MELBOURNE/KUALA LUMPUR (Reuters) - Shares in Australian rare earths producer Lynas Corp <LYC.AX> jumped 10 percent on Monday, after Malaysian government agencies gave positive feedback at a public hearing regarding an audit of its processing plant in Kuantan.
Malaysia's government commissioned a review of the plant's environmental record in September, raising concerns about the future of the only major rare earths producer outside China and sending its shares tumbling.
However, comments from members of government agencies at a weekend hearing were largely positive, according to local media and a broker report, which pushed Lynas shares up by 10 percent on Monday to a three-month high.
Rosli Zul, Department of Environment director for the state of Pahang, said that water quality near the Lynas plant had improved over the past six years and that the factory had complied with all stipulated conditions, national news wire Bernama reported.
A public health specialist on the review board said no increases of cancer, eye inflammation or respiratory diseases had been found among people in the city of Kuantan, where the plant is located.
And a director at a government department of occupational health and safety said Lynas complied with all regulations, Bernama reported.
"Overall we found it to be positive for the company with five government agencies attesting to a glowing performance of its environmental, health, OH&S (occupational health and safety) and social track record," broker CLSA said in a report.
"We reiterate to investors this business is not at risk of closure."
The committee will file its report to the government on Nov. 27.
Interest in the case has been heightened by falling Chinese exports of rare earths in the second half of the year. In October, China's rare earths exports tumbled 37.4 percent from the previous month to their lowest in more than three years.
China is the world's biggest producer of rare earths, raising concerns it could crimp exports to the United States amid rising trade tensions.
However, China's Ministry of Industry said a low rare earth output quota for the second half of 2018 was due to an unusually high quota for the first half.
(This story corrects headline, first and third paragraphs to explain that comments were from government agencies not audit committee members)
(Reporting by Liz Lee in KUALA LUMPUR and Melanie Burton in MELBOURNE; editing by Richard Pullin)
