Antinuclear

Lynas faces $60 million radioactive waste transport bill  https://www.afr.com/business/mining/rare-earths/lynas-faces-60m-radioactive-waste-transport-bill-20181206-h18toh?fbclid=IwAR3BFaAg8apIoudG9tyGHGcWgY49ZBeX5pikeM41U7MjKE0nbanOzSrK4lo By Bo Seo

Updated 06 Dec 2018 —Rare earths producer Lynas could face a bill of $60 million to transport 400,000 tonnes of radioactive waste out of Malaysia, as well as a complicated legal and regulatory landscape.The Malaysian government’s surprise decision on Tuesday to make Lynas’ future licences conditional on removing the waste sent the company’s shares tumbling by up to 26 per cent on Wednesday and left the $1.4 billion company threatening legal action. The stock recovered 1.5 per cent to $1.67 on Thursday.

“Lynas is working through various scenarios related to the ministerial statement,” said the company in a statement overnight.

Lynas obtains rare earths from Western Australia, processes them in Malaysia and sells them to manufacturers of industrial magnets used in automotives and electronics. Given a review released on Tuesday said the company had largely complied with its responsibilities in the country, the government’s more stringent licence conditions came as a shock.

A spokesman for the Department of Foreign Affairs and Trade said: “The Australian government has been in close discussions with both the Malaysian government and Lynas and will continue this engagement.”

CLSA analyst Dylan Kelly said in a note to clients that the cost of transporting the waste back to Australia was estimated to be $60 million, but said insurance would cover about $46 million of that. The balance of about $14 million would represent about 10 per cent of the earnings before interest, tax, depreciation and amortisation of $129 million that Lynas recorded in 2017-18.

“Based on the 80 containers per week of concentrate sent to Malaysia from the mine [in WA], it would take around 3½ years to progressively repatriate all 15,000 containers,” Mr Kelly said. “This obviously makes the government’s September 2019 target removal unrealistic, but we expect they will negotiate a reasonable outcome.”

Although Mr Kelly suggested the financial impact would not be significant, he and other analysts noted the difficult regulatory challenges faced by Lynas.

Crossing the sea

If Lynas decides to return the waste to Australia, which is the preferred solution of its critics in Malaysia, regulatory challenges will begin with cross-border transport.

Maurice Lynch, senior counsel on transport and trade at Mills Oakley, said: “Lynas must navigate a heavily regulated space.”

Domestic laws, which bring Australia into compliance with a range of international maritime conventions, are stringent on the notice, packing, storage, and personnel training required at various stages of international transport.

Mr Lynch said the regulations were onerous but surmountable.

The intention of the regime is not to prevent the shipment of hazardous cargoes,” he said, “it’s to ensure that it takes place within a safe and regulated environment.”

Back on land

The Australian Radiation Protection and Nuclear Safety Agency (ARPANSA), the federal agency tasked with radiation safety and nuclear safety, said that once on Australian soil, state regulations on transport kick in.

ARPANSA said: “it is not possible to say how the Lynas wastes would be classified without more information on the various chemical and radioactive contaminants present in the product.

“This would be a question for the WA regulator, as this classification would fall under the West Australia’s Nuclear Waste Storage (Prohibition) Act 1999.”

UBS analyst Daniel Morgan said: “Licensing in Australia may also have challenges in accepting re-imports/disposal.”

Back to history

In April 2012, Lynas lodged an application to ARPANSA to explore the possibility of shipping its by-product back to Australia, but ultimately backed away.

Then Lynas chief executive Nick Curtis said at the time, “we ceased looking for contracts in Australia because we think shipping to Thailand or Indonesia is cheaper”.