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Australia not as competitive as Malaysia, says Lynas

By Shannon Teoh

File pic of the Gebeng plant under construction March 19, 2011. — Picture by Choo Choy May

KUALA LUMPUR, May 6 — Australia’s Lynas Corp claims it picked Malaysia for its controversial rare earth refinery as it was more competitive than its home country. The miner will source the radioactive ore which produces the precious element from Australia before shipping it to Kuantan.
In a video posted on its Facebook page last night, executive chairman Nicholas Curtis said the original plan was to build the plant in Australia but the company found that “it doesn’t work.”
“Australia is unfortunately not competitive in the chemical industry the way the east coast of Malaysia is,” he said of the site in the Gebeng industrial zone near Kuantan.

Although reports say the plant may generate up to one per cent of the Malaysian GDP, critics have questioned the real economic benefit of the project, pointing to the 12-year tax holiday Lynas is set to get as a pioneer status company.

Curtis during his exclusive interview with The Malaysian Insider April 11, 2011. — Picture by Jack Ooi

Still, the government estimates RM2.3 billion investments spinoffs from the plant that will be operable in September after over two years of construction. Science, Technology and Innovation Minister Datuk Seri Maximus Johnity Ongkili told Parliament last month that RM300 million has already been poured in for two factories in Gebeng that will produce the hydrochloric and sulphuric acid needed to extract the rare earth metals.
The Australian miner has faced opposition to its RM700 million plant from environmentalists and local residents who fear a repeat of the radiation pollution from a similar plant in Bukit Merah, Ipoh.
The Asian Rare Earth (ARE) plant in Perak has been linked to birth defects and at least eight cases of leukaemia in the past five years, seven of which were fatal.
Nearly 20 years after it was shuttered, it is still the subject of a massive RM300 million cleanup exercise.
Those opposed to the plant, including PKR vice president and Kuantan MP Fuziah Salleh, have repeatedly questioned whether the project was brought to Malaysia because Australia would not accept the radioactive waste from the process.
But Lynas has insisted that the waste product will be low in thorium — the radioactive element found in nearly all rare earth deposits — and will abide by international standards.

Fuziah speaking to residents during a gathering discussing the Gebeng plant March 20, 2011. — Picture by Choo Choy May

Curtis said in the video that the company chose Malaysia because “we like Malaysia, the infrastructure and most importantly the people.” In a recent telephone interview with The Malaysian Insider, corporate and business development vice president Matthew James said that the company chose Malaysia instead of refining the ore in Australia, due to savings in already available infrastructure and labour.
He said that the plant would need a larger supply of water, natural gas, industrial land and chemicals such as lime and sulphuric and hydrochloric acid — all readily available in Malaysia.
“Each container contains about US$1 million (RM3 million) of rare earth so the transport cost is negligible,” James said.

Concerned Kuantan residents at a briefing organised by the Pahang government. — Picture by Jack Ooi

Curtis also said in an interview with The Malaysian Insider last month that Lynas ruled out the United States and Europe after Australia as costs there too would be prohibitive. “We wanted to go to China, that was the logical thing. But China imposed rare earth export quotas. We asked for permission to bring our material into China and re-export it, exempt from quotas but we couldn’t get it,” Curtis explained of the company’s attempt to base its refinery in the country that currently controls 95 per cent of the rare earth market.
Curtis added that Malaysia also has “the clearest set of regulations and a good engineering workforce.”
The company is hoping to begin operations in September despite the government currently putting the project on ice pending a month-long review by an international panel of experts.
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.