Lynas, the Australian rare earths miner, has turned down a $1.1bn takeover approach from conglomerate Wesfarmers.
Wesfarmers, the Australian retail-to-chemicals company, had hoped a vulnerable Lynas would be open to forging an agreement which would aid the miner’s efforts to overcome issues with its operations in Malaysia.
The Lynas Advanced Materials Plant (LAMP) in Kuatan, Malaysia is one of the largest and most modern rare earths separation plants in the world. The LAMP is designed to treat the concentrate from Lynas’ Australian Mt Weld mine and produce separated Rare Earths Oxide (REO) products for sale to customers in locations including Japan, Europe, China and North America.
Lynas’ licence to operate in Malaysia is up for renewal in September, when the company will face tough new regulations over waste storage in the Southeast Asian country.
The offer made to Lynas by Wesfarmers carried strict conditions, including “ensuring that relevant operating licences in Malaysia are in force and will remain in force for a satisfactory period following completion of the transaction.”
Wesfarmers Managing Director Rob Scott commented: “An investment in Lynas leverages our unique assets and capabilities, including in chemical processing, and will deliver Lynas’ shareholders with an attractive premium and certain cash return. We also acknowledge the importance of the Lynas Advanced Materials Plant in Malaysia and the strong contribution made by Lynas’ management team and its employees across all operations."
Lynas told shareholders it would reject the offer, citing its value was derived from its “irreplaceable” assets which include the Mt Weld orebody. Lynas offers its customers a stable and integrated supply of high-quality rare earths, particularly the strategically significant neodymium, praseodymium (NdPr) and certain heavy rare earth materials.