Wednesday, 22 June 2011

The Lynas Rare Earth Processing Plant Issue in Malaysia, Gomen must decide based on facts and not fear mongering

Trucks move in and out of an under-construction rare earth plant in Gebeng, 270 km (168 miles) east of Kuala Lumpur May 24, 2011.

"The Lynas Advanced Materials Plant in Malaysia's central Pahang state is expected to add stability to the world supply of key components used in electronics, green technology, and advanced weapons systems. It is the first rare earth processing plant being built outside China in the last thirty years. China currently produces over 90 percent of the globally supply of rare earth materials"

"For Malaysia the plant will create over 350 engineering jobs and could encourage high tech companies to start up new operations near the supply of these essential materials"

The Lynas issue has been going on for quite sometime now so I would not want to go into details on the argument "against" and the argument "for" the Lynas rare earth processing plant in Gebeng Industrial Area, Kuantan, Pahang.

Here is an interesting report from 2009 on Chinese global dominance of the rare earth source and processing:

China Tightens Grip on Rare Minerals

Published: August 31, 2009

HONG KONG — China is set to tighten its hammerlock on the market for some of the world’s most obscure but valuable minerals.

Toyota’s Prius hybrids use several pounds of neodymium, a rare earth, in their electric motors.
China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium, vital for a wide range of green energy technologies and military applications like missiles.

Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle.

Even tighter limits on production and exports, part of a plan from the Ministry of Industry and Information Technology, would ensure China has the supply for its own technological and economic needs, and force more manufacturers to make their wares here in order to have access to the minerals.

In each of the last three years, China has reduced the amount of rare earths that can be exported. This year’s export quotas are on track to be the smallest yet. But what is really starting to alarm Western governments and multinationals alike is the possibility that exports will be further restricted.

Chinese officials will almost certainly be pressed to address the issue at a conference Thursday in Beijing. What they say could influence whether Australian regulators next week approve a deal by a Chinese company to acquire a majority stake in Australia’s main rare-earth mine.

The detention of executives from the British-Australian mining giant Rio Tinto has already increased tensions.

They sell for up to $300 a kilogram, or up to about $150 a pound for material like terbium, which is in particularly short supply. Dysprosium is $110 a kilo, or about $50 a pound. Less scare rare earth like neodymium sells for only a fraction of that.

(They are considerably less expensive than precious metals because despite the names, they are found in much higher quantities and much greater concentrations than precious metal.)

China’s Ministry of Industry and Information Technology has drafted a six-year plan for rare earth production and submitted it to the State Council, the equivalent of the cabinet, according to four mining industry officials who have discussed the plan with Chinese officials. A few, often contradictory, details of the plan have leaked out, but it appears to suggest tighter restrictions on exports, and strict curbs on environmentally damaging mines.

Beijing officials are forcing global manufacturers to move factories to China by limiting the availability of rare earths outside China. “Rare earth usage in China will be increasingly greater than exports,” said Zhang Peichen, the deputy director of the government-linked Baotou Rare Earth Research Institute.

Some of the minerals crucial to green technologies are extracted in China using methods that inflict serious damage on the local environment. China dominates global rare earth production partly because of its willingness until now to tolerate highly polluting, low-cost mining.

The ministry did not respond to repeated requests for comment in the last eight days. Jia Yinsong, a director general at the ministry, is to speak about China’s intentions Thursday at the Minor Metals and Rare Earths 2009 conference in Beijing.

Until spring, it seemed that China’s stranglehold on production of rare earths might weaken in the next three years — two Australian mines are opening with combined production equal to a quarter of global output.

But both companies developing mines — Lynas Corporation and smaller rival, Arafura Resources — lost their financing last winter because of the global financial crisis. Buyers deserted Lynas’s planned bond issue and Arafura’s initial public offering.

Mining companies wholly owned by the Chinese government swooped in last spring with the cash needed to finish the construction of both companies’ mines and ore processing factories. The Chinese companies reached agreements to buy 51.7 percent of Lynas and 25 percent of Arafura.

The Arafura deal has already been approved by Australian regulators and is subject to final approval by shareholders on Sept. 17. The regulators have postponed twice a decision on Lynas, and now face a deadline of next Monday to act.

Matthew James, an executive vice president of Lynas, said that the company’s would-be acquirer had agreed not to direct the day-to-day operations of the company, but would have four seats on an eight-member board.

Expectations of tightening Chinese restrictions have produced a surge in the last two weeks in the share prices of the few non-Chinese producers that are publicly traded. In addition to the two Australian mines, Avalon Rare Metals of Toronto is trying to open a mine in northwest Canada, and Molycorp Minerals is trying to reopen a mine in Mountain Pass, Calif.

