nick curtis vows to fight on

Lynas chief vows to fight on by: SARAH-JANE TASKER From: The Australian December 15, 2012 12:00AM

Managing director Nick Curtis blames social media for many of the problems Lynas has encountered in Malaysia. Picture: Dan Himbrechts Source: The Australian
WHEN Lynas chief Nick Curtis kicked off his dream of developing an alternative rare-earths supplier to dominant China 12 years ago, he thought his great new venture would be in operation in less than four years.
But the rise of social media, the Japanese nuclear disaster and a nervous Malaysian government created a series of headwinds that threatened to derail his plans.

"Little did we know how long and hard it would be to build a processing plant in Malaysia," he tells The Weekend Australian.

"I underestimated the power of social media. Between 2005 (and) 2010 there was a major change in technology around the world and informal, non-accountable communication channels boomed. We underestimated the extent to which that could be used to subvert the message of the government."

Curtis had first set his sights on building a processing plant in China, to receive rare-earths material from the company's Mount Weld mine in Western Australia, but a move by the economic powerhouse to enforce quotas on exporting the product led him to search for a new home.

Abu Dhabi and Malaysia made it on to the shortlist in the 2006 search and it was the east coast of the Southeast Asian country that Curtis firmly believed was the best location.

"They had a very stable government, clear regulatory environment, and we perceived there was less political risk in Malaysia than other places," Curtis recalls.

"We'd talked to the government and regulators and they welcomed us with open arms to the point where we got a 12-year tax holiday."

While the attention on Lynas during the past 18 months has focused on the vocal opposition to the processing plant in the Gebeng industrial zone in Pahang, it hasn't been the only battle the company has had to fight since Curtis took the reins 12 years ago.

The company almost went under after the global financial crisis and the Chinese swooped in with a lifeline in 2009 that would have seen China Nonferrous Metals take control of Lynas. But Australia's Foreign Investment Review Board put the brakes on that and Lynas had to turn to the market to raise about $285 million for its project.

With a banking background at Macquarie and having worked for the Chinese government for five years, Curtis isn't one to walk away from a challenge, but when he settled on Malaysia to fulfil his dream of becoming an alternative rare-earths supplier to China, he couldn't have foreseen the endless bumps in the road.

Curtis says his stubborn nature has kept him focused as the hurdles keep rising.

"There is only one way forward, and that's forward," he says. "Lynas is a single-purpose company with a single vision. Failure is not something we contemplate . . . we are not a BHP that can shut this down and go to other operations."

When he left Macquarie in the mid-1990s, Curtis headed to China to work for a state-owned enterprise focused on developing a goldmine in the Asian giant. During his time in the resource-hungry country he started to learn about rare earths, which sparked an interest he decided to pursue.

"I figured with every computer in the world needing rare earths this would be a growth area, and with China being the only supplier in the world, that is unsustainable," Curtis says.

"I thought if we could find an integrated supply chain from mine through to the end product outside of China, then we'll capture a significant portion of the world market."

The Mount Weld asset had been sitting in the Rio Tinto stable for about 10 years when the diversified miner decided it wasn't core and gave an option on the project to what was then Lynas Gold.

Lynas had a $12m market capitalisation in 2001 when Curtis moved on the junior and took a 20 per cent stake in the company, which led to a friendly transaction that resulted in full control of the vehicle he would use to drive his rare-earths vision.

Rio had received permission to build a plant in Australia to process rare earths from Mount Weld and when Curtis took control of Lynas, he also had secured permission to build a plant in China. The high costs in Australia and the limit on exports out of China led to Malaysia. The country had a controversial history with rare earths, but Curtis was confident he could address the concerns.

The Malaysian community fear about radiation from rare earths goes back to 1992 and a Mitsubishi project called Asian Rare Earth in Bukit Merah.

Curtis says the material from Lynas is completely different to what was processed at the Mitsubishi plant, which had used waste from tin mining as its raw material. That material contained high levels of thorium, a source of high levels of radiation, which ultimately led to that plant's closure.

"There is a mythology about rare earths as having been damaging because of that Bukit Merah plant," Curtis says. "Today the regulations in Malaysia and everywhere in the world would not allow that plant to be built."

He was aware of the fallout from the Mitsubishi project but regulations were tightened in Malaysia following the controversy in the early 1990s, and an Atomic Energy Licensing Board was created.

Lynas went through the regulatory process and its plant was permitted. Although there was what Curtis describes as "noise" in 2007-08 when the company was going through the approvals process, it subsequently quietened. But then Japan's tsunami last year caused the nuclear disaster at Fukushima, and the noise reignited.

"When Fukushima happened, the opposition in (Pahang's capital) Kuantan, seeking political advantage, took out the Bukit Merah story, revived it and said this is what rare earths can do, look at what is happening in Fukushima -- and they created intense fear in the community," Curtis says.

"That took off like wildfire, particularly through social media, which is hard to contain.

"Suddenly the government and ourselves had a storm on our hands and the opposition was buoyed by the storm and kept feeding it."

Curtis says that not only had he never dealt with a social media issue before -- he still refuses to have a Twitter account -- neither had the Malaysian government.

The Save Malaysia Stop Lynas group has been the main driver of opposition to the plant and has lodged various legal challenges to shut the plant. With an election expected in the first half of next year, Curtis expects he will have to keep battling the "noise" during the campaign period. He wants to make Lynas a "boring, low-profile business", as he knows the attention is affecting the share price and investors have had to remain patient.

"The share price will reflect the value of the company when we are producing, making money, and it's a non-controversial business because we've established it's safe and the community is fully accepting of it," he says.

One of the toughest jobs for Curtis has been to translate all the facts and figures about the plant to the community, and he acknowledges that in the beginning the company didn't understand the level of fear.

He says the company has since gone above and beyond to ensure the local population isn't anxious about the project, and in this connection Lynas has held 15,000 community consultations.

"Our project stands the scrutiny of any sensible, objective reviewer," he says.

"We've been through six different independent inquiries. But facts aren't the issue here, community perception is the issue."

The head of the rare-earths company says he is comfortable that the plant is safe and that it will be good for the community.

"This is an industry of the 21st century. We want to be the global leader in rare earths for a sustainable future. We think the technology of tomorrow is part of the solution (to) the environmental problems of today."