Lynas Corporation's (ASX: LYC) processing plant in Malaysia has been a constant source of delay and controversy for the Australian rare earth miner. The processing plant, known as the Lynas Advanced Materials Plant (LAMP), has faced ongoing opposition from residents and environmentalists, as well as ongoing operational problems over the past three years.
Lynas mines rare earth from its Mount Weld mine in Western Australia, concentrates it on site and ships the concentrate to the LAMP near Kuantan in Pahang, Malaysia. The state-of-the-art plant has received limit approval thus far, with the stage 2 approval to increase production to 22,000 tonnes per year expected later this year.
Rare earth metals are a group of 17 elements found in the ground. Despite actually being relatively plentiful, the elements are not often found in commercially viable concentrations, making Lynas' mine in Western Australia all that much more significant. It's widely regarded as one of the richest rare earth deposits and is expected to be the biggest deposit outside of China.
With production on the way after the two-year delay between construction and first production, the company appears to be slowly turning it around. After losing more than $107 million last financial year, the plant is hitting its straps, increasing production by 76% in the three months to September 30, to 253 tonnes.
As an aside to the operational problems, Lynas' relatively new chief executive of seven months, Eric Noyrez, has been attempting to change the local population's perceptions of the plant. In the 11 months since it started operating, six international bodies for radiation and pollution levels have audited the plant. All six have come back clear, with the plant operating within local and international standards. Additionally, Lynas recently ran a tour for 80 health officials aimed at improving the public perception of the plant. It seems to have worked, with numerous local officials making public statements proclaiming its safety.
Foolish takeaway
Lynas shares are currently trading at near 24-month lows, at 34 cents. The share price reached an all time high of $2.70 in early 2011 as optimism about the Malaysian facility pushed the price up rapidly from 50 cents. It has steadily declined in recent years as delay after delay to the plant pushed the company to consecutive losses. With the plant finally operational and many of the local health officials now on its side, it appears that the worst may be over. Investors willing to accept greater risk might consider Lynas and a medium to long-term investment.
