Lynas Fights Back Against Rare Earth Plant Criticism

Lynas Corporation Ltd. (ASX:LYC), a company focused on creating a fully-integrated source of rare earth from mine through to market, has struck back at the increasing political, public, and media pressure that has been directed toward its project in Kuantan, Malaysia.

The rare earth element (REE) project gained global attention in February when over 2,000 local residents held a demonstration in an attempt to halt construction. Protesters in the city of Kuantan claimed there is a risk of dangerous radiation from the plant – something that few believe the Malaysian government would be able to cope with if any form of leakage were to occur.

Enough is enough

However, it seems that the media backlash has finally reached boiling point. Lynas and its subsidiary, Lynas Malaysia Sdn Bhd, confirmed that next month the Malaysian High Court will hear an injunction application that the company has filed against media outlet Free Malaysia Today (FMT) and protest group Save Malaysia Stop Lynas (SMSL).

Lynas filed the injunction in an attempt to prohibit the two parties from further publishing what it deems defamatory articles relating to the company and its Lynas Advanced Materials Plant (LAMP) facility. It is also seeking general and aggravated damages, as well as costs.

In addition, the company has lodged separate defamation proceedings in the Malaysian legal system against both parties on account of defamatory articles published on their online news portal and blog site, respectively.

The LAMP has been subject to controversy ever since the Atomic Energy Licensing Board (AELB) approved a two-year temporary operating licence (TOL) earlier this year. The TOL was challenged by a group of individuals who applied to the High Court for a judicial review of the decision. This application was denied on the basis that an appeal to the Minister of Science, Technology and Innovation was already in progress.

Many within the industry felt that confirmation of the proposed facility’s safety from the AELB, Department of Environment, and the Department of Occupational Safety and Health might quash any public criticism; however, the media backlash has been significant.

Objections without basis

In a further attempt to ease fears, a radiology safety adviser for Lynas Malaysia maintained that objections to the plant, particularly from the opposition, are without basis as they do not come from experts and are without substantiated evidence. Professor Ismail Bahari, who is a lecturer at Universiti Kebangsaan Malaysia, noted that while a low level of radiation will be emitted from the facility, it will not have an adverse impact on local residents.

“Admittedly there is radiation, but the amount is minimal and not harmful. Every worker will adhere to safe operation procedures like in any other industries. We have taken into account public and environmental concerns. The person who led the allegations never came to Lynas, never suggested or showed to Lynas what the real issue is,” said Bahari, adding, “[e]ach time Lynas comes out (with an explanation), we show the proof, we give handouts to the public and also the opposition.”

“They can read and challenge us. But they have never challenged us on all the information provided,” he said.

Accusations mount

Protests gathered momentum in 2011 after local media reported that the company was taking shortcuts on safety procedures, which led to fears that radioactive run-off from waste material at the plant could potentially seep into local water systems. These allegations were immediately denied by Lynas.

According to a recent company presentation, the LAMP facility – already eight months behind schedule – is forecast to be one of the main challengers of China’s dominance in the REE sector, with its first phase already 98 percent complete. It should supply approximately 11,000 tonnes of REEs in its first year, with this figure eventually rising to 22,000 tonnes. The first kiln feed is expected during the second quarter of 2012.

“Safest rare earths plant in the world”

Last week the company expressed optimism for the project when it announced that it is on track to commence production next month after an official in the country called it “the safest rare earths plant in the world.” Pol Le Roux, Vice President of sales and marketing for Lynas, said he believes a public hearing set for May 21 in Kuala Lumpur will be the final step in the process.

“We have no knowledge of any other procedure, hence we feel comfortable – reasonably comfortable, because we have learned in the last six months that you have to be careful – that we should get it by June this year,” he said.

The hearing on the injunction application against FMT will be heard on June 12, while the case against SMSL is set to be heard on June 19.

 

Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.