Wednesday, February 15, 2023

Lynas and The Rare Earth Industry

The New Straits Times ran a story on 16 August 2019 headlined “Yeo: My view on Lynas remains the same” and this did not go down well with the then Prime Minister, Tun Mahathir. In the report, I maintained my stand announced on 4 December 2018 that Lynas must ship out the accumulated radioactive waste at its rare earth processing plant in Kuantan, as promised in two letters of undertaking dated 23 February 2012 and 6 March 2012.

The Prime Minister expressed his displeasure with my remarks to a few Pakatan Harapan leaders. He wasn’t happy with my “stubbornness” in insisting that Lynas ships out its radioactive waste, as the Australian government, both federal and state, had expressly refused to accept the return of the waste. He was also not pleased that as a minister, I had publicly disagreed with the cabinet's decision. He was of the view that no matter the discussion at the cabinet meeting, the final decision must be presented as unanimous and shouldered as a collective responsibility.

Former Deputy Defence Minister Liew Chin Tong in his book “Lim Kit Siang: Patriot. Leader. Fighter”, described Tun Mahathir’s unhappiness over the Lynas issue and that he had wanted to sack me. Many people asked me whether it was true but I declined to answer because I believe the answer is not consequential to the issue at hand.

In fact, it took me some time to decide whether to include Lynas in this book, as I did not want the issue to be taken out of context in the public space and eclipse other important but less sensational topics in the book. Ultimately, I decided to write about it anyway, with the hope that readers will understand and view the issue objectively. In fact, as readers will find out later in this book, although the conditions imposed on Lynas were not as strict as many had hoped for, they were much more stringent than the regulations imposed by Barisan Nasional.

Beyond the high-profile Lynas project which was a “thorn in the flesh” during my 20 months as a minister, I will also discuss the rare earth industry as a whole in this chapter, offering the reader a broader context.


After we took government, anti-Lynas activists and supporters, including many Pakatan Harapan Members of Parliament, had high hopes that we would close down Lynas. Many of them had participated in anti-Lynas protests in 2012. I didn’t take part in the protest as I was not actively involved in frontline politics at the time. However, after joining active politics and researching the issue, I concluded that the Lynas project should not have been approved in the first place due to the uncertainty over the management of the radioactive waste. The 2013 Pakatan Rakyat manifesto for the 13th General Election (GE13) had promised to put a stop to Lynas if we won power.

By 2018, in the run-up to the 14th General Election (GE14), the situation was very different - Lynas had already been in operation for six years. The Pakatan Harapan Manifesto drafting committee could not agree whether Lynas should be closed down, hence there was no mention about Lynas in the manifesto, Buku Harapan. Nevertheless, after Pakatan Harapan won power, friends and foes alike pressured the government to fulfil our GE13 manifesto promise to close down Lynas.

I was caught between a rock and a hard place – between those who wanted us to close down Lynas with no room for discussion, and those who were worried about the negative impact that a sudden closure of an international company would have on foreign investors’ confidence in the country’s regulatory system and the consistency of policies. It would have been an easy decision if Lynas was still in the application stage, but this was a plant that had been in operation for six years. I had to find a middle ground decision to placate both sides, knowing there was no way to satisfy both camps.

To ensure that the decision on Lynas would be based on science, the Executive Review Committee on the Operations of the Lynas Advanced Materials Plant which comprised scientists and engineers, was formed on 10 October 2018 to give recommendations to MESTECC. It conducted public hearings that sought views from both Lynas and employees as well as anti-Lynas residents and activists, and completed the report in six weeks.

Of the many issues highlighted in the Review Committee’s report, our biggest concern was the management of the accumulated waste from Lynas - Water Leached Purification Residue (WLP) and Neutralisation Underflow Residue (NUF), which at that time had accumulated to 451,564 metric tonnes and 1.113 million metric tonnes respectively*. It was shocking to learn that this waste material had been stored in Lynas’s temporary Residue Storage Facility (RSF) – which was essentially an open landfill – from the time it started operating in 2012. Pictures below show the landfill at the Lynas site. It is gigantic!

