What a Battle Over Rare Earths Has To Do With Your iPhone
By Joel TozerJuly 20, 2012
Used in all sorts of hi-tech products, rare earth is actually in plentiful supply. But the potential dangers of processing it — which have made China the main global supplier — are now hampering an Australian project to refine it on the east coast of Malaysia.
On the edge of the Great Victoria Desert in Western Australia, stockpiles of rare earth metals are being crushed and packed into large bulker bags. More than 4,000 tonnes have already been sealed into the plastic-lined bags, ready to be shipped across the Indian Ocean.
These metals, found deep within the red soil of Mount Weld mine, are an essential component in products such as iPhones, wind turbines, high-tech weapons and hybrid cars. Located about 35km south of the industrial town of Laverton, Mount Weld is said to have one of the richest known deposits of rare earths in the world.
Australian company Lynas Corporation purchased the mine in 2001, with plans to construct a rare earth plant big enough to supply one-fifth of the world's demand for the metals. Despite the name, rare earths are not actually that scarce. But the high cost of building a refinery and processing the metals has left much of the work to China, which in the past has operated under lax environmental regulations.
China currently holds roughly 90 per cent of the world's rare earth supply (in 2010, China's exports totalled more than 130,000 tonnes), but its tight export controls have caused several trade disputes, and now countries hungry for its metals, such as the United States and Japan, are looking for new suppliers.
Almost all rare earth deposits — common in countries such as the United States, Australia, Brazil and Russia — are mixed with contaminants such as thorium and uranium, radioactive elements that are removed with a mixture of heavy-duty chemicals when the metals are refined. Few countries are keen to process the metals at this scale, mostly because of the low-level radioactive waste that it creates.
In 1992, when Canadian Company Ashton Mining owned the Mount Weld mine, the company sought approval to process the metals in Meenar, Western Australia. The plan was to transport the rare earth ore almost 900km from the mine, process the metals and any waste would be transported back to the mine and buried.
Lynas says the plan was approved in the late 1990s, but when it bought the mine from Ashton, Lynas sought other locations. The offshore processing project was approved in Shandong, China, in 2005, but China's tight export controls made selling the metals difficult. Lynas finally set its sights on Malaysia, where it had access to chemicals and was near its Asian customers.
The Lynas project involves shipping rare earths from Fremantle in Western Australia to Kuantan, on the east coast of Malaysia. In the past year, the company has been racing to finish construction of its refinery, which will process the metals for export to customers. But concerns by Kuantan locals and environmental groups about how the company plans to deal with the waste are delaying the project and, since May, this has been costing the company an extra $10 million a each month.
The Lynas project has been more than 10 years in the making and has so far cost the company more than $570 million. But as construction of the plant nears completion — sprawled across 100-hectares of tropical land in an industrial estate 5km from Kuantan's main shipping port — the company says an ongoing campaign of "misinformation" by protestors and environmental groups is damaging its prospects in Malaysia.
"There has been a serious campaign of misinformation about the LAMP [Lynas Advanced Materials Plant]," a spokesman for the Lynas told The Global Mail. "Lynas has heard the concerns, it understands the fears, is committed to gaining social support, and plans to demonstrate over time that it is a trustworthy company that will make a significant and ongoing contribution to Malaysia."
The Lynas plant is nestled in the middle of Kuantan's white beaches and dense nature reserves — an area that relies on its tourism industry to survive. Lee Tan was born in Kuantan, and she has recently begun traveling back from her current home in Melbourne, Australia, to protest the Lynas project. "It is no accident that the world-class Club Med is situated only 15km north of the Lynas plant, in the resort strip of Cherating," she says.
"Along the coast, tourism and the cottage seafood industries are the major employers and key sources of income for the rural community." Lee says that while the Lynas project will offer hundreds of jobs to locals, she is worried about pollution from the plant impacting other industries.
Community members who live nearby the project — an estimated 700,000 people live within a 30km radius of the processing plant — and protest groups say the Australian company is using Malaysia as a dumping ground for its waste. But the company says it chose Malaysia because it was close to supplies and customers in the Asian market.
Earlier this year, Lynas commenced defamation proceedings against a number of Malaysian groups over "false and misleading" statements about its almost $650 million project.