Unocal used to own the Mountain Pass mine, which suspended mining in 2002 because of weak demand and a delay in an environmental review. State-owned Cnooc of China almost acquired the mine in 2005 with its unsuccessful bid for Unocal, which was bought instead by Chevron; Chinese buyers tried to persuade Chevron to sell the mine to them in 2007, but Chevron sold it to Molycorp Minerals, a private American group.

A single mine in Baotou, in China’s Inner Mongolia, produces half of the world’s rare earths. Much of the rest — particularly some of the rarest elements most needed for products from wind turbines to Prius cars — comes from small, often unlicensed mines in southern China.

China produces over 99 percent of dysprosium and terbium and 95 percent of neodymium. These are vital to many green energy technologies, including high-strength, lightweight magnets used in wind turbines, as well as military applications.

To get at the materials, powerful acid is pumped down bore holes. There it dissolves some of the rare earths, and the slurry is then pumped into leaky artificial ponds with earthen dams, according to mining specialists.

The Ministry of Industry and Information Technology has cut the country’s target output from rare earth mines by 8.1 percent this year and is forcing mergers of mining companies in a bid to improve technical standards, according to the government-controlled China Mining Association, a government-led trade group.

General Motors and the United States Air Force played leading roles in the development of rare-earth magnets. The magnets are still used in the electric motors that control the guidance vanes on the sides of missiles, said Jack Lifton, a chemist who helped develop some of the early magnets.

But demand is surging now because of wind turbines and hybrid vehicles.

The electric motor in a Prius requires 2 to 4 pounds of neodymium, said Dudley Kingsnorth, a consultant in Perth, Australia, whose compilations of rare earth mining and trade are the industry’s benchmark.

Mr. Lifton said that Toyota officials had expressed strong worry to him on Sunday about the availability of rare earths.

Toyota and General Motors, which plans to introduce the Chevrolet Volt next year with an electric motor that uses rare earths, both declined on Monday to comment.

Rick A. Lowden, a senior materials analyst at the Defense Department, told a Congressional subcommittee in July that his office was reviewing a growing number of questions about the availability of rare earths.

China is increasingly manufacturing high-performance electric motors, not just the magnets.

“The people who are making these products outside China are at a huge disadvantage, and that is why more and more of that manufacturing is moving to China," Mr. Kingsnorth saidSource here.

Rare Wealth

Ok got some background reading already? Now read this:

Malaysian Rare Earth Refinery Draws Environmental Concerns
Brian Padden | Jakarta

In Malaysia a rare earth refinery under construction could end China's near-monopoly over the elements that are essential for manufacturing many high tech products. But some environmental organizations are opposing the plant's construction, saying it will produce massive amounts of radioactive waste and present a serious health risk to the public.

The Lynas Advanced Materials Plant in Malaysia's central Pahang state is expected to add stability to the world supply of key components used in electronics, green technology, and advanced weapons systems. It is the first rare earth processing plant being built outside China in the last thirty years. China currently produces over 90 percent of the globally supply of rare earth materials.

Nick Curtis, executive chairman of the Lynas Corporation, says China’s decision last year to temporarily block shipments to Japan over a political dispute reinforced the importance of creating other supply alternatives.

“The manufacturers of new high tech equipment outside of China are very concerned that there be a stable long term source of rare earths," Lynas said. "The Malaysian refinery is going to give them the opportunity to have access to long term stable non-China source rare earths.”

The Malaysia plant is scheduled to open this year. When fully operational, it is expected to be able to meet up to 30 percent of the world's demand for rare earths outside of China.

For Malaysia the plant will create over 350 engineering jobs and could encourage high tech companies to start up new operations near the supply of these essential materials.

Curtis says the economic conditions in Malaysia, the available pool of skilled labor, the infrastructure, the proximity to markets, and the relatively low wages make it economically feasible for the plant to process rare earths materials that are mined in Australia.

Some environmental organizations oppose the processing plant because of concerns over public health risks. Processing rare earth materials produces radioactive waste. In 1992 a Mitsubishi Chemicals rare earth refinery was shut down in Malaysia following claims that it caused birth defects and leukemia among nearby residents.

S.M. Mohamed Idris, president of Sahabat Alam Malaysia also know as Friends of the Earth Malaysia in English, says the Lynas plant is another case of a multinational corporation taking advantage of the lax regulations and enforcement in the developing world.

“We are very anti-nuclear and its effect on the people. And also we are wondering why the Australians cannot process in there own country, [and] they send it here,” Idris said.

