Lynas Corporation has just released its quarterly reports ending June 30, 2014.
Based on these reports, Lynas is financially in a critical state. Save Malaysia, Stop Lynas (SMSL) hereby urges the government and the regulatory authority the Atomic Energy Licensing Board (AELB) NOT to extend or renew its temporary operating licence (TOL).
In its Cash Flow report, the quarter ended with a deficit of A$23.775 millions while its previous quarter has a cash reserve of A$23.359 millions. It raised A$39.971 millions from a rights issue exercise and institutional placement of shares last May. It now has a cash balance of A$38.144 millions, while the next quarter has a forecast outflow of A$58.172 millions.
This does not include the next principal repayment due under the Sojitz Facility of US$35.0 millions on Sept 30, 2014.
Though the quarter saw a production of 1,882 tonnes of rare earth oxides (REO), Lynas only sold 1,630 tonnes and grossed in A$26.495 millions which is equivalent to a basket price of A$16.254/kg. It is much lower than basket price of US$20.35/kg during the quarter on a China domestic basis.
What this means is that the Lynas Advanced Materials Plant (Lamp) is operating on a loss accumulating basis. The market price for REO is continuing to experience the down trend and this will further exacerbate Lynas’ losses through a full operation ramp-up as announced.
It is now clear that Lynas’ financial health is in the intensive care unit (ICU). Should it fail to get their creditor Sojitz/Logmac to agree to defer their repayments of A$215 millions in six monthly intervals till 31 March 2016, it will begin to default on their repayments starting Sept 30 this year and this could lead to dire and serious implications for the community here.
With the meagre sum of US$13.05 millions received as security deposits, would it be sufficient to safely dispose off thousands of tonnes of solid radioactive wastes left behind by Lamp?
The government of Malaysia and the regulating authority AELB should exercise the principle of caution and reject Lynas’ application for the full operating stage licence (FOSL or renewal of TOL).
In its activities report ending June 30, 2014, Lynas revealed that it has submitted all documents required for the application for a FOSL for Lamp to the AELB. It has also made an e-application as well and submitted a letter of intent to that effect. Lynas claimed that it has complied with all regulatory requirements and ALL conditions of the TOL since it was issued by the AELB in September 2012. (Source: Quarterly report ending June 30, 2014)
The residents of Kuantan and Balok hereby request AELB to confirm
1. That Lynas has identified a location for its permanent disposal facility (PDF) as required under the terms of the TOL.
2. That Lynas has successfully conducted tests on the recycling of solid wastes into synthetic mineral products as claimed in their report and they are prepared to fulfill their undertaking of shipping them abroad to their potential buyers;
3. That AELB has certified the road base material developed from water leach purification (WLP) as a non-radioactive material and Lynas is seeking the Department of Environment’s (DOE) approval for construction of a demonstration and assessment road using this material;
4. That the company has gained approval from a customer (is AELB aware of this?) and is preparing to make the first commercial trial export of neutralisation underflow product (NUF).
5. That AELB has checked, agreed and approved all these alternatives to finding a PDF.
6. That the written undertaking by Lynas to ship all recycled products overseas will be adhered to as directed by the Malaysia cabinet.
Gravely concerned
The residents are gravely concerned that both Lynas and the regulatory authority have not been fulfilling their pledge to inform and engage the local residents and communities on these matters. It is part of the International Atomic Energy Agency’s (IAEA) recommendations that both Lynas and AELB should adhere to as a precondition to the issuance of the TOL.
Lynas claimed that WLP wastes will be recycled as road base material and the AELB has certified it as non-radioactive, we would like both Lynas and AELB to provide us with a sample so that independent experts can have a say over this.
Meanwhile, we urge the DOE not to approve the proposal from Lynas for the construction of a demonstration and assessment road using this material. Lynas should have done this before it built its plant here. Why should our land and environment be the experimental laboratory for Lynas’ radioactive wastes?
So is the claim by Lynas on the commercialization of neutralisation underflow residue (NUF) wastes. We demand that all information regarding the customer and the trials that had been carried out be made available to the public so that a fair and independent opinion can be sought from the experts to appease the fears and concern of the people.
Contrary to what Lynas has claimed in their report regarding the fulfillment of ALL conditions under the TOL, it has failed to carry out what it promised in its written undertaking. AELB should under no reasonable circumstances allow the application for the full operating stage licence to be approved.
We as stakeholders have been bypassed and ignored when Lamp was built. We promise that we will not let this matter rest if proper observation of rules and regulations both by Lynas and the regulating authorities are not adhered to. We shall pursue through whatever means necessary to ensure that our environment is not sacrificed on the altar of foreign profits and the incompetence of our government officials.
