Opposition
coalition condemns license for plant, vows to fight
Malaysia’s Atomic Energy Licensing Board
approval Wednesday of a temporary operating license for a contentious rare
earths processing plant in the eastern coastal state of Pahang seems certain to
present the opposition coalition with an emotive environmental issue that they
will use to their best advantage.
The Australian-owned Lynas Malaysia Sdn Bhd
has been negotiating for months with the national government over the project,
which has been largely ready for operation since late 2011. The government,
gun-shy over a previous rare earths plant in the state of Perak which turned
into an environmental disaster in the 1980s, has been reluctant to grant
permission to open the plant.
The issue is sensitive enough that the
government had expected to withhold permission to open the plant until after
projected snap elections set for late 2011 or the first quarter of 2012.
However, the United Malays National Organization-led coalition government
appears likely to put the elections off for considerably longer. Hence they
have allowed the granting of the temporary license.
“The opposition is incensed by this,” a
government source warned in an interview. “You can expect increased anti-Lynas
activity. It is not going to go away.”
Fauziah Salleh, a Kuantan member of parliament
for the opposition Parti Keadilan Rakyat charged in a prepared statement that
the refinery would make “lab rats” of Kuantan residents. Another opposition
figure charged that Lynas would make Pahang a “public toilet.”
To show how the opposition has quickly
marshaled its forces in reaction to the licensing, a group called “Save
Malaysia, Stop Lynas” is expected to march Saturday in Kuala Lumpur in defiance
of the country’s laws against public demonstrations without a permit “as we
believe Lynas is not just a Pahang issue, it's a Malaysian issue.” That ties in
with the opposition’s continuing opposition to the government’s revision of
public assembly rules, called “the Peaceful Assembly Bill 2011,” which was passed
over opposition objections in November because it bans street demonstrations
and requires assemblies, meetings and processions to be held only on designated
compounds.
A Lynas spokesman in Sydney, Australia,
declined to comment to Asia Sentinel on the political aspects of the situation.
“It is a Malaysia domestic political issue,” he said. “The government has
awarded a license, there are terms and conditions that we have met. I would
have thought once something has been granted it can only be taken away for
valid legal reasons.”
However, he said the plant is ready to begin
operations sometime in the June quarter of 2012. He insisted that the plant is
safe, and that its operations are far advanced from the Bukit Merah plant
operated by Mitsubishi Chemical in the mid-1980s. Mitsubishi so far has spent
US$99 million to clean up the site. Eight workers at the plant died of
leukemia, which was tied to the plant’s operation.
The granting of the temporary license,
however, is regarded as unlikely to be reversed unless the political
temperature rises a lot higher. The Lynas spokesman said that the permit that
allows the company to operate the plant is subject to close government
monitoring and gives the government the right to close the facility if it finds
it doesn’t meet strict operating standards. Lynas has agreed to put up a US$50
million deposit with the Malaysian government that it would forfeit if the
plant doesn’t meet standards. It must also within the next 10 months specify a
location for permanent disposal of about 1,000 metric tons per month of
low-level radioactive waste.
The Lynas spokesman also disputed a report
that AkzoNobel, a Dutch chemicals producer, had pulled out of a contract to
supply resins used to glue together fiberglass liners for concrete-walled tanks
to hold the radioactive waste.
The story that AkzoNobel had pulled out
because it couldn’t guarantee the safety of the product has energized
opposition to the plant. However, the Lynas spokesman said the report wasn’t
true, that AkzoNobel was one of several bidders and had not been selected by
Lynas to supply the materials.
The plant is crucial to plans on the part of
Prime Minister Najib Tun Razak to attract foreign direct investment under his
two-year-old 1Malaysia Plan. FDI in 2010 amounted to US$9.7 billion, less than
half the US$20 billion attracted by Myanmar despite its status then as a pariah
state subject to US and European Union sanctions. Total FDI inflows for the
first three quarters of 2011 reached US8.72 billion, meaning that when 2011
totals are in, FDI should surpass the 2010 figure.
However, authorities say FDI could dip again
in 2012 as the Eurozone slips back into recession and the US recovery is
lackluster. Failure to allow the plant to go forward in the face of
environmental and other opposition would likely be a signal to other foreign
investors of the government’s inability to fulfill its investment commitments.
The fight over the plant has implications well
beyond either Malaysia or its warring political parties. It would be the
biggest such processing plant in the world outside of China, which has faced a
wide range of environmental disasters and which has begun to close illegal
mines. Most other countries which produce rare metals stopped because of environmental
concerns, leaving China to produce more than 95 percent of the world's rare
earth metals, crucial for the manufacture of a wide variety of products
including wind turbines, disk drives, cell phones, flat panel displays and many
others.
But that has been at a monumental cost. The
state-owned Xinhua news service reported last year that of 12,523 tailings
ponds from mines, 2,098 exhibited various safety problems. Wang Guozhen, a
former vice president of the government-linked China Nonferrous Engineering and
Research Institute, was quoted as saying some of the environmental damage is so
severe that it may never be possible to clear it up.
When China cut back on exports in an attempt
to slow production to clean up the country’s environment, the World Trade
Organization ruled that the country’s restrictions had violated global trading
rules. The WTO ruled that drove up prices and gave domestic firms an unfair
competitive advantage in raw materials including bauxite, coke, magnesium and
zinc, according to Reuters. While the 17 rare elements used in the high-tech
sectors weren’t included, Reuters reported, that led to hope that China would
scrap export limits on those elements as well.
Lynas, however, does not intend to mind rare
earths minerals in Malaysia. It intends to import ores from Mount Weld in
Western Australia, said to be the richest rare earth deposit on the planet. The
company plans to truck the ore to Fremantle, send it by containership to
Kuantan, then process it at the Pahang facility before exporting the refined
materials. The company said it chose Malaysia to process the materials because
labor and other costs are cheaper than they are in Australia.
The fact that the company hasn’t figured out
how to store the waste yet has grown into a major concern. Some 700,000 people
live within a 30-km radius of the plant. Opponents also charge raised concerns
over the Malaysian government’s ability to monitor the plant because of the
history of the Bukit Merah plant.
However, the Lynas spokesman said, the
progress in technology has been such that the process is now environmentally
safe.
Asia Sentinel
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