Malaysian Rare Earth Plant Approved

It appears that a long-stalled Lynas Corporation rare earths processing plant in Malaysia has finally been given the go-ahead by the country’s Atomic Energy Licensing Board, which yesterday issued a temporary operating license for the plant to begin operation.

The decision to grant the license would make Malaysia a major force in the production of rare earths, minerals used in a long list of high-tech products from computers to cars to cellphones to avionics and more. It is also being closely watched by investors and users of the materials, almost all of which currently are produced in China. Lynas is expected to supply up to 30 percent of world production when it reaches full operation.

The approval also appears to say as much about Malaysian politics and the confidence of the ruling Barisan Nasional to go ahead with an election as it does about the safety of the plant. Approval of the plant, in the eastern Malaysian state of Pahang*, has been pending for more than a year while it was shuffled from government department to department to department. Lynas received a temporary operating license on Feb. 1, only to have it appealed, then appealed a second time.

However, political observers say the three-party Barisan Nasional has been growing increasingly confident that it can win a majority of seats in the Dewan Rakyat, the country’s parliament, in elections that must be held by next April, and possibly take back at least one of the states it lost to the opposition in its 2008 electoral debacle. In that contest, bedeviled by allegations of corruption and cronyism, the Barisan lost its historical two-thirds majority in parliament for the first time since the country was founded.

Pakatan Rakyat leaders say they are equally confident. UMNO leaders concede that the opposition may well hold all of the country’s major cities. One Kuala Lumpur-based businessman said the move to approve the plant could simply mean the Barisan Nasional has simply already written off Kuantan, the major city in Pahang state, and its environs. As Asia Sentinel reported in an earlier story, Lynas has been growing increasingly concerned about bleeding cash into Malaysia without any revenue return.

“Receiving this license from the AELB is a significant milestone for Lynas,” said Lynas Executive Chairman Nicholas Curtis in a prepared release. “The TOL provides additional validation of the safety of Lynas' operations in Malaysia and supports the previous assessment by the world’s pre-eminent radiation safety authority, the International Atomic Energy Agency, that the [plant] is safe and fully compliant with international standards.”

The Australia-based Lynas operation has become a political football that has been kicked around for months between the opposition Pakatan Rakyat coalition and the government, with thousands of opponents turning up at rallies across the country. It has become a major test of Prime Minister Najib Tun Razak’s attempts to woo international investment to the country.

Two protest groups have been given leave to challenge the decision by the Science, Technology and Innovation Ministry to allow the plant to go ahead. They told local media they would seek yet another injunction to stall the plant. However, Lynas officials were jubilant in Sydney and Perth in Western Australia, where a mountain of unprocessed ore has been building for months at the company’s Mount Weld mining facility. Although no one would comment for the record, given the touchy political situation in Malaysia, they are looking forward to the plant beginning operation despite a vow by protesters to block shipments of the ore.

The protesters say they fear that Malaysia’s inability to police its environmental laws could end up with the waste byproducts from the plant leaching into the water table or drifting into the atmosphere.

Lynas said it has poured nearly A$800 million and seven years into getting approvals for the plant. Some 350 Malaysians are already working at the facility, at an industrial state in Gebing in Kuantan state, Lynas told Asia Sentinel previously.

The issue has become so sensitive because a rare earth plant developed in the 1980s ended up contaminating air and groundwater at Bukit Merah near Ipoh. Several people were treated for various cancers because of the plant and later died. Mitsubishi Chemical Corp., which developed the plant, has spent an estimated US$100 million in the effort to clean up the environmental disaster.

*Corrected 7 Sept 2012. Story inadvertently said Kuantan was a state. We apologize for the error - Eds.