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Why the Lynas Corporation Ltd share price is sinking again today

The Lynas Corporation Ltd  (ASX: LYC) share price is down 3% to $1.61 despite the Australia and Malaysia-based rare earths miner releasing no specific news to the market.

Lynas shares are now down around 20% over the past six months after the Malaysian government vowed to increase regulation on the miner and even potentially shut it down if it did not comply with environmental and social well being standards.

Unfortunately for Lynas its mining license is due for renewal in Malaysia on September 2 2019, with the Malaysian ministry for the environment still demanding certain water purification residues be exported out of Malaysia as part of the operating conditions for a new license.

Even if Lynas is granted a new license it will likely be after taking substantial new compliance costs, although it’s operating performance continues to improve.

For example it clocked sales receipts of $79.9 million for the quarter ending December 31 2018 and had a cash balance of $53.7 million. However, it is the regulatory uncertainty overhanging the company that is giving investors jitters as to the potential outcomes.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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