The International Atomic Energy Agency is sending a team to assess the plant's compliance with the international safety standards. The Malaysian Ministry of Trade is declining all interview requests until it reviews the IAEA's report.

Curtis says the Lynas Corporation welcomes the IAEA review and refutes claims that the company is trying to evade environmental regulations.

“The environmental regulations in Malaysia are some of the tightest in the world. We actually went to Malaysia because we could see that the experiences, the unfortunate experiences that they had with rare earths back in the 1980's and the early 1990's actually set a body of regulation about any possible risk associated with environmental impact in this industry,” explained Curtis.

Abiding by strict environmental regulations, he says, helps ensure the plant will be operational and profitable in the long term. Some of the environmental protection measures being utilized in the plant include gas scrubbing units, a waste water treatment plant, and a storage facility for solid residue containing low level radiation.

Now read this:

IAEA panel confident Lynas plant won’t harm residents
By Shannon Teoh May 31, 2011

The Lynas Gebeng plant under construction in this March 19 file picture. — Picture by Choo Choy May
KUANTAN, May 31 — The international expert panel reviewing the controversial Lynas rare earth plant believe that radiation from the RM700 project can be controlled, the Kuantan Coalition of Chinese Associations said today.
Chairman Datuk Chow Liong told reporters after meeting the International Atomic Energy Agency-led (IAEA) team that he had raised the issue of residents — some 700,000 within a 30km radius — living close to the refinery in Gebeng.

“The panel said that the plant will not harm residents no matter how near they live if it is properly controlled. They said they will look at ways to control and there is normally no risk to residents with this sort of industry,” said Chow, who leads the coalition of about 50 Chinese bodies in Pahang’s capital.

Putrajaya bowed to public pressure last month and put the project on ice pending the review by international experts.

The nine-man team has been in Kuantan to meet local stakeholders over the past two days before submitting recommendations to the government by the end of June.

Despite the government review, Lynas expects no delay to its plans to begin operations in September as it maintains the plant is safe.

It is anticipating a windfall of RM8 billion a year from 2013 onwards from the rare earth metals that are crucial to the manufacture of high-technology products such as smartphones, hybrid cars and bombs. Read more here.

Even as the Malaysian Government tried to calm unnecessary fears instigated by the Opposition parties namely PKR , comes a letter from the Lynas Chairman to the most vociferous opposition to the rare earth processing venture which will bring tremendous benefits economically, strategically and technologically to Malaysia:

Letter from Chairman of Lynas Corporation, Nicholas Curtis, to Fuziah Salleh

June 22 — Dear Yang Berhormat Puan Hajah Fuziah binti Salleh

I have been carefully following your concerns and public comments about Lynas. I have felt challenged and confronted by some of your statements, as they do not fit with the perception I have of myself, or my company’s values.

I strongly believe Lynas has a role to play as a responsible and important member of the community, with an obligation to create shared value — not just in conventional economic terms, but in terms of long term, sustainable improvements to society.

I believe that in creating a new global hub in Kuantan for responsible processing of rare earth elements — essential ingredients for the sustainable future we all desire — we will deliver substantial benefits to the people of Kuantan. But clearly I have failed to convey this message effectively.

I have heard the community’s concerns and calls for greater clarity and transparency.

At Lynas, we genuinely believe that we acted responsibly because we complied with the law, consulted with a range of stakeholders, and set ourselves the goal of establishing new benchmarks for safety and environmental performance in rare earths processing.

Nevertheless, we are conscious that the burden of proof is on Lynas to demonstrate the responsible, safe management of waste from our operations. We are open to increasing our transparency, so that you and others may have all the information you require to hold us accountable on this issue.

Through community briefings, media interviews and a comprehensive presence on social media, Lynas has tried to give the public factual information to help build awareness that our raw materials and residues are safe, non-toxic and non-hazardous. Our information is broad, and covers the range of plant residue materials and environmental management initiatives.

However, it is clear that your explicit concern is about the waste stream that contains thorium. And in hindsight, it may have been better if we had talked more widely and specifically about our waste storage plans for the residue material containing low-levels of thorium and associated low-levels of radiation.

Lynas began its education outreach effort to local officials and the community in 2008. But it seems that some, including yourself, feel that it was not a credible engagement process and that is why you chose not to attend our past public briefings.

Lynas welcomes further discussion and I would like to understand where you think the opportunities for constructive community engagement may lie. The upcoming report from the IAEA may be the basis for a deeper dialogue with Kuantan residents and community leaders about the Lynas Advanced Materials Plant, the impact of rare earths processing, and how we will responsibly mitigate and manage any associated risks.

