08/04/2019 - 14:00

Wesfarmers confirms Malaysian govt talks for Lynas

08/04/2019 - 14:00

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Wesfarmers has confirmed it engaged in discussions with the Malaysian government in regards to its takeover target, Lynas Corporation, as the rare earths miner revealed it may set up processing operations closer to its Mount Weld mine near Laverton.

Wesfarmers confirms Malaysian govt talks for Lynas
Lynas says there is value processing close to its Mt Weld mine near Laverton.

Wesfarmers has confirmed it engaged in discussions with the Malaysian government in regards to its takeover target, Lynas Corporation, as the rare earths miner revealed it may set up processing operations closer to its Mount Weld mine near Laverton.

In a statement to the ASX, Lynas said it was seeking clarification from the Malaysian government, after the country’s prime minister, Mahathir Mohamad, said on Friday Lynas must remove the radioactive waste from its Malaysian processing plant.

“With regards to Lynas, we have imposed an extra condition, that is they must take away the waste,” he said.

“They want to take it to Australia, but Australia doesn’t want to accept it, so they can’t do it anyway.”

Mr Mahathir said companies interested in acquiring Lynas agreed to extract radioactive waste before importing it to the Lynas processing plant in Malaysia.

"There are other companies willing to buy up or somehow or other acquire Lynas, they have given us a promise that in the future before sending the raw materials to Malaysia they will clean it up first," he said.

“They will crack it and decontaminate it in some way with regard to radioactivity.

“So, they, this company or even Lynas they can continue if they promise that the raw material from Australia would be brought here only after, what they call, cracking and cleaning it up.”

Mr Mahathir did not specify which companies had promised the Malaysian government it would alter Lynas’s processing system to remove radioactive waste should it acquire the miner.

However, a spokesperson for Wesfarmers told BusinessNews Mr Mahathir’s comments were consistent with discussions the company had with government officials.

“We welcome the additional clarity provided by the Malaysian prime minister,” Wesfarmers said.

“It is consistent with prior public statements by the government and the views shared with us in meetings with senior Malaysian government officials since we announced our proposal to acquire Lynas.

“We look forward to more detail from the government about Lynas’ operating licence certainty, to assess the conditionality of our proposal.”

Last month, Lynas said it would not engage with Wesfarmers' $1.5 billion indicative takeover offer, a day after the conglomerate launched the bid for the rare earths miner.

The all-cash Wesfarmers offer at $2.25 per share was a 44.7 per cent premium to Lynas's previous closing share price before the bid of $1.56.

Today, Lynas also said for months it has been developing detailed plans to assist the company to mitigate risk from any regulatory changes in Malaysia.

“We see value in operating alternative cracking and leaching processing close to our resources,” Lynas said.

“We will provide a further update on our plans and progress in the coming weeks.”

It said its Japanese lenders, Japan Australia Rare Earths, had affirmed their support for the company and the management team.

Shares in Lynas were down 2.13 per cent to trade at $2.06 each at 3pm AEDT.

 

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