Back in September ’11 we posted about a mining-related project in Malaysia being proposed by the Australian rare-earths miner, Lynas Corporation Ltd. The point we tried to make in that post were that there is very little economic analysis of the impacts of the Lynas project and that the reasons for granting Lynas generous tax concessions didn’t seem to make a lot of economic sense. We’ve been following events since then and there continues to be a very well organised community (and political) effort to oppose the Lynas Advanced Materials Plant (LAMP).
So it was with great interest that we read a report today by Daiwa Capital Markets titled: “Will Lynas’ LAMP ever shine?”. The short report is the joint effort of Amy Chew and and David Brennan at Daiwa. Amy visited Malaysia to investigate the community concerns and political risk surrounding the project. David did some analysis of what the risks might mean to Lynas’ share price here in Australia. Their conclusions:
- Local opposition to Lynas’ rare earth processing plant is vociferous and mounting
- Regardless of a 30 January decision by the AELB on whether to commission the plant, protests look set to continue
- If the plant doesn’t go ahead, Daiwa value Lynas at A$0.68 per share, if it does go ahead, they value it at $1.63 per share.
Lynas has been and continues to be arrogant in addressing the local Malaysians. Lynas has been aggressively advertising on local newspapers stating their commitment to answer any questions raised by the locals. And yet, when it comes to walking the talk, Lynas invites the less educated & poorly informed rural villagers to visit their LAMP. And recently, I was informed that they invited groups of undergraduates to visit the LAMP as well. The informed and the professional groups are selectively ignored and sidelined by giving various restrictions. Is it not ironic that the mounting opposition comes mostly from the informed and professional groups of which Lynas keep ignoring ?
I follow the Lynas issues since 2009, and I am one of the informed locals who are kept being ignored until today. Questions that I posted in Lynas facebook, designed to answer questions raised by locals, are not specifically answered.
For example, my request for an answer to why I cannot buy a copy of the document that was shown to public was ignored; Lynas do not expect me to abandon my daily work during normal office hours for 10 over days just to go to specific locations and read the 300 pages of document, do they ? Is my request for an answer too mush to ask for ? Lynas could have answered, for example, that it is their company policy not to sell the documents, instead of ignoring and not answering at all.
Daiwa’s decision to send someone onto the ground to check things out is a wise move.
Lynas Corporation has invested heavily in the public relation area and not enough in building a safe plant that can allay fears of the Malaysians living nearby. This is a good lesson in CSR indeed!
Lynas shares is now at AUD0.13 only:(!!