Developers shy away as Lynas plant looms

Posted on May 30, 2011. Filed under: Pollution |

-The Malaysian Insider-

KUALA LUMPUR, May 30 — The controversial RM700 million rare earth plant in the Gebeng industrial zone is threatening to sink the local property market in Kuantan.

Developers are holding off on new projects, fearing a collapse in prices if Australian miner Lynas Corp is given the green light to begin operations in as little as three months.

The refinery has faced mounting opposition over the past few months due to fears of radiation pollution, giving pause to both developers and buyers.

“A few developers here are holding back from starting new projects. Some who have not committed too much money have totally backed out of their current developments,” said property valuer Liom Hong Sang.

Kuantan Chinese Chamber of Commerce chairman Pang Woon Ping said that some real estate companies had experienced a 50 per cent drop in sales since March.

Although developers have managed to hold out without slashing prices, Pang told The Malaysian Insider that “if the plant goes ahead, there will be a sure drop.”

Homes along the Kuantan-Gebeng stretch are currently priced about 20 per cent lower than in the city of Kuantan itself, with single-storey terrace units going for about RM100,000 to RM120,000.

The government was forced to put the refinery on ice last month pending a review by international experts that will be completed at the end of June.

Despite the review, Lynas expects no delay to its plans to begin operations in September as it maintains the plant is safe.

But until a decision is reached, the market is expected to move at snail’s pace.

“The average housing development here has 40 to 50 units, with sales of two or three a month. Over the past few months, some developers have made no sales at all,” Liom told The Malaysian Insider.

Pang, who is also managing director of property developer Perumahan Satelit Jaya, said some banks were now reluctant to offer loans, fearing negative equity should panic set in if the government approves the plant.

Environmentalists and local residents fear a repeat of the radiation pollution from a similar plant in Bukit Merah, Ipoh which has been linked to birth defects and at least eight cases of leukaemia in the past five years, seven of which were fatal.

Nearly two decades after it was shuttered, the plant is still the subject of a massive RM300 million cleanup exercise.

In recent weeks, green groups here and in Australia have been calling for the project to be nixed, citing Lynas’ opaque plans on waste storage and transport management across 3,000km from the Mount Weld mine in Western Australia to the refinery in the Gebeng industrial zone.

Lynas is anticipating a windfall of RM8 billion a year from 2013 onwards from the rare earth metals that are crucial to the manufacture of high-technology products such as smartphones, hybrid cars and bombs.

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