Australian rare earths miner Lynas Corp (ASX: LYC) said Wednesday its board has rejected a A$1.5bn (about $1.1B) takeover proposal from Australian retail and industrial conglomerate Wesfarmers.
Lynas, one of the world’s main suppliers of rare earths outside China, said the offer undervalued the company’s “intellectual property.” The miner also said it could deliver better shareholder value in its current form than under Wesfarmers' control.
Analysts had warned that Wesfarmers’ unsolicited bid was highly opportunistic, as it comes at a time when Lynas' stock price is under pressure, due to the ongoing environmental issues in Malaysia.
Lynas, which has a mine in Western Australia and an $800 million processing plant in Malaysia, is facing problems getting licence renewals for the plant due to concerns over waste storage.
Lynas' board said the company can deliver better shareholder value in its current form than under Wesfarmers' control
Earlier this week, Lynas said it was considering initial ore processing in Western Australia, where its Mount Weld mine is located. It noted it had long been considering building new processing facilities as part of expansion plans and to reduce risks from further regulatory changes in Malaysia.
Malaysian environmental groups and Lynas Corp. workers held rival demonstrations in Kuala Lumpur on Wednesday. While activists reiterated worries around the radioactive waste produced, Lynas workers asked authorities to base any decisions on “scientific fact and evidence,” highlighting the plant’s importance for employment in the region.
This is not the first time the miner’s six-year-old facility — known as the Lynas Advance Material Plant (LAMP) — is the cause of tension between Kuala Lumpur and the Sydney-based miner.
LAMP was the centre of relentless attacks from environmental groups and local residents while under construction in 2012. They feared about the impact the low-level radioactive waste the refinery generates could have on the health of those living nearby, and to the environment.
Scrutiny escalated last year, with Kuala Lumpur setting a committee to review Lynas’ operations. The company’s chief executive and managing director, Amanda Lacaze raised concerns about the impartiality of a couple of committee members, as both are known for being long time opponents of having the refinery located in Malaysia.
In December, the country ordered Lynas to remove 450,000 tonnes of radioactive waste stockpiled at its processing plant by Sept. 2., when the company’s licence is up for renewal.
Lynas, however, revealed earlier this year that it would not be able to comply with such demand by the given deadline.
China currently dominates the rare earths market, producing nearly 90% of the world's total, while Lynas controls around 10%.