China lifeline revives work on Lynas plant

Published: 2009/05/05

An Australian company is set to resume building a RM1.2 billion plant in Gebeng, Pahang, thanks to investments by a new major shareholder, China Nonferrous Metal Mining (Group) Co Ltd (CNMC).

Lynas Malaysia, a unit of Lynas Corp Ltd, started work on the lanthanide processing plant in February last year, but it was stopped in February this year due to a dispute with bondholders.Lynas Malaysia said the Gebeng plant will start production about 12 months after it receives funds from CNMC.

"The new capital will fund the first phase of the project at 10,500 tonnes per annum lanthanide oxide, including project suspension and remobilisation costs, working capital, contingency, financing fees and corporate overheads."CNMC will also provide a guarantee for bank funding of the second phase expansion to 21,000 tonnes per annum lanthanide oxide," it said in a statement released in Kuala Lumpur yesterday.

CNMC is taking control of Lynas under a deal that will give the Australian company a RM1.3 billion lifeline. The deal is still subject to approvals from relevant Australian and Chinese authorities as well as Lynas shareholders.

The plant in Gebeng was originally scheduled for completion by the end of this year. Lynas Corp had planned to invest RM900 million in the first phase and another RM300 million in the second phase.The plant will process lanthanide ores, to be shipped from Mount Weld in Western Australia to Kuantan, into purified lanthanides, which are used to develop green technologies.

Rare earths like lanthanides are used in products such as energy-saving light bulbs, catalytic converters, flat-panel displays, disk drives, iPods and MP3 players. They are also used in technologies that enable weight reduction in cars, higher yields from oil refineries and in diesel additives.

Lynas Malaysia said the proposed processes in the Gebeng plant will not change and workers will be hired once the project resumes.The plant is expected to employ about 300 workers initially, and up to 350 when it hits full capacity.Lynas Malaysia will be managed and run mainly by Malaysians.Australian Stock Exchange-listed Lynas Corp owns the richest deposit of rare earths in the world at Mount Weld. "Rare earths" is the term given to 15 metallic elements used in environmentally friendly products.