Australia's man in Malaysia says Lynas call was big test

Brad ThompsonReporter

Aug 19, 2019 — 12.00am

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Australia’s high commissioner to Malaysia says the Mahathir Mohamad-led nation has passed a big test in the eyes of international investors by granting Lynas Corporation a conditional six-month extension on its operating licence despite protests against the rare earths producer.

High commissioner Andrew Goledzinowski said the Malaysia government, led by 94-year-old Dr Mahathir, had improved its standing with the global investment community by basing the Lynas decision on science, not the politics surrounding the company's storage of low-level radioactive waste.

“Evidence-based decision-making is practically the definition of good economic governance,” he said.

“In the eyes of the international investment community, it is what separates safe investment destinations from risky ones.

“Given the international attention that the Lynas issue has attracted, this pro-science decision is a green light, signalling that Malaysia is a safe destination for serious investment in advanced manufacturing.

"Because of the special properties of rare earths, the ongoing presence of Lynas puts Malaysia at the heart of a global supply chain on which a variety of high-tech, low-emission industries depend."

RELA

Lynas’ powerful Japanese backers as well as Australia, the United States and European nations have been monitoring the licence renewal controversy closely given recent Chinese threats to cut off supply of rare earths as part of its trade war with the US.

Lynas is the only significant source outside China for rare earths materials increasingly important in electronics, electric vehicles and in the military. China is the only country in the world with capacity to separate some heavy rare earths materials that Australian Defence Minister Linda Reynolds has said are essential in defence applications.

Writing in The Star newspaper in Malaysia, Mr Goledzinowski threw down the gauntlet to Environment Minister and fierce Lynas critic Yeo Bee Yin to visit the company’s $1 billion plant at Kuantan where it processes rare earths mined at Mount Weld in Western Australia.

Mr Goledzinowski said he hoped Ms Yeo would visit the plant so she could “see it for herself, speak to the Malaysian engineers and scientists who run it, and understand its potential for Malaysia”.

Ms Yeo lobbied the West Australian and Australian governments to allow Lynas to ship waste stockpiled at Kuantan into Australia but the request was refused in keeping with international precedents under which the country where processing takes place is responsible for residue management.

Lynas faced more protests in Kuantan on Sunday, with the Save Malaysia, Stop Lynas group claiming nowhere in the country was safe for a permanent disposal facility (PDF) for the company's stockpiled waste.

Lynas chief executive Amanda Lacaze has previously threatened to take legal action against critics making outrageous claims against the company, which has had its operations cleared several times, including by a government-appointed independent scientific panel that found the operations low risk and well managed.

Malaysian regulators issued a statement late on Thursday saying the Lynas licence had been extended subject to various conditions, including identifying specific sites for the PDF and submitting a PDF construction, funding and operations plan with six months.

Lynas was given four years to build a cracking and leaching (C&L) plant in WA to remove radioactivity from rare earths materials before they are sent to Kuantan.

It was ordered to cease all research on using waste in fertiliser and to instead redirect 0.5 per cent of its revenue to the Malaysian government as a security on building the C&P plant, expected to eat up the lion's share of a $500 million capital works program announced by the company in May.

Ms Lacaze said on Friday she did not see the ban of fertiliser research as "necessarily being the best approach" but welcomed the six-month licence extension and expressed confidence Lynas could meet all of the conditions.

It remains unclear what proportion, if any, of a $US42 million bond held by the Malaysian regulator for site rehabilitation Lynas can use to meet PDF costs.

The company will also have to accelerate its Lynas 2025 plans to shift C&L to one of two sites under consideration in WA – the Mount Weld mine or an industrial park at Kalgoorlie – to satisfy Malaysia.

Ms Lacaze said on Friday that the licence extension did not deal with plans to increase production at Kuantan and admitted Lynas faced production challenges this year.

However, she said Lynas would produce in sufficient volumes to meet market demand and continue its strategy of not making sales into China while demand there remained soft.

last month Lynas said it was limiting sales of key permanent magnet ingredients neodymium and praseodymium (NdPr) to strategic customers and building up a small inventory in response to softer prices.
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