Lynas Corporation (ASX:LYC), a company focused on creating a fully integrated source of rare earths from mine to market, is facing a moment of truth over its controversial $800-million Malaysia-based processing plant as locals prepare to go to the polls in what is being hailed as the most closely contested election in the country's history. The Malaysian parliament was officially dissolved last week, with the date of the upcoming election set for May 5.
Lynas' facility finally began production last year following lengthy environmental and safety disputes with local residents and the Save Malaysia Stop Lynas protest group. Some analysts believe that a victory for the ruling National Front party, headed by Prime Minister Najib Razak, could potentially end years of uncertainty surrounding the facility, as it was this same government that initially invited the company to relocate to Malaysia.
The National Front, which has run the country for the last 56 years, is still favored to win the elections despite the growing popularity of opposition parties. The Wall Street Journal reported that a recent opinion survey conducted by the University of Malaya shows that 42 percent of respondents support the National Front, with 37 percent supporting the opposition and 21 percent undecided.
Even if the National Front is ousted, Lynas' facility will not necessarily automatically face closure; however, a new government will likely create uncertainty about the project's future. A new Malaysian administration is likely to come under intense pressure from lobbyists and some opposition politicians have promised to review — or even shut down — the plant should they gain power. Recently, Kuantan MP Fuziah Salleh stated that opposition party Pakatan Rakyat will not compromise and will shut down the facility if it comes into power.