At the same time, I have a growing sense of unease about the more exaggerated claims made by extreme and vocal opponents of our plant, and how they are generating speculative fear, uncertainty and unrest amongst residents and the public.

A calm and constructive conversation is now urgent.

On Friday evening, 17 June 2011, two Molotov cocktails were thrown at the Kuantan residence of Lamp Construction Manager, Mr. Bill Morris. A sign “Go Back to Australia Lynas” was painted on Bill’s front fence. Fortunately Bill was unhurt. Together, I’m sure you will join me in the call that whilst vocal opposition to our plant may be fair, violence is unacceptable. Safety of individuals and the Kuantan community must come first.

At Lynas, we each hold personal safety as a core commitment. The safety of our employees and the communities in which we operate will always take precedence over production. Our Lamp has been designed with this core principle in mind.

Lynas will engage with all stakeholders, including its opponents, in meaningful dialogue on the substantive issues. Through open engagement and positive interaction with the community, Lynas will earn the trust required to sustain a license to operate.

Lynas seeks to reach out, listen to different perspectives and build some trust with those who are concerned about the safety of the Lamp.

I understand that feelings currently run high and that speculative and unsubstantiated claims create uncertainty and doubt. Amongst the voice of opposition, I sincerely hope there is a common respect for the facts.

We appreciate your recent correction via Twitter that Lynas had obtained approval to build a refinery in Australia. This correction on the public record is an important step forward from our point of view. The less incorrect information there is out there, the more we can focus on the issues that truly concern the community and other anti-Lynas groups, to see if we can resolve their concerns.

Lynas did have approval to build its processing plant in Australia, but chose to build in Malaysia where the highest international standards for rare earths processing exist today. We chose Malaysia for its transparent and rigid regulatory environment, and we intend meeting and exceeding the high bar that your nation sets for the industry.

We would appreciate your help on correcting the suggestion that that the Lynas Advanced Materials Plant will adopt Chinese standards in its construction and operation, and as a consequence, will not adhere to international standards. This is not true. The downside of such false claims is that a perception could grow that we are not willing to be held to account to the highest standards. We’d appreciate your help in ensuring the facts are known about the commitments we have made.

In an open letter to Mentri Besar Datuk Seri Adnan Yaakob, on 2 April 2011, you requested that an international panel be appointed to review and provide external expertise and consultation on the safety of the Lamp.

On 22 April 2011, Minister YB Datuk Sri Mustapa Mohamad appointed an esteemed panel of global experts in the field of radiation, health and safety. This panel brings together the highest level of expertise and scrutiny to the project. The International Atomic Energy Agency (IAEA), represented on the panel, is unrivalled in its understanding of radiation risks, process modelling, and health and environmental impacts.

To ensure that this internationally-recognised group of professionals play the role you hope they will, I note you have been calling for them to demonstrate impartiality and independence.

We support this call.

We also support the Malaysian Government’s commitment to the health and safety of its people and the environment as the top priority. We will commit to fulfilling the recommendations of the independent review findings. We hope that in doing so, Lynas may play a role in helping Malaysia realize its stated ambition for the Rakyat through high-income, inclusiveness and sustainability.

Rare Earths play a vital role in green technology, and Malaysia has the opportunity to be at the forefront of the industry. With the Lynas Advanced Materials Plant, Malaysia will play an indispensible role in helping to build energy efficient light bulbs, hybrid cars and wind turbine engines for renewable power generation — technologies we’ve come to embrace and rely upon as green, sustainable solutions for the future.

Once again let me state that I would appreciate the opportunity to meet with you personally as soon as possible, so that we may constructively engage on the issues face to face. Please let me know your availability so that we may arrange a time that it is mutually convenient.

Yours sincerely,

Nicholas Curtis

Taking away all the political verbals, its nice to read that PKR Fuziah is willing to see the Lynas Chairman see here, but I doubt it will change her stand as her agenda seems more political than anything else. 

I like the rest of Malaysians will wait for the IAEA report by real experts in their field not unsubstantiated fear mongering from the Opposition. I hope the Gomen will make the right decision on the Lynas rare earth processing plant based on facts not on the votes. 

Great strategic technological  investment opportunity of this nature is very rare, and we should not pass it up just because the opposition have politicize the issue. I am quite sure from the strategic point of view the Chinese Government will be the happiest if the Lynas Plant in Malaysia is terminated as it would ensure their global dominance in rare earth production and subsequent advanced technology manufacture.

"Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle"

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