Sun, May 13, 2012 - Page 9 News List

Citizen backlash ensures Malaysia rare earth plant kept on hold

By Siva Sithraputhran  /  Reuters, GEBENG, MALAYSIA

The expensive machinery lies silent, idling as Malaysia’s government weighs a delicate decision to allow shipments of raw material to arrive from Australia and finally start operations at the world’s largest rare earths plant outside China.

At the industrial estate on the country’s east coast, 20 or so protesters gathered in the searing afternoon heat have begun a chant: “No to Lynas. Lynas go home.”

The handful of demonstrators seems an unlikely obstacle to plans by Australia’s Lynas Corp to build its 2.5 billion ringgit (US$800 million) plant, seen as crucial to challenging China’s near monopoly on the production of rare earths, used in items ranging from smartphones to smart bombs.

However, the expanding protest movement they represent, feeding off broader frustrations with Malaysia’s government as elections loom, has already delayed the project by eight months and cast a shadow over its future.

The resistance — fed by social networks and Malaysia’s increasingly lively independent online media — also raises broader questions over the global expansion of an industry that has created huge environmental problems in China, which currently accounts for about 95 percent of global supply.

“Western countries don’t want it. Why should we in Malaysia?” asked Norizan Mokhtar, who lives less than 10km from the plant in the industrial area of Gebeng, close to fishing villages and Kuantan, a city of half a million people.

“My youngest is six, the effects might not be seen now, but in the future. We eat fish everyday, what if there is radiation?” she asked.

She is afraid controls on the plant will become slack after the first few years.

Lynas has been plagued by delays and controversy in Malaysia since it broke ground on the plant two years ago with the aim of easing China’s grip on the supply of rare earths and capitalizing on rising prices for the materials.

Its share price has halved since early last year as investors worry that it will lose out in the race to feed surging world demand.

Lynas has orders covering its first 10 years of production. Japan, the world’s biggest consumer of rare earths, is counting on Lynas to supply 8,500 tonnes a year by early next year.

“Our customers are waiting,” Mashal Ahmad, the managing director of the Lynas plant, told reporters during a tour of the plant for media last month.

“We have nothing to hide,” he said, adding that “too much misinformation” had been spread about the company.

Prized for their magnetism, luminescence and strength, world consumption of rare earths is estimated to rise to around 185,000 tonnes a year by 2015, from 136,000 tonnes in 2010.

China imposed export quotas in 2009 to fight pollution caused by illegal mining and processing, turning up the pressure to find alternative sources.

The Lynas plant is one of a handful under construction. It is 98 percent complete and would supply about 11,000 tonnes in its first year, eventually rising to 22,000 tonnes.

Elsewhere, Canada’s Great Western Minerals is teaming up with a Chinese group to build a rare earth processing plant in South Africa, while US firm Molycorp is set to produce just under 20,000 tonnes of rare earth oxide this year at its site near California’s Death Valley.

The Malaysian protest movement gathered strength last year after allegations — denied by Lynas — that it was cutting corners on safety, fanning fears that radioactive run-off from waste material stored at the plant could seep into the local water system after being chemically treated.

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