Lynas Faces Renewed Political Scrutiny Over Malaysian License

Shares of Lynas Rare Earths traded lower on the Australian Securities Exchange (ASX) today, pressured by reports of fresh political opposition in Malaysia concerning the renewal of its operating license. End-of-year profit-taking activity also contributed to the downward movement in the stock.

The focal point of the market's concern is a renewed push from Malaysian lawmaker Wan Ahmad Fayhsal Wan Ahmad Kamal. Citing a report from yesterday, his demands—originally made in parliament on November 27—are back in the spotlight. He called for a ban on Lynas's new operating plan and urged a "temporary moratorium" until outstanding questions regarding the disposal of radioactive waste are fully resolved.

According to media coverage, the politician argues that Malaysia must avoid "repeating the same mistake." He criticizes the arrangement where Lynas has received tax incentives for over twelve years, while the local community bears the environmental and radiation risks. This stance has gained renewed traction through recent reporting.

This debate emerges during a sensitive period. The federal government in Kuala Lumpur is currently working on extending Lynas's operating license to meet commitments under the Reciprocal Trade Agreement (ART) signed with the United States in October 2025. This pact aims to secure supply chains for critical minerals and positions Malaysia as a key partner in the U.S. strategy to diversify away from Chinese sources.

Market Reaction and Broader Context

The market reaction, while sensitive, lacked panic. The stock declined from AUD 12.59 on Tuesday to an intraday low around AUD 12.40, representing a loss of approximately 1.5% by midday. Observers note that the consolidation is being amplified by profit-taking, given the share's remarkable performance: it remains up nearly 90% for the year 2025.

The situation in Malaysia underscores the complex interplay between operational planning, domestic politics, and geopolitics for Lynas.

Should investors sell immediately? Or is it worth buying Lynas?

• Operational Performance: Despite today's pullback, Lynas shares have been among the clear outperformers in 2025. This strength has been driven by the ramp-up of its processing facility in Kalgoorlie, Australia, and rising prices for rare earth oxides. Against this backdrop, the current correction appears measured.

• The Persistent Waste Issue: The disposal of Water Leach Purification (WLP) residue, which contains low levels of naturally occurring radioactive material (NORM), remains a particularly contentious point. This issue has fueled political debate in Malaysia for over a decade. Lynas maintains that its facilities operate safely and in compliance with International Atomic Energy Agency (IAEA) standards. Nevertheless, the topic provides a recurring argument for the project's political opponents.

• Geopolitical Stakes: The ART agreement highlights Lynas's role as the largest producer of separated rare earths outside of China. Consequently, the continued operation of its Kuantan plant holds strategic importance for U.S. supply chain security. For the Malaysian government, this creates a tension between international obligations and domestic political pressure.

Looking Ahead to 2026

In the coming days, the official response from the Malaysian government to the calls for a moratorium will be crucial for market sentiment. A clear rejection of any operational suspension would relieve pressure on the stock, while a formal review could trigger additional volatility.

Operationally, attention is turning to the quarterly report scheduled for January 2026. Management is expected to provide updates on the license renewal process and production figures from the Mt Weld expansion. From a technical perspective, the share price is hovering around a short-term support zone of AUD 12.30 to AUD 12.40 as the year concludes. Defending this level is seen as important for maintaining the strong upward trend established throughout 2025.