Shares in rare earths producer Lynas Corporation (ASX:LYC) fell Monday after the Australian miner responded to media reports indicating the new Malaysian government was set to launch an official review of the company's refinery, located in the province of Kuantan.
While the Sydney-based miner had received no official notification as of Monday, it said the rumours "raised concerns," adding that the renewal of certain operating approvals had been taking longer than normal in recent times.
Local media reported the newly-elected coalition government would launch a three month evaluation of Lynas' rare earths processing operations.The company's statement triggered a massive sell-off, with the stock losing 23% of its value to A$1.61, its lowest in a year, and closing more than 18% down at A$1.72.
According to Malaysian paper The Star Online, Fuziah Salleh, a government politician and a long-standing critic of Lynas' plant, will chair the committee in charge of reviewing the refinery, which activists say is environmentally hazardous.
The facility - known as the Lynas Advance Material Plant (LAMP) - was the centre of relentless attacks from environmental groups and local residents while under construction in 2012. They feared about the impact the low-level radioactive waste the refinery generates could have on the health of those living nearby and the environment.
Lynas say its operations have already been extensively scrutinized, adding it will advocate for a "transparent, impartial and scientific" review provided the chair of the proposed committee is Salleh.
The company is the only major rare earths miner outside China. The metallic elements, crucial in the production of magnets, are extracted in Western Australia, but processed in Malaysia.