Investing in Lynas shares? Here's why Malaysia may reconsider its licence restrictions

Lynas Malaysia's operating licence was extended last week, but the miner will be prohibited from importing and processing lanthanide concentrate after 1 July.

| More on:
Female miner in hard hat and safety vest on laptop with mining drill in background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Lynas shares could get a lift if Malaysia compromises on its licence restrictions
  • The ASX 200 rare earths miner has lodged an appeal with Malaysian regulators
  • A Malaysian minister said the government may reconsider the lanthanide concentrate ban if Lynas ships out the waste

Lynas Rare Earths Ltd (ASX: LYC) shares are down 1% in afternoon trading on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) rare earths miner closed on Friday trading for $8.29 per share and are currently trading for $8.21 apiece.

That's today's price action for you.

Now, what's this about Lynas' Malaysian operating licence?

Why might Malaysia reconsider the operating licence restrictions?

More than $11.5 million worth of Lynas shares traded hands last Tuesday after the ASX 200 miner updated the market on the operating licence for its 100% owned subsidiary, Lynas Malaysia.

Malaysia's Atomic Energy Licensing Board granted a three-year licence renewal, but with a catch.

The regulator said it was sticking to a clause applied to Lynas' renewed licence in March 2020. That clause prohibits the ASX 200 rare earths miner from importing and processing lanthanide concentrate after 1 July due to concerns over radioactive waste.

"No party has the right to continuously produce radioactive waste in our homeland," minister Chang Lih Kang said on Wednesday.

Lynas shares remained fairly resilient, despite the company saying the prohibition would lead to the closure of the cracking and leaching component at the Lynas Malaysia plant, the world's largest single rare earths processing facility.

After market close on Thursday, Lynas followed through with its promise to appeal the ruling.

Lynas said it is "seeking administrative review of the decision of the Atomic Energy Licencing Board in failing to consider Lynas' application for the removal of the licence conditions prohibiting the import and processing of lanthanide concentrate".

Yesterday, word emerged, via Twitter, that there might yet be grounds for negotiation.

"If someone is willing to ship the 'low risk radioactive waste' (as claimed) out of our country, the government can consider retaining C & L plant in Gebeng," Chang wrote in a tweet.

Stay tuned…

How have Lynas shares been tracking?

As you can see in the chart below, Lynas shares are up 5% so far in 2023.

Longer-term, the ASX 200 rare earths miner has seen its stock soar 319% over five years.

Created with Highcharts 11.4.3Lynas Rare Earths Ltd PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Why Infratil, Iluka Resources, Lynas Rare Earths shares are jumping higher today

These three ASX 200 shares are gaining ground today.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Resources Shares

Guess which ASX mining share is jumping 10% on big news

This miner is having a good session on Wednesday. What's going on?

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

Miner looking at a tablet.
Resources Shares

Does Wilson Asset Management prefer Rio Tinto or BHP shares?

Which miner is in favour?

Read more »

Two smiling men in high visibility vests and yellow hardhats stand side by side with a large mound of earth and mining equipment behind them smiling as the Carnaby Resources share price rises today
Resources Shares

Macquarie tips this ASX 200 resources stock to soar nearly 40%

Big returns could be on offer here according to the broker.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Resources Shares

Bell Potter says this ASX 200 mining stock can rise ~30%

Let's see why this miner could be destined to deliver big returns over the next 12 months.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Up 23% today, why Macquarie forecasts this ASX 200 mining stock could rocket another 33%

Macquarie forecasts more outsized gains to come for this surging ASX 200 mining stock.

Read more »

Three mining workers stand proudly in front of a mine smiling because the BHP share price is rising
Resources Shares

Forget gold! This metal just hit record highs and ASX 200 miner BHP is betting big

Let’s find out why.

Read more »