These statements include an article published on the Free Malaysia Today website in March, which describes the Lynas refinery as a "harbinger of death".
On July 17, the website posted an apology for all articles that claim the Lynas plant may be unsafe. "We apologise for these publications as such claims do not have a scientific basis. The regulatory review of the Lynas plant has been thorough and diligent," the article noted.
An injunction case was heard in the Malaysian High Court on July 19, seeking a court ruling to prevent the defendants from making further such comments. The Court will decide on the injunction application on July 26. A date for the defamation case is yet to be made.
No Place for Waste
Malaysian protestors want to know why Lynas can't just ship the waste back to Australian shores.
The $350 million refinery was awarded a temporary operating licence from the Malaysian government in late January this year, subject to a number of conditions that include coming up with a plan for a permanent disposal facility for the waste. But with ongoing protests and regulatory challenges, Lynas says it does not know when it will physically receive the licence.
Since the project was approved, numerous protests and political disputes have delayed the company's plans. "Since then, a court action brought by a Pahang resident to challenge that decision has been rejected, an appeal to the Science Minister… has also been dismissed, and a Parliamentary Select Committee has also concluded that the plant is safe and that the licence should be awarded," a Lynas spokesman said.
In June, Malaysia's Atomic Energy Licensing Board imposed two new conditions on the project, requiring the company to submit a plan on how it will immobilise radioactive elements in its waste and an emergency response plan for any dangerous dust releases.
Neither Lynas nor the Malaysian government will reveal details about the plans, but Lynas says it has submitted its proposals to the licensing board, which is currently assessing them. The company has said that one possible use of the waste is to recycle it for use "as a component in synthetic road base".
The licence conditions note that if the company's plans are not approved it would be forced to send the "residue to its source of origin", a spokeswoman for Malaysian minister for Science, Technology and Innovation, Maximus Ongkili, told The Global Mail.
While the company would not say if it had approached the Western Australian government about returning its waste from Malaysia, a spokesman for the company says it is "absolutely confident that the by-products of the of the Lynas Advanced Materials Plant will be recycled and reused in commercial applications, and will not require long-term storage."
The Western Australian minister for mines and petroleum, Norman Moore, told The Global Mail that national law would prohibit any waste produced offshore being returned to Australia, unless it was authorised by the Commonwealth Government. We could find no precedent of such an arrangement.
Despite placing a number of conditions on the Lynas plant, the Malaysian government has welcomed the local investment, giving the company a 12-year tax-free reprieve. The plant is predicted to make $1.7 billion a year in rare earth exports and the company has agreed to pay 0.05 per cent of the plant's yearly revenue to the Malaysian licensing board to fund radiation research in that country.
Rare Earth is Back in Vogue
The global demand for rare earths has fallen in the past two years, mostly due to high prices and concerns over the security of supply. China's near monopoly on the market and tight controls of exports has forced companies such as Toyota in Japan to look for rare earth substitutes, recently suggesting that it has found a way to make hybrid cars without rare earths. Other companies, such as car manufacturer Honda, have begun turning to used parts and electronics to extract the rare earth metals for re-use.
But with the price of rare earths lowering, companies are once again building new products that require the metals. "Even as countries and companies channel millions of dollars into research efforts to find substitutes for rare earths, even greater amounts of R&D [research and development] dollars are being invested into new products and processes involving rare earths," a spokesman for Lynas said.
Dudley Kingsnorth is an expert on rare earths and managed Mount Weld mine for Ashton Mining of Canada for 10 years. He estimates that by the end of the decade, rare earth demand will increase to between 200,000 and 240,000 tonnes, of which non-China demand could be between 70,000 tonnes and 90,000 tonnes a year.
"China's dominance through a range of measures such as export quotas and taxes is unhealthy, as it means sustainability of supply is uncertain," Kingsnorth told The Global Mail. "Australia along with Canada and Africa have a number of projects under evaluation that could reduce or eliminate the world's dependence upon China."
After two years of production, Lynas says its processing plant would be capable of producing 22,000 tonnes of refined metals a year. If Kingsnorth's estimates are accurate, that would represent 25 to 30 per cent of non-China demand.
