Malaysia: Rare Earths proposal meets major opposition

Published by MAC on 2012-02-07
Source: New York Times, PlanetArk

Radiation danger may sink parlous project

Rare Earth Metal Refinery Nears Approval

By Keith Bradsher

The New York Times

31 January 2012

KUANTAN, Malaysia - The world's largest refinery for rare earth metals has risen out of the red mud of a coastal swamp here and could soon obtain permission to operate a step that would help break China's near monopoly on rare earths but also worsen an emerging glut of some of these strategic minerals.

China's suspension of exports of rare earths to Japan during a territorial dispute in 2010 fed a bubble in the market that drove prices up 30-fold by last summer. But prices have slumped by up to three-fifths since then for some of the 17 rare earth elements, which are vital to smartphones, wind turbines and other components of the modern economy. The approaching completion of the Malaysian refinery, with the capacity to meet a fifth of the worlds demand, has contributed to the plunge.

The progress toward opening the plant has occurred despite street demonstrations here over radiation worries, regulatory challenges and the withdrawal of a major equipment supplier worried about the safety of the refinery, which is being built by Lynas, an Australian company.

Raja Dato Abdul Aziz bin Raja Adnan, the director general of the Malaysian Atomic Energy Licensing Board, said by telephone Monday evening that the board had discussed at a closed-door meeting earlier in the day whether to grant an initial operating license of up to two years for the refinery, which is a series of more than a dozen sprawling buildings connected by a labyrinth of pipes. He declined to say what the board had decided, but added that an announcement would be made sooner rather than later.

Raja Adnan had said in a phone interview last week that his personal view was that it would be useful to issue the license and then carefully monitor radiation levels at the refinery and in its waste, because he did not trust pilot-scale models designed to predict how the refinery would operate.

We still have the right to stop them and suspend and terminate if the refinery is not running safely, he said. The board also has no obligation to notify the public of its decision, and may not even notify Lynas immediately either, he said.

A delay before announcing the boards decision gives the country's political leaders time to consider whether to postpone or overrule the issuance of a license. But there has been little sign they will do so, as the project is a cornerstone of Malaysias economic development plan.

Fuziah Salleh, an opposition-party lawmaker from Kuantan who has fought the refinery here, said that opponents of the project planned to file a lawsuit in the coming weeks in a last bid to stop it. Critics filed more than 1,000 objections to the project on Thursday, the last day for public comments, partly in the hope that the board would delay action to read them.

Despite the drop in prices for rare earths in the second half of last year, they remain several times higher than the long-term levels that prevailed until China began severely constricting exports in 2009. With China sharply reducing exports again last year as it closed refineries permanently or began refitting them with better environmental equipment, the underlying economics for the Malaysian refinery remain strong.

Lynas has been trying for several years to find a site for the permanent disposal of the roughly 20,000 tons a year of low-level radioactive waste that will be produced, and is still struggling to do so.

The International Atomic Energy Agency in Vienna recommended last June that a long-term disposal plan be approved by regulators before the refinery starts operations. Lynas now says that it has met this goal with a plan that calls for storing up to 20 years of the refinerys production waste in pits lined with plastic and clay at the refinery, plus a commitment to find a site for a permanent repository and build it. Raja Adnan said that the Malaysian board would require that Lynas meet all of the energy agency's recommendations, but he declined to say whether the companys waste disposal plan complied.

After sending a team here last spring at the request of the Malaysian government, the agency also recommended that the project include greater public disclosure and communication.

Malaysian regulators and Lynas put three printed copies of the revised project plan on public view for two weeks this month at four locations in Malaysia, where they could be viewed on request for only one hour at a time. Volunteers ended up taking turns over 56 hours to copy the entire document by hand, then retyped the information at home to recreate the full document, Mrs. Salleh said.

Nicholas Curtis, the chairman of Lynas, said that the company was using proved Chinese technology, but had paid special attention to improving its safety and environmental performance. We simply took Chinese processes, scaled them up and cleaned them up, Mr. Curtis said in a speech in Hong Kong in November.

The authorities in China have also cracked down on the industry in recent months after numerous toxic leaks and some radioactive leaks contaminated thousands of acres over the last two decades.

Lynas announced last Tuesday that a heavy monsoon and some engineering work had delayed completion of the refinery again, and that it would be ready in the second quarter of this year. It was originally scheduled to begin production last September.

Lynas plans to mine ore from the Australian desert and concentrate it there, removing dirt but leaving the radioactive contaminants still chemically bound to the rare earth metals. The concentrated ore will then be shipped here, and the rare earth metals will be separated from the radioactive material by using powerful acids at high temperatures.

One setback for the Lynas project is that a crucial contractor, AkzoNobel, pulled out this autumn, according to engineers here and internal company e-mails. The Dutch chemicals multinational had a contract to supply important resins.

The resins are supposed to glue together dozens of fiberglass liners for concrete-walled tanks up to the size of double-decker buses. Hundreds of tons of rare earths with low levels of radioactive contamination will be mixed in the lined tanks with extremely corrosive acids at more than 200 degrees Fahrenheit.

