Wesfarmers confirms talks with Malaysian government before Lynas shock

At a press conference on Malaysian television after a cabinet meeting Friday, Dr. Mahathir said: "We have opened the trade to other people, and other companies are ready to to acquire Lynas. "

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"They promised us that in the future, before sending raw materials to Malaysia, they would clean them first, crack and decontaminate them in one way or another. another with regard to radioactivity. "

He added that this claimant, or Lynas himself, could operate in Malaysia if they promised that raw materials arriving in Malaysia would be cleaned of this radioactive material.

In a statement released Sunday, Wesfarmers confirmed to be in talks with the government.

"This corresponds to the government's previous public statements and the views we have shared in meetings with senior Malaysian government officials since the announcement of our proposal to acquire Lynas." We look forward to the details from the government regarding the certainty of Lynas' operating license, assess the conditionality of our proposal, "said Wesfarmers.

Lynas investors have not lost sight of the consequences of the involvement of an external company in the announcement of the shock of Friday.

Matthew Ryland, portfolio manager at Greencape Capital, majority shareholder of Lynas, said: "We are questioning the governance of companies that engage with foreign governments about assets that they do not have. We do not see it as a governance problem. "

Lynas is facing an existential crisis after the Malaysian government announced in December that tough new working conditions would be tied to its license to operate a billion-dollar rare earth plant. in Malaysia. This included the disposal of all radioactive residues produced in its processing plant.

The recent publication of Lynas' half-yearly results included the warning of its auditors about "significant uncertainty" as to whether the rare earth transformer could obtain a license to continue its operations in the UK. Malaysia after September 2 ", and group would be able to continue its activities".

Lynas' board of directors said that he felt it was appropriate to prepare accounts on a going concern basis because of his confidence in the company's ability to resolve licensing issues before September.

Dr. Mahathir's new requirement means that the company should invest in another processing plant, most likely in Western Australia, where it mines rare earth minerals, and may still be forced to remove all waste from Malaysia.

"Lynas is seeking clarification from the government regarding the Prime Minister's press conference and will provide an update when more information becomes available," Lynas said at the end of the press conference Friday evening.

After his bid was rejected by Lynas last month, Wesfarmers general manager Rob Scott said the company remained interested in acquiring Lynas.

Lynas shares closed down one cent Friday at $ 2.11. The Wesfarmers bid on Lynas was $ 2.25 per share, payable in cash.