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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

and regulations.

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

and remediation.

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.



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