* As at 24 September 2019 (the last formal statistics I received), Lynas had accumulated 637,581 metric tonnes of WLP and 1,084,203 metric tonnes of NUF.

NUF (above) and WLP (below) Temporary Residue Storage Facilities at the Lynas Site.
Source: Lynas, 24 November 2019

WLP is a type of solid waste containing naturally occurring radioactive material (NORM) with a radioactivity of 6.2 Bq/g. Its waste management is regulated by the Atomic Energy Licensing Board (AELB) in accordance with the Atomic Energy Licensing Act 1984, which defines radioactive material as material with radioactivity of more than 1 Bq/g. 

As for NUF, it is categorised as a type of scheduled waste. Its waste management is regulated by the Department of Environment (DOE) in accordance with the Environmental Quality Act (EQA) 1974 under Regulation 9 of the Environmental Quality Regulations (Scheduled Waste) 2005.

Both AELB and DOE were under the purview of MESTECC. (Many people thought that I was involved in regulating Lynas's radioactive waste management in my capacity as the Environment Minister. However, it was actually in my capacity as the Science, Technology and Innovation (STI) Minister as AELB was under the STI sector.)

To ensure fairness, we looked at how Lynas’s waste management was regulated in Malaysia compared to other companies:
     i. For the temporary storage of naturally occurring radioactive materials (NORM) using an open landfill storage system, AELB records showed that while there are companies that stored higher radioactivity NORM, the amount was far lower and for shorter periods of time - unlike Lynas, the NORM was not accumulated*; and

* WLP radioactivity is lower than Amang (a by-product of tin mining) which has a radioactivity level of >200 Bq/g. Amang was being stored temporarily at the sites of several mining companies in Perak. However, the WLP volume was and is still continuously accumulating. It is being stored in much larger amounts at a scale of hundreds of thousands of tonnes while the Amang storage amounted to thousands of tonnes.

    ii. For the temporary storage of scheduled waste, EQA 1974 states that the quantity of scheduled wastes accumulated on site shall not exceed 20 metric tonnes nor stored on site beyond 180 days. At the time of inspection, Lynas had stored more than 1 million metric tonnes of NUF at their site, which is 50,000 times more than the permissible level and for more than six years.

The issue that concerned us most about Lynas was not the radioactivity or toxicity level of the waste streams* but the ever-increasing amount of accumulated residue in its temporary open landfill site. The waste was exposed to the threat of natural disasters such as major flooding, with unknown consequences to the surrounding community due to its large amount. As the amount of accumulated waste on site increases, so will the risks to the surrounding communities and environment. To ensure long-term safety, the management of the waste needs a permanent solution.

* At 6.2 Bq/g, WLP radioactivity is lower than Amang (as mentioned in the previous footnote) and much lower than the radioactive wastes of a nuclear plant, where even lowlevel waste is categorised at the scale of 4,000 Bq/g. For NUF, although it is categorised as scheduled waste, the toxicity is also lower than that of many other waste streams from the chemical industry.

According to Lynas, it had been accumulating the waste at its site because it was conducting research into the potential recycling of WLP and NUF into a soil conditioner named Condisoil, which could be used as agricultural fertilisers. Lynas gave assurances about the safety of Condisoil. However, it first requires Malaysia to use Condisoil locally to prove its feasibility before it could be sold abroad. In short, they expected Malaysia to serve as a “lab rat” for Condisoil.

After receiving expert opinions, the Review Committee reported that there was insufficient evidence to conclude on the safety of using Condisoil and recommended that Lynas stops the long-term studies for Condisoil on WLP, allowing only research on NUF to continue.

