Business

Japan extends Lynas loan by 10 years

An employee at work in Lynas' processing plant in Gebeng, Kuantan

An employee at work in Lynas' processing plant in Gebeng, Kuantan

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR — June 27, 2019: Japan has renewed its funding of rare-earth producer Lynas Corporation Limited by 10 years, which gives certainty for further investments in downstream operations. .

The loan is from Japan Australia Rare Earths B.V. (JARE).

“Japan recognises the importance of rare-earth for its advanced manufacturing industry. Through this agreement, we will continue to work together to develop strong supply chains to meet growing demands,” says a statement from Lynas managing director Datuk Mashal Ahmad.

JARE is a special purpose company formed by Japan Oil, Gas and Metals National Corporation and Sojitz Corporation, a leading Japanese trading firm and, Lynas’ exclusive distribution partner in that country.

Mashal said the extension will assist in the relocation of Lynas’ first processing stage of cracking and leaching from Malaysia to Western Australia over the next five years.

Once the new facility is operational, the material shipped to Malaysia for further processing in Gebeng, Pahang, will not include naturally-occurring radioactive material that has been a point of contention of Lynas’ critics here.

Lynas’ operations at its plant in Gebeng passed a review by a panel of experts and scientists appointed by the government last November but its fate was then still uncertain following contradictory directives from the authorities over residue disposal issues.

It was only until late last month that Prime Minister Tun Dr. Mahathir Mohamad explicitly gave Lynas the greenlight to continue its operations because otherwise Malaysia would lose a very big investment from Australia.

“As the world’s second largest producer of rare-earths products, Lynas can help to attract further investment in the downstream supply chain in Malaysia, which can position Malaysia as the manufacturing hub of products made from Rare Earths,” wrote Mashal.

China, which has been producing at least 85 per cent of global rare-earths output, had last month, warned it may curb exports to the United States as part of the ongoing trade war between the two countries.

Lynas last month signed a memorandum of understanding to build a rare earth processing facility in Texas with privately held Blue Line Corporation.

The Lynas share price was up about 0.6 per cent to $2.62 in afternoon trading today.

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About the author

Zaidi Azmi

Zaidi Azmi

If Zaidi Azmi isn’t busy finding his way in the city, this 26-year-old northern kampung boy can be found struggling to make sense of the Malaysian political scene. Zaidi can be reached at [email protected]