But Lynas is not the only company looking to make a profit from the metals. Molycorp Minerals in the United States is also racing to get its rare earth project up and running, with plans to re-open and expand a rare earth mine in Mountain Pass, California in the coming year. After decades of mining and processing rare earths at the mine, chemical processing was shut down in 1998 when radioactive wastewater flooded a nearby lake. Molycorp is ramping up construction on a new plant — also known as Project Phoenix — and is expected to produce almost double the amount of Lynas (40,000 tonnes a year) by the end of 2013.
The price of rare earths soared in 2010 when China announced export quotas on its products, restricting its supply for its own industries. But with more projects outside of China expected to come on board, Lynas says the price has fallen to "something more sustainable in the longterm".
The lower prices are also attracting new buyers, with Lynas already securing customers from Europe, Japan and the United States for its metals. "Named customers include Japanese trading company Sojitz, BASF and Rhodia. Most customers have asked for confidentiality," the spokesman said.
The Bitter Legacy of Bukit Merah
The Lynas rare earth plant is not the first to be built in Malaysia. Almost three decades ago, Japanese company Mitsubishi Chemical started processing waste from old tin mines that was rich with rare earth metals. Processed in Bukit Merah — hundreds of kilometres north of the current Lynas plant — the project operated without a long-term storage facility and many residents began blaming the company for a growing number of birth defects and cases of leukaemia.
Bowing to public pressure, the plant shut down in 1992, leaving behind one of Asia's largest radioactive cleanup sites. Hundreds of truckloads of contaminated material were removed from the site, permanently stored in a forest reserve roughly 5km away.
The legacy of the Bukit Merah plant lingers in the minds of many Malaysians and forms a large part of the fears and anxieties surrounding the new Lynas project.
But it is difficult to compare the two projects — the Bukit Merah plant processed completely different materials and operated under quite different regulations.
In a company video from April this year, Lynas executive chairman Nicholas Curits says the legacy of Bukit Merah means any new rare earth projects in Malaysia will be highly scrutinised for safety.
"The Bukit Merah incident meant that we were certain that the standards that we would have to meet would be such that we could be very, very safe to community. We've met those standards," he says. "We are safe and we are not to be compared to Bukit Merah."
In response to concerns about the waste produced at the Lynas refinery, the company says that the levels of radioactivity in the Mount Weld concentrate are considered safe "by all international standards". The company says the rare earth ore from Western Australia is not classified radioactive by the International Atomic Energy Agency transport regulations — an international body for radiation safety.
"By all international standards, the Lynas raw material is classified as safe, non-toxic and non-hazardous," the company spokesman said.
The Community Fight
Dozens of protests have been held across Malaysia and internationally against the project, including a protest by Kuantan locals in July 2011 outside of the Lynas headquarters in Sydney. Dressed in white plastic jumpsuits and makeshift gas masks, the Stop Lynas Save Malaysia group — which is one of the groups being sued by Lynas — said it wanted to make Australians aware of the project.
Tan Bun Teet, chairman of the group and a Kuantan local, travelled to Sydney for the protest. He says Lynas is yet to address the concerns of locals. "I think the company has a lot to catch up on to convince the people that the plant is safe," Tan told The Global Mail. "Our regulatory bodies have lost the confidence and the trust of the people right at the beginning and we are sceptical if they know or have the capacity to monitor and safeguard the environment."
Lynas says it has had several public consultations, including "face to face briefings for more than 10,000 local residents, community leaders, villagers and their families". It says it has also allowed more than 60 site visits of the processing plant to groups who are affected or interested.
Lee Tan says the Malaysian government would be risking "strong electoral backlash" if the licence is given to Lynas. The Malaysian election is expected to be held later this month and some say disputes over the refinery may turn four marginal seats.
"If the government is foolish enough to risk losing the next election, it will issue the temporary operating licence," Lee told The Global Mail. "Lynas will continue to attract public outrage and protest actions."
Protestors are expected to gather this week outside the Malaysian High Court, where the Lynas injunction case is expected to be heard. "We will gather our supporters to be there," Tan says.
But while the politics continue to play out in Kuantan, and Lynas waits to physically receive its operating licence, nothing will be processed through the Malaysian refinery. And the thousands of tonnes of unprocessed metals that companies have committed to buy will remain stacked up in the Western Australian desert.