After reviewing the Review Committee’s recommendations, we decided on 4 December 2018 to impose the following main preconditions on Lynas for future renewal of licences and permission:

    i. The WLP containing radioactive materials that had accumulated on site must be removed from Malaysia in accordance with the letters of undertaking presented by Lynas Corporation Ltd., Australia (Lynas Australia) and Lynas Malaysia Sdn. Bhd. (Lynas Malaysia) in which both parties had committed to removing all waste from Malaysia, if necessary (see Figure below);

Letters of Undertaking signed by Lynas on Removal of Waste from Malaysia.

    ii. Lynas must submit an action plan on the disposal of its accumulated NUF; and

    iii. Lynas can no longer do research and development on WLP to commercialise the radioactive waste for agriculture use. In short, don’t make Malaysians your “lab rat”! While Lynas was agreeable and later complied with the second and third pre-conditions, they did not agree with the condition to send back the WLP residue and lobbied vehemently against it.

Their arguments were:
    i. The letters of undertaking were only for the first TOL;

    ii. The cost of removing the WLP residue from Malaysia would render its business unfeasible and may eventually trigger its closure, resulting in Malaysia losing investments and jobs; and

    iii. The government should follow the Review Committee’s recommendations on the radioactive waste, with the first recommendation being the construction of a permanent disposal facility (PDF) that complies with international standards to store the WLP, instead of going straight to the second recommendation which was to remove the WLP from Malaysia.

Let us dissect whether their arguments have merit.

On the cost of removing the WLP, the Australian Financial Review reported the following:

    “CLSA analyst Dylan Kelly said in a note to clients that the cost of transporting the waste back to Australia was estimated to be $60 million but said insurance would cover about $46 million of that. The balance of about $14 million would represent about10 per cent of the earnings before interest, tax, depreciation and amortisation of USD 129 million that Lynas recorded in 2017-18.” 

To put things into perspective, according to the CLSA estimate, the cost of shipping out the waste that had accumulated in Malaysia for six years would be only 10% of Lynas's earnings in one year. In addition, even after MESTECC set the requirement for Lynas to remove the WLP waste from Malaysia, brokers such as UBS and CLSA still kept their “BUY” recommendations on Lynas stock. UBS even set a USD 3.10 price target6 on the stock, which was nearly double the then share price. These numbers tell me that keeping the waste in Malaysia was all about protecting the company’s bottomline.

Of course, Lynas strongly disputed the cost estimated by CLSA. Whether the Lynas denial can be substantiated, I believe that corporations, especially those claiming to be international companies, should honour their word. When Lynas undertook to remove all waste from Malaysia when necessary, with not one but two letters of undertaking, the management would have calculated the cost into their business planning and the necessary regulatory requirements. In my view, it was unethical and immoral of them to change their mind and say that they couldn’t do it and even argued that the letters of undertaking were only for the first TOL approval.


Why did we go straight to the Review Committee’s second recommendation to remove the WLP from Malaysia, instead of going with the first recommendation of a PDF?

The way I see it, the PDF recommendation was academic and didn’t take into account the sheer size of the PDF. Indeed, a PDF is a common solution for radioactive waste around the world with a well-established set of standards from the International Atomic Energy Agency (IAEA) for its construction. However, those are for waste with high radioactivity but of a small amount. The challenge with the PDF for Lynas's radioactive waste was not the radioactivity at 6.2 Bq/g, which was many thousand times lower than nuclear power plant waste, but the amount of the waste which was increasing at a rate of about 100,000 metric tonnes per annum depending on Lynas's production rate.

Since Lynas was at that time the only rare earth processing plant outside of China, we could only refer to the standards set by China in managing waste in similar rare earth processing plants. The common practice in China for light rare earth element (LREE) processing, such as that of Lynas, is to return the large amount of waste back to the mine, as the geology of the mining site is typically suitable for a PDF (with lower specifications since it has lower radioactivity). Furthermore, these sites are usually far from densely populated areas such as cities.

