The Lynas Rare Earths Ltd (ASX: LYC) share price is having a tough start to the week.
In morning trade, the rare earths producer's shares dropped as much as 8% to $8.06.
The Lynas share price has recovered a touch but remains down 7% to $8.14 at the time of writing.
Why is the Lynas share price under pressure?
The weakness in the Lynas share price on Monday has been driven by concerns over its Malaysian operations.
According to the Singapore-based The Straits Times, the Pakatan Harapan-led government in Malaysia plans to force Lynas to operate radiation-free at its advanced materials plant in The Gebeng Industrial Park by July.
The media outlet understands that Malaysian Prime Minister Anwar Ibrahim's administration refused a request by Lynas to lift conditions for the three-year renewal of its licence, which expires in March.
An anonymous top government figure reportedly told The Straits Times:
The Cabinet has decided to reject the request. Lynas will no longer be allowed to produce radioactive waste in Malaysia.
The official also revealed that a full announcement by the Pakatan Harapan-led government.
This would be bad news for Lynas and could disrupt production at the plant. Especially with its new cracking and leaching facility in Western Australia unlikely to be ready before the Malaysian government's deadline.
Lynas response
The company has released a response to the media speculation today, stating that it hasn't been contacted by the Malaysia government, but that hasn't been enough to stop the Lynas share price from falling. It commented:
Lynas Rare Earths notes recent media speculation regarding the conditions applicable to Lynas Malaysia's operating licence renewal. At this time, the company has not been notified of any decision by the Malaysian regulator in this matter.
Investors will have to sit tight and wait to see if the Pakatan Harapan-led government releases an announcement later this month as the anonymous source suggested.