The corrosiveness of acids increases steeply at high temperatures, which makes acids ideal for dissolving ore but difficult to handle.

AkzoNobel has long specialized in making some of the most esoteric resins for the mining industry. It uses a secret chemical formula to help the resins hold together fiberglass even under challenging combinations of heat and corrosiveness. The company said last spring that it would supply chemicals for the Lynas project only if it were certain that it would be safe.

Engineers involved in the project said, and internal e-mails showed, that AkzoNobel withdrew from supplying the chemicals after it was told that the fiberglass liners would be installed in concrete-walled tanks that have a problem with rising dampness in the floors and cracks in the walls. AkzoNobel had been in discussions about the problem of rising dampness, but only became aware of the cracks this autumn, according to the engineers and the memos.

The engineers said they felt a professional duty to voice their safety concerns, but insisted on anonymity to avoid the risk of becoming industry outcasts.

In an e-mail, AkzoNobel said that it was no longer supplying the project, but gave only a brief explanation. Due to changes in the project specification, AkzoNobel would only recommend the use of its linings on the project subject to the successful results of longer-term testing, the company said. That testing cannot be completed within the current project time scale.

Mr. Curtis, the chairman of Lynas, confirmed that AkzoNobel had pulled out of the project but he insisted that it was not for safety reasons. He declined to elaborate but said that Lynas had found a new supplier for the resins, which he declined to identify.

Engineers involved in the project said that Lynas was building costlier steel-walled tanks for a second phase of the factory, which would avoid the need for concrete-walled tanks with fiberglass liners. Mr. Curtis denied this, and said that all of the separation tanks and piping at the factory are safe and meet international and Malaysian standards.

They are appropriately engineered, he said in an interview.

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Malaysian Opposition Says Would Scrap Rare Earths Plant

By Anuradha Raghu

PlanetArk

31 January 2012

Malaysia's political opposition has vowed to scrap a controversial $200 million rare-earths processing plant being built by Australia's Lynas Corp if it wins national elections expected to be called within months.

The plant, in Malaysia's east, aims to weaken China's monopoly on the global supply of the metals, which are used in a range of products from flat screens to iPhones and energy-efficient light bulbs. It is also backed by Japanese investors keen to see the development of alternative supplies.

"The opposition will put a stop to the plant," Fuziah Salleh, an opposition member of parliament for Kuantan where the plant is being built, told Reuters on Monday.

"We are very clear about our position with regards to sustainable development. And Lynas is definitely not what we categorize as sustainable development."

The opposition is backing some residents and green groups which have voiced fears over radioactivity from thorium waste from the plant, though Lynas says this will be extracted and kept in a facility that meets world standards for safe storage.

The opposition is seen as unlikely to win a parliamentary majority in the upcoming elections, but its shock gains four years ago mean a victory is not out of the question.

Its strong stance against the plant adds to uncertainty over the project as Lynas and its investors await a decision by Malaysian authorities as early as Monday on its application for a pre-operating license to begin commissioning the plant.

Malaysia's Atomic Energy Licensing Board confirmed it was discussing the Lynas case, but its director general, Raja Abdul Aziz Raja Adnan, told Reuters it was not clear if a decision would be announced on Monday.

Government officials said the final decision would likely be made by Prime Minister Najib Razak and his cabinet next week.

The Malaysian plant is to process rare earths mined in Australia at Lynas' Mount Weld project. The operation is key to breaking China's grip on the supply of rare earths metals, crucial in several green products such as hybrid cars.

Japan is counting on Lynas to supply 8,500 tonnes a year of rare earths by early 2013 to curb its reliance on China, under a deal involving trading house Sojitz Corp and state-run Japan Oil, Gas and Metals National Corp.

The Japanese came to Lynas's rescue in 2010 with $325 million in funding after the Australian government balked at approving a Chinese bid for a majority stake in the company.

Lynas has also lined up Germany's BASF as a customer and has plans to form a joint venture with Siemens AG to make magnets for wind turbines using rare earths products from the Malaysian plant.

Lynas shares rose 1.95 percent to A$1.31 on Monday.

Wary of Voters

Opposition leader Anwar Ibrahim has also spoken out against the plant, saying he would scrap it if his disparate three-party alliance wins the election. Protests by local residents during construction of the plant prompted an investigation by the International Atomic Energy Agency (IAEA).

Lynas received a favorable report from the IAEA but was told to provide a long-term waste management and safety plan.

It says that its plant is not comparable at all to a rare-earths plant that was shut by a unit of Mitsubishi Chemicals in Malaysia in 1992, after residents there blamed the plant for birth defects and a high rate of leukemia cases.

Prime Minister Najib wants more foreign investment but is wary of sparking voter anger after his ruling coalition suffered record losses in 2008 polls.

Opposition politician Fuziah said Lynas' plan for managing the radioactive waste was "shoddy and full of holes." She said it had yet to identify a permanent disposal site for the waste that would not be a risk to the environment or public health.

"Lynas claims that they are for green technology because rare earths is used in green technology," Fuziah told Reuters. "There's nothing green about a rare earth refinery," she added.