What happens to Lynas if it cannot renew operating licences after Sept 2?

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Lynas Faces Significant Uncertainty Over Continued Operations Post-September 2 Licence Renewal

If Lynas is unable to renew its operating licences after September 2, 2019, the company faces substantial uncertainty regarding its ability to continue as a going concern. This situation arises primarily from the precondition set by the Malaysian Ministry of Energy, Science, Technology, Environment and Climate for licence renewal, which requires the removal of accumulated Water Leached Purification Residue (WLP) from the country. The existing temporary storage licence for this residue is set to expire on the same date as the operating licence renewal deadline.
Licence Renewal Contingent on Waste Removal

The renewal of Lynas's operating licence, due on September 2, 2019, is directly linked to the company's capacity to export its accumulated Water Leached Purification Residue (WLP) from Malaysia. This specific precondition was outlined by the Ministry of Energy, Science, Technology, Environment and Climate as a requirement for future permits. The temporary storage licence for the WLP waste itself expires on September 2, 2019, creating a critical deadline for the company to address this issue.
Appeal Lodged Against Waste Export Precondition

Lynas has formally appealed the precondition mandating the removal of its waste stockpile from Malaysia. The company has expressed "reasonable confidence" in reaching a resolution to this matter. In parallel, Lynas managing director Datuk Mashal Ahmad has stated that the company is actively collaborating with the Malaysian government to devise a way forward, asserting that the current licence conditions align with international best practices for environmental and public safety.
Auditors Highlight Material Uncertainty

The potential inability to secure a renewed licence poses a significant threat to Lynas's future operations. The company's auditors have flagged a "material uncertainty" concerning whether the rare earth processor can obtain the necessary licence to continue operating in Malaysia beyond September 2. Furthermore, these auditors noted a "material uncertainty" regarding the group's capacity to continue as a going concern should operations cease after this date.
Broader Implications of Sovereign Risk

The challenges faced by Lynas in Malaysia underscore broader concerns about sovereign risk, as highlighted by the company's chief executive officer, Amanda Lacaze. She advised businesses to be cognizant of such risks, noting that a global increase in sovereign risk makes asset concentration more precarious than in previous years. The auditors' report explicitly links political difficulties in Malaysia to threats against the company's entire future.

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What happens to Lynas if it cannot renew operating licences after Sept 2?

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