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Lynas up nearly 10% on positive public hearing for Gebeng rare earths plant

Lynas Corp. Ltd.'s ASX shares rose nearly 10% Nov. 12 having enjoyed a "big public relations win" at its long-awaited Nov. 11 public hearing as part of the government review of its Gebeng rare earths processing plant in Malaysia, according to a Chinese-owned brokerage which attended.

Two staffers from CLSA who attended the Nov. 11 public hearing in Pahang of the government review committee reported that five government agencies attested to a "glowing performance" of the Lynas' environmental, health, occupational health and safety and social track record.

"In our view, it reaffirms our thesis the review process is an opportunity for a big PR win in setting the public record straight," CLSA said in a Nov. 12 note, which saw Lynas shares rise by 9.1% on that day.

"We reiterate to investors this business is not at risk of closure and we expect the share price to return to pre-election highs once the committee’s report is filed on Nov. 27."

"With the NdPr [neodymium and praseodymium] price beginning to show signs of life thanks to recent Chinese environment and illegal crackdowns, we reiterate our high-conviction buy rating and A$3.90 per share target. We make no model changes."

CLSA noted in a previous news flash on Oct. 30 that China's Ministry of Industry and Information Technology had just that day launched a new nationwide campaign against illicit rare earth mining and separation for a month.

The ministry said it would "maintain stable supply of rare earths," noting that China had already boosted its full year quota, both in terms of mining from 105,000 tonnes to 120,000 tonnes, and in terms of its separation and refining quota from 100,000 tonnes to 115,000 tonnes.

The high-profile hearing was attended by over 250 people, starting with various ministries, departments and regulators involved in investment and trade, environment, health, occupational health and safety and the Atomic Energy Licensing Board. It was streamed online in the local Malaysian language.

CLSA said that, overall, each agency gave a "positive, if not a glowing review" of Lynas and confirmed its complete compliance with strict government regulations. That was followed by two more sessions comprising submissions from professors, experts and non-government organizations.

Experts focused on the environmental implications of using soil conditioner Condisoil, which CLSA said were "negligible and appears positive in potentially solving the NUF [neutralization underflow residue] waste stockpile issue."

The NGOs, meanwhile, consisted of protest groups which reiterated historical claims, and one member of parliament even spoke on behalf of an NGO, CLSA said.

The brokerage said that while Lynas still needs the review committee to write a positive report, CLSA still believes the rare earths producer has "every right to be confident."

The government has given the committee six weeks to conduct its task, after long-time Lynas opponent Fuziah Salleh resigned as committee chair.