Malaysia has extended the licence of Lynas' controversial but highly strategic rare earth refinery for six months, during which the Australian company must finalise plans to build a permanent disposal facility (PDF) for more than half a million tonnes of feared radioactive waste and a pre-processing plant overseas to decontaminate ore.
The announcement by the country's Atomic Energy Licensing Board (AELB), ahead of the Sept 2 expiry of the Australian miner's operating permit, confirms The Straits Times' report last month that the government would abandon an earlier demand for the waste to be repatriated as a requirement for licence renewal.
The radiation regulator said the new conditions were set after the Australian federal government and the Western Australia state government told Malaysia that they would not take back Lynas' radioactive water leach purification (WLP) residue.
"The construction of the PDF must be expedited to minimise the risk of the accumulated WLP radioactive residue that has exceeded 580,000 tonnes... from exposure to natural disasters such as heavy flooding," said the AELB, adding that the decision by Malaysia's Cabinet was based on recommendations by a government review panel last November.
The AELB said it is up to Lynas to identify the PDF site and gain the necessary permissions, failing which it must find another country to accept the WLP. Plans for a "cracking and leaching" facility overseas to take over these processes from the Malaysian refinery must also be tabled, and it must be operational within four years.
Lynas mines rare earth ore from a deposit in Mount Weld, Australia, and processes it at its plant in Pahang, Malaysia. It had already committed A$500 million (S$471 million) in May to expand operations by 2025, which would include a pre-processing facility in Australia to decontaminate the ore before it reaches Malaysian shores.
The AELB has also ordered the firm to halt its multimillion-dollar research into the use of WLP as fertiliser and to redirect the contractual 0.5 per cent of gross revenue for research and development towards an additional security deposit until the "cracking and leaching" facility is operational.
China controls 70 per cent of the world's rare earth production and meets 80 per cent of the United States' demand. But the trade war between the two countries has sent investors scurrying for alternative sources of the material, crucial in high-technology electronics and defence applications.
Lynas, which began operations in 2012, produces about 12 per cent of the global rare earth supply.