By Debra Chong
KUALA LUMPUR, May 22 – Lynas Corporation chairman Nicholas Curtis has said that bilateral deals are only as good as the willingness of governments to play by their own rules, citing the Australian miner’s frustrations in starting up its Kuantan rare earths plant even as Canberra and Putrajaya inked a free trade agreement (FTA) today.
The Lynas chief was quoted today in a report in The Australian that suggested the miner’s hurdles in starting its controversial plant here was a cautionary tale for other Australian businesses interested in pursuing business deals in Malaysia as a result of the FTA.
The Australian reported the executive chairman of the Sydney-based rare earths miner saying FTAs “are only as good as governments’ willingness in these countries to play by their own rules, to operate according to their own laws”.
Curtis, whose company has sunk A$700 million and seven years into building and getting approvals for his Lynas Advanced Materials Plant (LAMP) in Gebeng, Pahang, told the broadsheet he had thought the last of many levels of approvals had been given by the Atomic Energy Licensing Agency (AELB) in January, but the Malaysian government is withholding the permit for the factory to start operating.
“It’s a 30-40 year commitment to the country at least. You don’t build and then seek environmental approval. We have gained the permissions, spent the money, and are now wondering where the goal posts really are, because they’ve moved,” Curtis told The Australian in a report published today.
The report, titled “Free trade? One mining firm begs to differ”, was published just hours before International Trade and Industry Minister Datuk Seri Mustapa Mohamed ink a 21-chapter deal covering trade, services and investment as well as economic cooperation with Australia’s Industry & Dr Craig Emerson.
“Fear is a powerful political tool, and they say that we are going to irradiate Malaysia. We are asked why we don’t build our factory in Australia instead,” Curtis told the paper.
The newspaper noted that LAMP has been the subject of demonstrations led by PKR MP Fuziah Salleh that have gained considerable traction ahead of the 13th general elections that must be called within the next 10 months and in which the Barisan Nasional (BN) government faces the prospect of defeat for the first time since independence 55 years ago.
The paper reported that Malaysia’s environment and regulatory authorities has given Lynas their approval for LAMP back in 2007 but Prime Minister Datuk Seri Najib Razak has set up a parliamentary committee to review the project.
The Australian reported Curtis saying Lynas had entirely fulfilled the requirements.
He told the paper that Lynas has already employed 350 Malaysians to work at the Gebeng plant, and that the Mount Weld mine is stockpiling its output of concentrate, waiting for the factory to start functioning.
The opposition on environmental grounds is especially frustrating because the plant’s products were parts of the “green supply chain” – as essential elements in catalytic converters and electric cars among other technologies, he was reported saying.
Lynas said last year the first phase of its plant, which was initially slated to fire up in September 2011, will produce rare earth worth RM8 billion annually.
Prices for rare earths, highly sought-after for high-technology products such as smartphones, wind turbines and bombs, have since dipped slightly as the market reacted to record highs resulting from export quotas imposed since 2009 by China, which controls 97 per cent of production.
The AELB had said in January it would approve a TOL, which allows Lynas to operate for an initial period of two years, subject to added conditions including identifying a suitable long-term waste disposal site.
This was despite Lynas insisting it can reprocess its residue, which it says has only very low levels of radiation, into safe commercial products.
Lynas has said the plant would be ready to fire up operations within three weeks of receiving the go-ahead.
It has faced fierce protests over the past year from local residents and opposition politicians who say that the plant will cause radiation pollution despite the company insisting it has met and exceeded local and international safety standards.