Indeed, it is possible to build a PDF that complies with international standards. However, this PDF will be massive in size and the land it occupies, as well as the buffer zone surrounding it, will become permanently unusable. Unlike China and Australia, which have a vast land mass and non-arable land and can thus afford to carve out land that will be permanently “lost”, Malaysia’s land mass is much smaller and fertile, and can otherwise be used for more productive activities such as agriculture. Additionally, it would be difficult to find a suitable site in Malaysia with suitable geology to build the PDF which is required to be far from cities and water sources.

Based on these practical considerations and considering that Lynas had undertaken “to remove all waste if necessary”, we decided that the Review Committee’s second recommendation of WLP removal from
Malaysia would be a better one. Hence, this was one of the pre-conditions we set on 4 December 2018 for Lynas’s TOL renewal. Unfortunately, while we managed to hold on to all the other conditions in the next TOL renewal, we had to take a step back on the WLP removal.

The biggest roadblock in removing Lynas’s radioactive waste was Australia’s refusal to accept it. To my dismay, Lynas did not make every effort, at least in my view, to fulfil their promise stated in the letters of undertaking. They did not petition their own government with equal diligence, compared to their zealous approach and effort in lobbying the Malaysian federal and state governments.

When the TOL renewal date was nearing, the Prime Minister and most of the ministers were concerned that not renewing Lynas’s TOL might affect foreign investors’ confidence in our country. (When investors evaluate which country to invest in, they will look at the country as a whole and not differentiate between one government or another. To provide as much certainty as possible to investors, every government needs to take responsibility for the decisions made by their predecessors.) I was asked by the cabinet to review the WLP removal condition and find a middle ground.

Eventually, we replaced the condition on removing all radioactive waste from Malaysia with removing the radioactive-producing process (cracking and leaching) from Malaysia within four years. Under this new condition, Lynas had four years to build a cracking and leaching facility elsewhere. Upon its completion, Lynas would no longer be allowed to produce radioactive waste in Malaysia and only the intermediates are allowed to be shipped here for further processing. With that, we could keep the Lynas operations in Malaysia and stop further accumulation of radioactive waste in Malaysia.

What about the existing WLP and future ones that will be accumulated until the cracking and leaching facility is completed? It would have to be buried permanently in the PDF, according to Review Committee’s first recommendation.

How big is this PDF that we talking about? According to a Malaysiakini report dated 17 February 2021, a total of 202.35 hectares - equivalent to 283 football fields - had been carved out of the Bukit Kuantan permanent forest reserve, to be converted into a Multi-Category Industrial Scheduled Waste Disposal Site (MCISWDS), with the Lynas PDF occupying 58.25 hectares or 29% of the overall site7. In other words, the PDF will be roughly the size of 82 football fields!

In short, this PDF will be huge. The only saving grace is that the size is capped. Had we not imposed the condition for Lynas to construct a cracking and leaching facility elsewhere, the size of the PDF in Malaysia would keep growing to keep up with the ever-increasing WLP accumulated in Malaysia!

Yes, it is possible to build a PDF that complies with international standards, but this PDF would forever serve as a national monument of shame for Malaysia for two reasons. Firstly, in the name of economic development, we would be giving 12 years of tax exemption to a foreign company that produces a huge amount of waste to be dumped permanently in Malaysia. Secondly, we would be letting this company off the hook for a commitment made in black and white. This would send the message that a developing country’s government can be bullied by a company from the developed world and had no choice but to put up with it in the name of economic development. This is the very reason why, from the very beginning, I pushed – unsuccessfully - for the waste to be shipped out of the country.

All in all, the conditions that we set for Lynas’s licence renewal was done in good faith, with objectivity and intended to protect the interest of the people. It was a tall order to the ministers from the different component parties to agree to a cabinet decision that would strike the right balance between health/environment concerns and economic benefit.

As expected, the middle ground position was not good enough for either side. I was criticised heavily by anti-Lynas activists who were adamant about closing down Lynas, and even my own colleagues openly shouted at me in parliament. Meanwhile, Lynas launched a hostile offensive to portray itself as a victim of an “anti-business” minister, me – when in fact, during our private interactions, their top management undermined me with their condescension and derision (perhaps fuelled by a perceived sense of racial superiority). But I can say with good conscience that I did not obtain any benefit or personal gain from the decisions made on Lynas.

