been part of our planning. It is provided for in our financial statements and by way of the PDF bond in excess of US$34 million that is held by the Malaysian regulator,” said Lynas.

The rare earths company went on to say that it has complied with all of AELB’s licensing conditions.

“Lynas’s license conditions explicitly state that residues should be recycled,and if that fails, then they should be stored in a PDF. Export should only be considered if a PDF is not possible. The recommendations of the review committee are consistent with this sequent of events.

“We will consider all options available to us to achieve an appropriate outcome prior to Sep 2, 2019, including legal options,” it said.

On the NUF pre-condition set by the Ministry, Lynas said that it has already submitted an action plan and will seek to accelerate its work with the Department of Environment to allow the execution of this plan, including having the Lynas Malaysia plant designated as prescribed premises for the management and disposal of NUF residue.

In summary,Lynas said that it is pleased that the Review Committee’s report finds Lynas Malaysia’s operations low risk, and that the company complies with applicable laws.

However,  Lynas managing director and chief executive officer Amanda Lacaze reiterated  disappointment with the pre-conditions set by MESTECC.

“We are surprised with the Ministry’s decision to impose a pre-condition that does not follow the process outlined in October, and which is inconsistent with the science, inconsistent with the expert Review Committee’s recommendations and is contrary to international best practice.

“This appears to be policy based on politics, not based on science. It is very disappointing to receive this on the same day the Review Committee report was released,” she said.

“However, we are confident we are well placed to manage potential changes and our long term investment thesis remains strong,” added Lacaze.

In its statement yesterday, MESTECC said it is concerned with the increasing risk arising from the continued accumulation of residue without a viable solution to manage its accumulation in the near-term, and will not allow the unlimited accumulation of residue at Lynas Advanaced Materials Plant(LAMP) in Gebeng, Pahang.

In this regard, it had stated that the aforementioned pre-conditions will be applied to Lynas Malaysia.

The statement from MESTECC  mentioned that WLP residue, which contains radioactive materials, must be removed from Malaysia, and that the Ministry noted that Lynas Corp and Lynas Malaysia had each in 2012, indicated their commitment to remove LAMP residue from Malaysia, if necessary.