By Datuk Seri Mustapa Mohamed, Minister of International Trade and Industry
KUALA LUMPUR, June 19 (Bernama) -- On June 4, the International Panel of
Independent Experts appointed to review the Lynas project returned to Vienna to
complete its work. The panel had been in Malaysia to study safety aspects of the
proposed rare earth processing plant in Gebeng, Pahang, and will submit its
report to the government at the end of the month.
This completes one phase of a decision-making process that has important
implications for the government and the nation. Public safety will not be
compromised by this 'People’s First' Government.
Let me explain.
The economic considerations:
Lynas Corporation Ltd is an Australian company which was given a licence in
January 2008 to set up a manufacturing plant in Pahang. As a foreign investor,
the company is no different from other foreign investors here. They come to our
shores because they think they can earn a decent return on their investment, and
because they believe they will be treated fairly, according to established rules
We welcome foreign investments because they help us to modernise and grow
our economy. Not any investment, of course, but the right type of investment.
When we evaluate an investment proposal, we ask questions like: What
benefits will it bring? Will there be spin-offs that can benefit other sectors
of the economy? Will it create jobs? What kind of jobs? Will there be any
transfer of technology or skills? And so on.
These are standard factors we take into account when evaluating a foreign
investment proposal. A comprehensive due diligence exercise will be undertaken
for this purpose, and a 'yes' or 'no' decision will be made, depending on its
Issues of governance:
When the Lynas investment proposal was first submitted to the Government in
2006, however, it raised questions that went beyond the ambit of these economic
considerations. Issues of public safety and health, and environment were also
The Government was well aware then that the rare earth industry was
associated with health and safety issues, especially after the experience of the
Asian Rare Earth (ARE) project in Perak in the early nineties. So, it was
pertinent to ask what impact the Lynas project would have on public health. How
will it affect the environment and the livelihood of people living in its
vicinity? Are these risks measurable, and within acceptable limits? Do we have
the rules, regulations and institutional framework to monitor and manage these
Critical to the Government’s decision was the fact that the authorities had,
by then, learnt from the ARE experience and had a better understanding of how to
manage radiological risks. By 2008, the rules and regulations governing such
activities had been revised and brought up to international standards. A repeat
of ARE was not possible under the new regulatory regime.
This explains why, when Lynas was granted its manufacturing licence, the
company was specifically required to comply with the safety standards and good
practices established by the Atomic Energy Licensing Board (AELB), the regulator
for the Atomic Energy Licensing Act 1984, and the Department of Environment
(DOE), the regulator for the Environmental Quality Act 1974.
Among other things, these standards define the amount of radiation exposure
that is considered dangerous to workers, the public and the environment. These
standards apply to all phases of the Lynas project: construction,
pre-operations, operations, transportation, waste management, decommissioning
A key feature of the work procedure involved is the staged-approval process
Lynas has to undergo. For example, the company must meet safety standards
imposed at the construction phase before it can proceed to engage in
pre-operations activities. And it cannot do the latter without first satisfying
the AELB and DOE that the safety standards applicable in this next phase can be
This approval process, therefore, ensures that the safety standards imposed
by the regulatory bodies cannot be bypassed, postponed or avoided. Monitoring is
continuously carried out to ensure they are adhered to.
At this point in time, Lynas has not applied for, nor has it received
approval, to proceed to the pre-operations stage.
Independent Panel of International Experts:
The Lynas project was discussed at public briefings in Kuantan and in
Parliament in 2009, but became a topic of more extensive debate only after the
Fukushima incident on March 11, this year.
It soon became clear that some people living in the vicinity of the Lynas
site believed the project would pose unacceptable health and safety risks to
human life and the environment. In the views of some, at least, the project
should be terminated.
This, despite assurances by AELB and DOE that Lynas had, to date, complied
with all safety standards required of it.
While the government remained confident in the integrity of the decisions
taken by the regulatory bodies, it felt it owed the public, and the people of
Kuantan in particular, a duty to ensure that their health and safety would not
be compromised. This was, and remains, the government’s highest priority, and
overrides all other considerations.
Accordingly, on April 22, I announced the government’s decision to invite
the International Atomic Energy Agency (IAEA) to appoint an independent panel of
international experts to study all safety issues related to the Lynas project.
The IAEA nominated a nine-member panel to do the job. The panel consisted of
a leader and eight members. All are world-renowned experts on issues of
radiological safety. Four members are from the IAEA itself, and the rest are
from the Netherlands, Canada, India, United Kingdom and Italy. No one from
Australia, China or Malaysia was invited to be a panel member to avoid any
possibility of a conflict of interest.
The panel began its work immediately and visited Malaysia from May 29 to
June 4, to meet members of the public, representatives of Lynas, government
officials and visit the Lynas site.
The government also made elaborate arrangements to ensure that anyone who
wanted to make representations to the expert panel could do so either in person
or in writing. Public announcements outlining these arrangements were made in
all mainstream newspapers in Bahasa Malaysia, English, Chinese and Tamil.
In the event, representatives from residents’ associations, NGOs, community
organisations, political parties and professional bodies did take advantage of
the opportunity to meet the expert panel and make their submissions at meetings
held in Kuantan and Putrajaya. Among the political parties which participated in
the sessions were UMNO, MCA, PKR, PAS and DAP. Of course, YB Fuziah Salleh, the
MP for Kuantan, was invited and she used the opportunity to submit her case to
the expert panel.
The panel has undertaken to submit its findings and recommendations to the
government by the end of this month, and the government will make the report
Where do we go from here?
How will the Lynas issue be resolved?
The government’s decision on the future of the project will be guided by a
few fundamentals. First, the health and safety of the rakyat is the No. 1
priority. This overrides all other considerations, and any decision on Lynas
will not be made at its expense.
Second, any decision taken will be based on facts, not emotion or political
considerations. The IAEA-appointed expert panel will determine the facts in this
case, and the government’s decisions will be guided by its findings and
Thirdly, the government continues to welcome constructive public discussion
of this issue, and views it as an important component of the democratic process.
On its part, the government has sought to contribute to this process by making
sure that anyone who wants to make a submission to the expert panel is able to
do so, either in person or in writing.
Fourthly, the government will continue to act transparently in its dealings
with the public on this issue. All public information and reports related to the
Lynas project are accessible through relevant web links.
These guidelines will ensure integrity in the government’s decision-making
and in the decisions that will finally have to be made.
There are about 10 days to go before the expert panel submits its report.
Until then, it is appropriate that all parties refrain from making comments that
may pre-judge the panel’s findings.
I think investors will welcome the fact that this government makes its
decisions based on facts and reason, and does not act arbitrarily.
This incident also highlights the need for investors to be responsible
corporate citizens in their host country. They should adhere to standards of
conduct and governance which are not in any way inferior to those practised in
their home country. I think these are legitimate expectations, and no
enlightened investor will have any quarrel with them.
MM SHY GR AO