Malaysian Rare Earths Plant Okay Soon?

The Malaysian government, apparently emboldened by a belief that the national ruling coalition is comfortably ahead in polls for elections to be called soon, is leaning towards okaying a controversial rare earth processing plant in Kuantan state, a United Malays National Organization source told Asia Sentinel.

Maximus Ongkili, the Science, Technology and Innovation Minister, told reporters Tuesday that he hopes to make an announcement on the plant’s future within two weeks. The UMNO source indicated the announcement is likely to be positive, although that isn’t certain, as things tend to go awry.

The plant has become a major emotive issue between the opposition Pakatan Rakyat coalition, particularly the Democratic Action Party, and the Barisan Nasional, the national ruling coalition. Thousands of green-shirted opponents of the plant appeared at an April 29 rally in Kuala Lumpur which was organized to protest what the organizers charged were Malaysia’s election, laws, which they say were skewed to keep the opposition from power.

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. The backers of the plant, constructed by Lynas Malaysia Sdn Bhd, a subsidiary of Lynas Australia, say it is safe and that only low-radiation waste products will be produced in any case.

The Malaysian government’s hand could be forced by remarks to reporters in Australia on May 22 by Lynas Australia chairman Nicholas Curtis that the company is growing frustrated with the delay in the plant, which a company spokesman told Asia Sentinel last week is “98 percent complete. Lynas has poured A$700 million and seven years into getting approvals for the plant, according to The Australian. Some 350 Malaysians are already working at the facility, at an industrial state in Gebing in Kuantan state, Curtis said. Other sources say Lynas is beginning to run cash short.

The opening of the plant would make Malaysia a major force in rare earths production, a smorgasbord of minerals used in a long list of high-tech products from computers to cars to cellphones to avionics and more. China currently controls as much as 90 percent of world production. It cut back sharply in recent months because of severe environmental damage on the part of small-scale mining companies but lately the government has announced it would loosen the reins on production again. The Lynas plant is expected to supply up to 30 percent of world production when it reaches full operation.

Curtis told The Australian that Lynas had made a 30 to 40 year commitment to Malaysia. “You don’t build and then ask for environmental approval,” he said. “We have gained the permissions, spent the money and are now wondering where the goal posts really are, because they’ve moved.” The company has been stockpiling ore from its Mount Weld operations in western Australia in preparation to shipping it to Malaysia for processing.

Approval of the plant has been intricately tied to Malaysia’s political equation. Lynas received a temporary operating license on Feb. 1, only to have it appealed, then appealed a second time.

Prime Minister Najib Tun Razak has been playing a cautious game, partly because of a disastrous bout with a rare earth plant in the 1980s which 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.

The Barisan Nasional doesn’t want to lose either national votes or those in Kuantan, the home of the processing plant.

Political observers in Kuala Lumpur had expected Parliament to be dissolved and the national election, which must be held before April 2013, to be called first in May, then June. However, it is extremely unlikely that the government could get the polls off before then. Puasa, the Malaysian version of Ramadan, begins on 20 July and ends 19 August.

Former Prime Minister Mahathir Mohamad has been on television, advocating that the government hold up the election until after the end of Puasa, saying the opposition is growing steadily weaker and that the longer they wait, the more they will weaken. Whether that’s true or not, A Universiti Melayu poll prior to the recent Bersih 3.0 rally on 29 April gave the Barisan s strong 49-21 percent lead over the opposition.

That was before the massive rally in Kuala Lumpur, which drew an estimated 100,000 people and has been called the biggest such rally in Malaysian modern history. Both sides have been claiming propaganda victory, with the rally culminating in a bout of violence in which police beat protesters, tear gassed them and doused them with water cannons. The protesters turned over a police car and attempted to breach barriers around Independence Square, from which they had been forbidden to march. The organizers, an umbrella organization of NGOs called Bersih (Clean) 3.0, charged that the government had employed agents provocateurs to make it appear that the protest was violent. Both sides have displayed films attempting to prove the trouble was the other’s fault.

In any case, whether Mahathir, a canny politician himself, is right, Najib has been on a trip to the United States and the parliament is scheduled to meet until the end of June, which leaves a small window of 20 days in July to go before Puasa it’s unlikely they will get the election off.

Thus Lynas is growing impatient. The company has gone along with a long series of concessions, offering to set aside part of its earnings from the plant in Gebeng to help sponsor research into disposal of the waste and depositing funds to ensure safe management of any remaining residues as required by the Atomic Energy Licensing Board.

Science, Technology and Innovation Minister Ongkili told reporters Tuesday that "I have gotten several updates and have reviewed 14 submissions during the appeal hearing and will hopefully make an announcement in the next two weeks."

"Under the Act, I have the power to call for further feedback if I am not satisfied with the findings and will then decide on the next course of action," he said.