Lynas rare earth project sparks huge campaign in Malaysia

Lee Tan

History was made in Malaysia on Sunday February 26 in the coastal town of Kuantan. About 15,000 people turned up for the country's biggest ever environmental protest action. Protestors shouting "Stop Lynas. Go Back to Australia!" carried placards and banners against the directives of the country's new law to control protests known as the Peaceful Assembly Act.

This is but one of the many monthly public protest actions which have taken place since Malaysians first learnt from a New York Times article that the world's largest rare earth processing plant was under construction in an industrial estate very close to the Kuantan Port, several kilometres from the South China Sea. The plant has been constructed quietly since 2008 with no community consultation.

Entangled in this controversy is Australia's Lynas Corporation. Earlier in February, the Malaysian Government granted a temporary operating licence to Lynas for its Advanced Materials Plant (LAMP). It is a rare earth refinery, the biggest of its kind outside of China. The plant is several months away from completion. It sits on top of a drained peat mangrove swamp only a few kilometres away from several residential estates. Within a 30 km radius live an estimated 700,000 people, mostly concentrated along the coast.

Lynas aims to ship ore concentrate from its Mt Weld mine near Laverton in Western Australia some 5,500 kms away via Fremantle to the Port of Kuantan to its refinery for the final stage of production.

Hybrid and electric cars, wind turbines, solar panels, low-energy light bulbs, hi-tech digital and electronic equipment, and guided missiles all use rare earths. Ore bodies are often found with radioactive thorium and uranium. The processing of rare earths into oxides is hazardous due to the addition of vast amounts of corrosive concentrated acids at very high temperature. Huge amounts of water and fuel are required, in the process discharging a massive amount of toxic waste in all forms – solid, gaseous and liquid – as well as carbon.

China has been supplying about 97 percent of the world's rare earth oxides at low costs. There, poorly managed refineries and their toxic waste have poisoned the surrounding land and waterways, posing serious health hazards and agriculture problems to the local community. Pollution is so serious that the Yellow River 10 kms away was contaminated through its tributaries. Increasing fatal cases of cancer and ruined crops have been reported. In some places, the problem was so bad that the entire village had to be relocated.

In the USA, the Molycorp rare earth plant in California's Mt Pass was shut down in 2000 by the government due to groundwater contamination and pollution problems. Molycorp under its new ownership vowed to pioneer clean rare earth production, spending US$500 million to clean up the problem and to re-engineer the plant to make it a closed system where all the waste will be managed and contained.

Late in 2010, China suddenly reduced the export quota of its rare earth oxides. The reduced supply coupled with an increasing demand from green and hi-tech industries has resulted in a spike of rare earth prices – from as low as US$10.32 per kg in 2009 to a peak of US$222.92 last August (based on the Mt Weld average composite prices provided by Lynas Corporation).

Lynas says it will provide the first new source of supply to the world outside China, making Malaysia, if the plant goes ahead, a strategic player in the industry. However, the local community has vowed to do whatever it takes to stop the project. Their concerns are understandable since the Lynas plant will be leaving behind about half a million tonnes of hazardous solid sludge – enough to fill about 250 Olympic-size swimming pools every year. On top of that, every hour 100,000 cubic metres of waste gas will be discharged into the atmosphere and 500 tonnes of waste water will be discharged into a natural river, which is an important mangrove habitat. This river drains directly into the South China Sea less than four kilometres from the plant.

Malaysia has never had any single project that produces so much waste. The plant's location on a peatland and its close proximity to the sea add to the problems and risks. A disposal facility for the radioactive solid waste has not been established, nor has a site been located for a disposal facility. The presence of radioactive substances, especially long-lived thorium, and the sheer volume of the waste pose a huge challenge for safe and effective management of the waste.

Lynas has proposed to turn its contaminated radioactive waste into commercial gypsum and fertilisers, creating concern that the hazards will be spread far and wide all over the country.

Seafood is a speciality for Kuantan. Many families rely on catches from the sea for their livelihoods. This part of Malaysia is a prime coastal tourism destination with the world class Club Med resort 10 kms away. Tourism and fishing are by far the most important income-generating activities for many coastal communities.

Until recently, when news of the strong local protests reached the international media, Lynas' share values were riding high as investors flocked to put their bet on Lynas.

Construction defects

Lynas is a single-project company with neither mining experience nor rare earth processing expertise. In the absence of any institutional memory, Lynas resorted to hiring contractors which in turn sub-contracted other contractors and suppliers to carry out all of its operations. The haste, the lack of experience and the reliance on contractors have caused massive cost over-runs and construction defects at the plant in Kuantan.

The critical parts of the plant – the concrete tanks in the processing area − are defective due to the omission of the damp proofing membrane at the base of the tank and poor workmanship resulting in serious leakage and cracks. They are expensive and time consuming to fix if at all possible. Yet Lynas continued to promote its early production date.

Lynas has overlooked the strong reaction the project will draw from Malaysians. Malaysia has already had a nasty experience with a rare earth plant. In a neighbouring state, Japan's Mitsubishi Corporation was forced to shut down the Asian Rare Earth plant about 20 years ago following strong public protest and court action. Unusually high numbers of fatal leukaemia cases, birth defects and a range of other ailments were detected in nearby villages. Mitsubishi subsequently paid US$100 million for the clean-up effort which is still continuing today.

Only a few months ago, news of the permanent storage site leaking for the last 20 years were revealed in a major daily newspaper in Malaysia. The leaking waste storage site is a constant reminder of how the government and a large corporation failed in their duty of care.

The Lynas plant is near completion. The protest movement has the support of Malaysia's key professional bodies such as the Malaysian Medical Association and the Bar Council (Association of Lawyers). Many highly qualified and skilled professionals have come forward to study Lynas' plan and have provided critical reviews to the government and to protesters. They are sceptical that the project is as harmless as Lynas, the government and the International Atomic Energy Agency have claimed.

Following the mass rally in Kuantan and a number of solidarity actions throughout the country including one near the site of Mitsubishi's now-closed rare earth plant, the Malaysian Prime Minister told the media, "We would not give an operating license unless we are satisfied that the local community can accept that this project is safe." Only a few days later, the licence was reportedly handed to Lynas.

Some Malaysian politicians have suggested the waste be sent back to Western Australia, where the mining occurs, an idea WA Minister for Mines and Petroleum Norman Moore has firmly rejected.

What is the responsibility of the WA government and Lynas to manage the radioactive waste derived from Western Australian rare earths? Does WA have a responsibility to take back waste? If WA had to take back the waste, would the state want to mine and export it in the first place? If toxic waste from rare earth ore processing was returned to the country supplying the ore, should that precedent also apply to, for example, uranium exports?

The Malaysian authorities have been so inept and complacent that they have not acknowledged the hazards and risks associated with the rare earth plant. The rapid approval process and the secrecy surrounding the project raise suspicions of dodgy deals waiting to be exposed.

While the community is firmly opposed to the rare earths project, the Malaysian government has granted Lynas a 12-year tax holiday. Lynas would have to pay A$18 million a year in taxes including a carbon tax in Australia.

Please sign the online petition to stop this unethical project: thepetitionsite.com/1/ban-rare-earth-exports

More information: savemalaysia.org and stoplynas.org