While the conditions on the licence renewal set by the Pakatan Harapan Government were not as dignified as I and many Malaysians desired, they were without a doubt much more stringent than those imposed by Barisan Nasional.

Firstly, Lynas was not permitted to dump their WLP and NUF residue on site – they had to devise a permanent solution that meet international standards. Second, we put an end to the idea of recycling the radioactive WLP waste into Condisoil for agriculture usage, which would have made Malaysia a “lab rat”. Thirdly and most importantly, Lynas was required to build a cracking and leaching plant elsewhere within four years and ensure that no more radioactive waste would be produced in Malaysia.

    On 27 February 2020, Lynas announced the following:

    “We also confirm our commitment to develop our new Cracking & Leaching facility in Kalgoorlie, Western Australia. We thank the Australian Government, the Government of Japan, the Government of Western Australia and the City of Kalgoorlie Boulder for their ongoing support of our Kalgoorlie project.”

Therefore, if you hear someone say this in the future, “there is no point in voting because all the governments are the same; just look at Lynas”, do pause and think about the facts I’ve laid out above.

It is easy and simplistic to look at the Lynas issue and generalise the whole issue into a “close it or keep it” matter and conclude that voting is no longer important. The fact is, had there not been a change in government in 2018, Lynas’s waste would continue to accumulate on site, posing environmental and health risks to the surrounding communities. Without the Pakatan Harapan government’s decision, recycled WLP would one day end up in Malaysian agriculture products and most importantly, Lynas would continue to generate radioactive waste until the end of its operations here.

Yes, the outcome may be less ideal than we expected, but it is much better than the status quo pre-GE14. So your vote matters, let no one tell you otherwise.


Looking beyond our (bad) experience with Lynas, I would like to give readers an overall picture of the rare earth industry and discuss it in general.

What is Rare Earth?

Rare earth refers to a group of 17 metals known as Rare Earth Elements (REE), which were discovered in the 18th century. Rare earth elements are not “rare”, because they are relatively abundant in the earth’s crust. However, these elements exist as a part of larger minerals, on the scale of parts per million, making extraction complex, expensive and potentially harmful to the environment if not conducted properly.

Uses and Applications

There is an analogy that, if petroleum is the lifeblood of modern industry, then rare earths are the vitamins. Scientists discover new uses for rare earth almost every three to five years, and one out of every six modern inventions requires the use of rare earth.

Generally, REE can be categorised as light rare earth element (LREE) and heavy rare earth element (HREE), according to their atomic numbers 57-64 and 65-71 respectively, with the exception of Yttrium (39). (See Table 1.) Because REEs have similar chemical properties, many of them have related or complementary uses, hence it is easier to explain their usage by application rather than by individual element.

First, REEs are used in the glass industry for glass polishing as well as to provide colour and special optical properties to glass. They are essential in the manufacture of flat panel display screens, camera lenses, optical fiber, and other highly-specialised glasses.

Second, REEs are used as catalysts, which are substances that speed up the chemical processes in industry. In the petrochemical industry, REEenriched catalysts are used in the cracking process of heavy hydrocarbon molecules.

Table 1: List of Rare Earth Elements

In terms of green technology, REEs are used as catalytic converters to reduce carbon monoxide emissions from vehicles, thereby reducing air pollution. They are also used in light-emitting-diode (LED) lighting, which uses half the energy of conventional lighting. Permanent magnets made from REEs are used in hybrid vehicles’ electric motors as well as wind turbine manufacturing. REEs are also an important component of rechargeable batteries, which are essential to electric vehicles, as well as renewable solutions (wind and solar power are intermittent in nature, and as their penetration increases, giant rechargeable batteries will be needed to ensure the security of power supply). As the world moves towards a low-carbon future, demand for electric vehicles and batteries will rise, and along with it, the demand for REEs. Yes, it is ironic that while REE mining and production are frequently associated with environmental degradation, REEs are almost indispensable to the future of clean energy and low carbon.

