Malaysian Panel Says Rare Earth Plant is Safe

As expected, a parliamentary select committee today issued a 71-page report saying the controversial Lynas Advanced Materials Plant on Malaysia’s eastern coast has met all of the requirements necessary to begin operations under a temporary operating license issued earlier this year by Malaysia’s Ministry of Science, Technology and Innovation.

It is still uncertain, however, when the plant might begin to operate. So far the Australia-based Lynas Inc. has spent A$800 million and five years attempting to open the facility, which has largely been completed for months, with 400 employees remaining idle.

The plant has been an emotive issue in Malaysia, with environmentalists turning it into a major campaign issue for national elections expected to be called over the next few months. Whether Science and Technology Minister Maximus Ongkili removes the restrictions from the temporary operating license in essence depends on whether Prime Minister Najib Tun Razak feels confident enough in the ruling Barisan Nasional’s ability to pull off an election victory, and particularly that of the United Malays National Organization, the biggest ethnic party in the ruling coalition. The other two parties– the Malaysian Chinese Association and the Malaysian Indian Congress, are riven with factionalism and riddled with charges of corruption.

“I would say that even if Najib is confident of an electoral win, he wouldn’t do anything to jeopardize it now, until we get a clear mandate,” a source within UMNO told Asia Sentinel. “Even if we’re confident that Umno will do will and maybe even gain back the two-thirds majority, why should we stir the pot with any contentious issue now? Everything is about the elections.”

There is growing concern that Lynas is at the end of its patience, however. Lynas Executive Chairman Nicholas Curtis has publicly expressed growing impatience with the situation in Malaysia, complaining that the country has constantly moved the goalposts every time Lynas has complied with all of the requirements.

“The Barisan knows this, so they could just get their license this week. But that’s liable to be followed with multiple lawsuits in Malaysia and Oz,” the Umno source continued. “Lynas is bleeding money, they have workers doing nothing, this has taken a huge amount of time and money.”

Thousands of protesters are due to gather Saturday near the plant’s processing facility at Gebing near the eastern town of Kuantan in Pahang state, with speakers expected to assemble from across the country to attempt to turn the plant into a larger referendum on Malaysia’s environmental policies and thus the government as well. The Stop Lynas contingent, clad in yellow t-shirts, played a major role in a big rally in Kuala Lumpur that was sponsored by the NGO Bersih (clean), which is protesting what they regard as unfair electoral laws. The Barisan Nasional charges that both movements have been hijacked by the three-party opposition Pakatan Rakyat headed by Anwar Ibrahim.

A Sydney-based spokesman for Lynas said the company hasn’t received the report and so was unable to comment. However, he added, “they are starting to run out of reasons to keep us from starting operations.”

There is no doubt that the government would like to get the plant underway and is trying to find the most politically palatable way to accomplish that, and probably much of the west would agree. A vast stockpile of ore is piling up at the company’s operations at Mount Weld in Australia for processing at the Gebing facility. Once the plant opens it would make Malaysia almost immediately a major global player in the production of rare earth metals, which are used for a wide array of products from computers to cars. At the moment, China produces about 90 percent of the world supply of the rare earth stock, and shocked Japan last year by temporarily cutting off its exports after a confrontation over the Diaoyu Islands, which the Japanese claim as the Senkakus. A major portion of the Malaysian supply would go to Japan.

The flip side is that if the plant doesn’t open and the plans fail, it represents a major blow to Najib’s aspirations to lure foreign investors to supplement the country’s anemic foreign direct investment portfolio. If public opinion is strong enough to drive out a major operation, other investors are likely to be discouraged from investing in the country.

A week ago, Science Minister Ongili issued a report saying he was in a position to grant the temporary operating license as long as two new conditions were met, ordering it to formulate plans to immobilize radioactive elements in the plant’s waste and to come up with a response plan on dust control.

“Lynas has readily available solutions to satisfy the new conditions announced by the Minister,” Lynas Executive Chairman Nicholas Curtis said in a prepared release earlier this week. “Lynas looks forward to completion of the regulatory and political processes in Malaysia as soon as possible.”

The committee report issued today said that the panel has held three public hearings attended by individuals, interest groups and experts on the rare earth plant.

"The committee is satisfied that the Lynas project has complied with standards and laws in Malaysia, which are in line with international practices,” the report noted. "In fact, more stringent rules have been imposed on the plant compared to international standards.”

The committee said the project has in place a system that ensured public safety and environmental protection and that all licensing conditions and additional requirements have been met but went on to recommend that environmental audits be conducted by a third party registered with the Department of Environment every six months when the plant is in operation.