The US-China trade war has fuelled American fears that Beijing may take advantage of its position as the world’s primary producer of rare earths, and consequently a rush has begun for alternative sources.
The country’s new Pakatan Harapan government has threatened to discontinue the operating licence of Australian miner Lynas Corporation unless it adheres to strict conditions for its rare earth refinery in Kuantan, which it has run since 2012. These include orders to remove and dispose of more than 451,000 tonnes of water leach purification residue, a radioactive substance produced in the mining process. The firm has been given a September deadline.
Lynas has responded by threatening legal action against the Malaysian government, but Yeo Bee Yin, the minister for energy, science, technology, the environment and climate change, has insisted the restrictions on the facility are within the nation’s sovereign rights.
“Lynas cannot come and dictate how the rule of law is applied … They cannot ask for exemptions as if it’s their right,” she told Malaysian media in December.
Her ministry has stood firm on policies aimed at protecting the environment, amid a push to meet renewable energy goals and slash the import and use of plastics.
The move against Lynas presents the company with a hurdle in the race to fill what it describes as a “critical supply chain gap” for Western manufacturers, which rely on rare earths to produce a range of hi-tech products from smartphones to military weapons.
The firm recently announced a joint venture with Texas-based Blue Line Mining to set up a plant in the United States that will be the only large-scale facility for rare earth production outside China, which produces about 90 per cent of global supply.
“Rare earth separation capacity has been absent from the United States for several years,” Lynas said in a recent statement. It added the deal with Blue Line would ensure American companies had continued access to rare earths through a US-based source.
Lynas’ Malaysian business said the agreement would have no effect on its local operations.
“Rare earths are an important strategic resource, and are also non-renewable,” Xi said.
“We must strengthen technological innovation … step up environmental protection, and achieve sustainable development,” he said.
The lawmaker in 2011 founded the Save Malaysia Stop Lynas movement, which organised protests against plans for the plant.
His ascension to elected office has not caused him to turn away from his anti-Lynas activism. In March he accused the Australian High Commissioner to Malaysia of “coloniser behaviour” after the diplomat said Kuala Lumpur was close to renewing Lynas’ licence.
Australia has refused to accept waste from the firm into its territory, with Western Australian mines minister Bill Johnston telling The Australian newspaper that the best place for contaminated material was “where it comes from, which in this case would be in the mine void. But we are not going to take mine waste back from overseas”.
The US-China trade war, said the current chairman of Save Malaysia Stop Lynas, Tan Bun Teet, had put pressure on Lynas to find solutions in a short space of time. But in February, Lynas auditors flagged a material risk to the business after the firm said it would not be able to export the water leach purification residue by September 2, the date its licence expires.
Australian conglomerate Wesfarmers recently attempted a US$1.1 billion takeover bid for the company as its shares hover at an 18-month low and creditors anxiously eye the miner’s finances.
“This memorandum of understanding signed with Blue Line is just a public relations stunt. Their goal is to tell the government of Malaysia that its demand isn’t reasonable, and to raise the [share] price,” Tan said.
His take on the situation is a popular one in Malaysia. MP Fuziah said Lynas had been keeping silent on its waste generation issues while “continuing with its public relations exercises”, and the mining company has to be held accountable.
She said: “Come September, if the issue of waste management remains unresolved, Lynas’ operating licence must not be renewed, period.”