Malaysian rare-earth anger links up with
poll reform calls By Simon
Roughneen
BANGKOK - With Western countries
and Japan seeking to get around China's domination
of the crucial but mis-named "rare earths" sector,
a potentially game-changing processing site slated
for Malaysia looks set to become a major election
issue as that country gears up to vote.
Opposition politicians and local activists
from Kuantan - where Australia's Lynas Corp hopes
to build a processing plant for rare earth
minerals mined in Australia - are protesting
against the project. The plant will provide "a
crucial link in developing a non-Chinese supply of
rare earth metals", according to Yaron Voronas of
the Technology and Rare Earths Center, an online
forum for the industry.
The 17 materials,
which are not in fact "rare", but are difficult to
mine in commercially
viable amounts, are growing in economic and
strategic importance because they are a key
component in high-tech devices such as mobile
phones and computers, as well as military hardware
such as night-vision goggles and guided missiles.
Despite having only around 35% of estimated global
rare earth deposits, China currently supplies
approximately 95% of the global market - as mining
and processing in Western countries has been
largely mothballed over environmental concerns.
Those same concerns have animated protests
against the proposed Malaysian site, which awaits
the granting of a Temporary Operating Licence from
the Malaysian Atomic Energy Licensing Board,
initially approved in February but postponed
pending an appeal by locals and activists who have
come out against the project.
The fracas
looks set to be entwined in Malaysia's fractious
party politics as speculation grows that
Malaysia's Prime Minister Najib Razak will call
national parliamentary elections soon, with
whispers about an early June vote to coincide with
school holidays. In the meantime,
opposition-linked activists will stage renewed
public demonstrations on April 28, after the
findings of a parliamentary committee set up to
assess electoral reform options were dismissed as
"flawed" by opposition leader Anwar Ibrahim.
Anwar hopes to make history by leading his
opposition coalition to victory in the elections,
an outcome that would mean a change of government
away from the United Malays National Organisation
(UMNO)-led administrations that have ruled the
country continuously since Malaysia's 1957
independence from Great Britain.
The
opposition made gains in the last 2008 elections,
but hopes of an outright win are stymied, they
feel, by a rigged electoral system. After tens of
thousands of Malaysians protested in Kuala Lumpur
last July, seeking changes to how the country
stages elections, the parliamentary committee
recently issued 22 recommendations, including
suggestions that the Election Commission operate
separately from government and that the required
election campaign period be extended to a
still-short 10 days, up from the current seven.
The government is not bound to implement
the committee recommendations, and electoral
reform campaign leader Ambiga Sreenavasan told
Asia Times Online that "there were recommendations
that we agreed with and some that we did not".
The Kuantan rare-earths plant is getting
caught up in the pre-election jostling. Lynas, for
its part, says that the project "is safe for its
employees, surrounding communities and the
surrounding environment". In an email to Asia
Times Online, a company spokesperson cited the
International Atomic Energy Agency (IAEA) view
"that Malaysia's laws and regulations regarding
radiation safety are 'comprehensive' and 'conform
to IAEA standards'".
Anti-Lynas
campaigners Himpunan Hijau were contacted for
comment by Asia Times Online, but did not respond
by time of writing. However Ambiga Sreenavasan,
who heads a Malaysian electoral reform campaign
known as Bersih (or "clean") confirmed to Asia
Times Online that the anti-Lynas group will join
the upcoming April 28 Bersih rally, saying "their
cause is as urgent as ours". However, the Lynas
spokesperson said that the proposed plant "has
been subjected to a deliberate, highly politicised
campaign based on lies and misinformation".
If the plant is cancelled, it could hurt
Malaysia's investor-friendly image. Alyson
Warhurst, CEO of Maplecroft, a London-based
business and political risk consultancy, that the
plant is "crucial to Prime Minister Najib Tun
Razak's aspirations to transform Malaysia into a
high-income and fast growing economy by 2020".
She believes that if the Lynas operation
is ultimately foiled by public protests or for
domestic political reasons, it "would not be a
welcome signal to other multinationals
contemplating investment in the country".
While the fate of the proposed plant will
have broader implications for Malaysia, it stands
to change how the increasingly important global
rare-earths market works. If the plant goes ahead,
it will make Malaysia the second-largest processor
of rare earths in the world, and a vital supplier
to Japanese industries currently dependent on
Chinese supplies.
Fears that Beijing could
use its dominance to strangle supplies emerged in
late 2010, when China imposed a two-month embargo
on exports of the materials to Japan, after a
diplomatic row when Japan arrested a Chinese
fishing vessel captain, accusing him of ramming
his boat into Japanese coastguard vessels near
Japanese-controlled but disputed Senkaku islands
known as the Diaoyu in China.
The
rare-earths row has become entangled in domestic
politics in the United States, with US-China
relations likely to be a key foreign policy issue
come the presidential election later in 2012. With
Republican candidates sucking-up news space, US
President Barack Obama took to banging the
anti-China drum in March, when the US, European
Union and Japan announced a joint complaint to the
World Trade Organisation (WTO), over China's
restrictions on supply of rare earths and alleged
preferential treatment for domestic companies
using rare earths and for foreign companies
located inside China.
That said, a recent
Pentagon report said that the US defense industry
will, by 2013, meet its rare earth needs using
domestic supplies - perhaps relying on Molycorp, a
California-based company that is re-starting rare
earth extraction in the US. But Jack Lifton,
co-founder of Technology Metals Research, which
advises companies involved in the rare earths
sector, says that "the US government is doing
everything wrong IF it's goal is to make the US
self-sufficient in rare earths", believing that
the WTO case will merely drive prices for rare
earths down and make life difficult for any
revival of the domestic US rare-earth industry.
So it seems unlikely, for now, that US
businesses can meet rare-earth needs by relying on
potential domestic supply. The Pentagon report
adds that defence industry uses "represent a small
fraction of US consumption".
The
controversial Lynas Malaysia project, could,
therefore, assume increased importance in the eyes
of companies such as Apple, Research in Motion and
others who need rare earths to make their
products.
Simon Roughneen is a
foreign correspondent. His website is
www.simonroughneen.com.
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