Australia’s Lynas Rare Earths Facility Now Caught in Thorny Malaysian Politics

Posted on January 17, 2012. Filed under: Pollution |


The final approval allowing Australia’s Lynas Corp.’s rare earths facility to be fully operational is now caught in a thorny path of Malaysian national elections slated in March.

Well-placed sources in government said that the forthcoming national election in Malaysia is weighing down on the final approval as officials are afraid to receive a negative backlash and loose crucial votes.

The negative perception on the environment impact of the project, perceived to be the biggest rare earths resource outside of China, has not been fully effaced causing the local and national governments to delay its final green light for the project.

“Prime Minister Najib wants to get solid votes in Kuantan, where the Lynas project is located. So this is another reason for the delay,” a ranking government official explained.

With the current government administration led by the ruling Barisan Nasional Party led by incumbent Prime Minister Najib Tun Razak wanting to get an edge over top competitor Pakatan Rakyat led by Anwar Ibrahim, it must not provoke the public with any controversial policies.

The government official, who declined to be named because he is not authorized to speak on the matter, said the Lynas rare earths project may get its permanent license after the gamut of political elections had been eased out.

Australia’s Lynas Corp. said in related reports that it is still confident to get the temporary license by end of the month or at least on 30 January to assure its investors.

Temporary License Application

Lynas Malaysia said in a separate statement that its application for a temporary operating license meets requirements and if approved by the government at the end of the month, it can fire up its controversial RM2.5 billion rare earth plant in Kuantan in six weeks.

Top officials from the local subsidiary of the Australian miner insisted that despite three revisions before its application was made available for public viewing, the document was never rejected by local regulators Atomic Energy Licensing Board (AELB).

“We prepared the document that meets requirements and it has been going back and forth because the authorities want more information and deliberation.

“It is wrong to say versions one to three were rejected. When the (AELB) expert panel reviewed, they did not reject, they wanted more information.

“We have fulfilled requirements. If you leave it to them (the panel), it is enough already. But they want the public to read it easily,” Lynas Malaysia managing director Datuk Mashal Ahmad told The Malaysian Insider in an interview.

Professor Ismail Bahari, the company’s radiological safety adviser, said that “Lynas was asked to adapt… to meet ever-changing requirements.”

They both agreed that unless there was a clear objection raised by the public during the two-week viewing period that ends on January 17, there was no reason for AELB to reject the application given it had met requirements adopted after a government review by international experts in June.

Public Pressure

Putrajaya bowed to public pressure in April after sustained opposition from local residents and environmentalists and put the project on ice pending the review by the International Atomic Energy Agency (IAEA).

In July, the government agency adopted 11 recommendations set out by the review of the refinery being built in the Gebeng industrial zone and said it would not allow Lynas to begin operations or import rare earth ore until all conditions, which include a comprehensive, long-term and detailed plan for managing radioactive waste, are met.

The Malaysian government source also explained that a temporary license is also a way for Lynas to prove that the plant meets safety requirements outlined in its application.

Contract Agreements

According to Lynas, AELB will meet on January 30 to decide on whether to issue a pre-operating license which will be followed by a full license within two years if the plant meets safety requirements outlined in its application.

Mashal also said today its rare earth ore was ready to be shipped from its mine in Mount Weld, Western Australia, and would take “minimum a month or 1½ months” to arrive in the 95 per cent completed plant in Kuantan.

He added all other operational matters would also be finalised in “just about that time.”

He also said that multinational corporations such as engineering giant Siemens and BASF, the world’s largest chemical company, had already signed on to buy rare earth from Lynas, “indrectly confirming that we conform to international environmental standards.”

“Because we conform, they can label their products as green products. The fact they want to enter into a contract with us means they have to do a thorough audit to ensure Lynas is a green supplier,” he said.

He said Siemens has also signed a letter of intent to embark on a RM500 million joint venture with Lynas to produce supermagnets for wind turbines “which logically should be next door” to the refinery.

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. With reports from Malaysia Insider , RareEarths Metal Blogs

For comments and suggestions on this article, contact the editor

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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