A rare earths processing plant in Malaysia at the center of an Australian Arm wrestling

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Rare earths, a family of essential metals in a range of new technologies such as electric cars and renewable energy systems, have made headlines in the news thanks to a public offer to buy $ 1.1 billion from an Australian company with a controversial ore processing plant in Malaysia.

Wesfarmers, a diversified industrial conglomerate with interests ranging from retail to chemicals, offered a share of $ 1.62 per share for the control of Lynas Corporation, a premium of 44.7% higher than the pre-market price. Offer of its purpose.

Investors are not impressed, raising Lynas shares to $ 1.51. This gap of 11 cents compared to the price of the offer is a sign that they feel that the offer has too many conditions. They also sold Wesfarmers shares, dropping them by 3.5% to $ 24.33 on a day when the overall Australian stock market had risen slightly.

Radioactive waste & nbsp; is a problem

What seems to be of concern to Wesfarmers' shareholders is that Lynas is facing a dispute with the Malaysian government over its Lynas Advanced Materials Processing (LAMP) plant in East Malaysia, threatening to close the waste-producing plant. radioactive.

In its semiannual report filed last month, Lynas said it solved one of two waste management issues and called for conditions for a second waste stream requested by the license management committee. atomic energy of Malaysia.

One of the conditions of Wesfarmers' offer is that the relevant operating licenses in Malaysia are in force and will remain in effect for a period of "satisfactory period after completion of the transaction".

Lynas' business model has been controversial since the company chose to mine rare earth ore at Mt Weld in Western Australia and send it to Malaysia for processing, which has led to allegations that Australia is simply exporting a problem of radioactive waste.

Previous Malaysian governments have approved the construction and operation of the LAMP plant, as well as the way the waste is treated. A change of government last year saw the return of Prime Minister Mahatir Mohamad and the election of officials opposed to the project.

Ironically, after a difficult financial start, Lynas realized substantial financial gains thanks to strong demand for its rare earth products containing neodymium and praseodymium, the metals used in the high-strength magnets that make up the core of the engines. electric.

Lynas Director Amanda Lacaze said in her semiannual report that improvements in production are continuing at LAMP and that new products are being developed to meet customer demand.

Japanese companies are the main buyers of what Lynas produces, in part because it is one of the few sources of non-Chinese rare earths.

Despite a one – month shutdown in the semester and until December 31, the LAMP facility produced a record 9642 tonnes of rare earth oxides, although lower prices have reduced revenues by 10.5% to $ 130 million. Profit before tax was $ 36.5 million.

Lacaze said the regulation in Malaysia was very difficult throughout the semester.

Rob Scott, the general manager of Wesfarmers, said his company was ideally placed to support Lynas' future through additional investments to support downstream processing badets and realize the full potential from the Mt Weld deposit.

"Wesfarmers also offers highly complementary expertise in mining and chemical processing, as well as successful work experience with various governments and other stakeholders to achieve sustainable and positive results for local communities, Scott said.

Scott added that there was no certainty that the offer, which he qualified as an indicative proposal, would lead to a transaction.

Lynas president Mike Harding has called the offer "unsolicited and highly conditional".

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Rare earths, a family of essential metals in a range of new technologies such as electric cars and renewable energy systems, have made headlines in the news thanks to a public offer to buy $ 1.1 billion from an Australian company with a controversial ore processing plant in Malaysia.

Wesfarmers, a diversified industrial conglomerate with interests ranging from retail to chemicals, offered a share of $ 1.62 per share for the control of Lynas Corporation, a premium of 44.7% higher than the pre-market price. Offer of its purpose.

Investors are not impressed, raising Lynas shares to $ 1.51. This gap of 11 cents compared to the price of the offer is a sign that they feel that the offer has too many conditions. They also sold Wesfarmers shares, dropping them by 3.5% to $ 24.33 on a day when the overall Australian stock market had risen slightly.

Radioactive waste is a problem

What seems to be of concern to Wesfarmers' shareholders is that Lynas is facing a dispute with the Malaysian government over its Lynas Advanced Materials Processing (LAMP) plant in East Malaysia, threatening to close the waste-producing plant. radioactive.

In its semiannual report filed last month, Lynas said it solved one of two waste management issues and called for conditions for a second waste stream requested by the license management committee. atomic energy of Malaysia.

One of the conditions of Wesfarmers' offer is that the relevant operating licenses in Malaysia are in force and will remain so for "a satisfactory period after the completion of the transaction".

Lynas' business model has been controversial since the company chose to mine rare earth ore at Mt Weld in Western Australia and send it to Malaysia for processing, which has led to allegations that Australia is simply exporting a problem of radioactive waste.

Previous Malaysian governments have approved the construction and operation of the LAMP plant, as well as the way the waste is treated. A change of government last year saw the return of Prime Minister Mahatir Mohamad and the election of officials opposed to the project.

Ironically, after a difficult financial start, Lynas realized substantial financial gains thanks to strong demand for its rare earth products containing neodymium and praseodymium, the metals used in the high-strength magnets that make up the core of the engines. electric.

Lynas Director Amanda Lacaze said in her semiannual report that improvements in production are continuing at LAMP and that new products are being developed to meet customer demand.

Japanese companies are the main buyers of what Lynas produces, in part because it is one of the few sources of non-Chinese rare earths.

Despite a one – month shutdown in the semester and until December 31, the LAMP facility produced a record 9642 tonnes of rare earth oxides, although lower prices have reduced revenues by 10.5% to $ 130 million. Profit before tax was $ 36.5 million.

Lacaze said the regulation in Malaysia was very difficult throughout the semester.

Rob Scott, the general manager of Wesfarmers, said his company was ideally placed to support Lynas' future through additional investments to support downstream processing badets and realize the full potential from the Mt Weld deposit.

"Wesfarmers also offers highly complementary expertise in mining and chemical processing, as well as successful work experience with various governments and other stakeholders to achieve sustainable and positive results for local communities." Scott said.

Scott added that there was no certainty that the offer, which he qualified as an indicative proposal, would lead to a transaction.

Lynas chairman Mike Harding has called the offer "unsolicited and highly conditional".