REEs are also increasingly important in the electrical and electronic industry as they are essential ingredients in the manufacture of computer memory chips, mobile phones, microwave equipment, superconductors, lasers, sensors, and others. REEs also play an important role in national defence equipment such as night vision goggles, precision weapons, communication and GPS equipment, as well as hard alloy for armoured vehicles. In addition, REEs are used in X-ray imaging and other medical applications such as surgical lasers, positron emission tomography scintillation detectors, magnetic resonance imagining (MRI) and so on, as well as in the aerospace industry, pigments for ceramics and others.

All in all, from the many uses and applications of REEs listed above, it is not hard to see why REEs are dubbed as the “vitamin” of modern technology. 

Rare Earth Prices

LREE are relatively cheaper and more abundant, whereas HREE, which are used in highly specialised and high technology applications in aerospace, military, national defence and new materials, are more expensive and difficult to substitute. (Lynas's RE is in the LREE category.) Table 2 below shows the price of selected rare earth oxide (REO) from 2016 to 2020 according to the annual U.S. Geological Survey.

Table 2: Rare Earth Oxide Prices from 2016 to 2020.
Geopolitics of Rare Earth

Because REEs are widely used in modern technologies as well as emerging cutting-edge technologies with the potential to shape the future, the global demand for REEs is on an upward trajectory and will probably continue to do so, leading to a price surge. Despite the fact that high prices have prompted manufacturers to seek ways to substitute or reduce the amount of REEs in their products, the demand for REEs is projected to rise until a technological breakthrough occurs. 

Due to the broad range of uses and applications for REEs, as well as their significance for the future, they have the potential to become highly politicised resources, similar to oil in the Middle East.

China began producing significant amounts of rare earth oxides in the early 1980s and became the world's leading producer in the early 1990s. Throughout the 1990s and early 2000s, China steadily increased its dominance over the global rare earth market. At the time of writing, China controls about 80% of the REE global production, despite having only 36% of the global reserve, with Brazil and Vietnam each controlling 18% of the reserves. It should be noted that while 80% of the global production share is high, it is a significant drop from its 2009 level of 97%. This is attributed to other players entering (or re-entering) the market, giving Australia and US 12% and 9% of the global production share currently.

Since REEs are an important element in modern and future technology, it is always a threat if a single country has too much control over the global supply chain. When trade tensions rise, this threat becomes more prominent. For example, on 20 May 2019, shortly after the Trump administration blacklisted Huawei, Chinese President Xi Jinping toured a rare earth processing plant and highlighted that rare earths are “important strategic resources” - a statement widely interpreted as a threat to restrict Chinese exports to the US. Following Xi’s visit, the price of neodymium (used in magnets and speakers) increased by 26.5% in just a week, from USD 50 to USD 63.25/kg. Meanwhile, dysprosium metal (used in lasers), and erbium oxide and gadolinium oxide, which are used in medical imaging and fuel cells, shot up by as much as 10% in a week10. In fact, even before the Trump-Xi tensions flared, in 2010, Beijing had taken a similar approach towards Japan after a Chinese fishing trawler collided with a Japanese coast guard vessel near disputed islands.

To maintain its lead in global REE production and thus control over modern technology, China could expand its REE supply* to put downward pressure on the global REE price. This will serve as a strategic deterrent to the construction of REE supply chains outside China.

*Most of China's REE production comes from state-owned enterprises, hence national strategic interests can take priority over profitability.

In short, it is foreseeable that the race to control the global REE production will continue for as long as REEs remain an important element for modern and future technology. Even with the presence of
free trade agreements, there will always be a threat to the global supply chain if it is over-reliant on a single country, and occasional trade tensions such as the Trump-Xi clash in May 2019 will continue to play out in the future.

Instead of confining our view of the REE industry to the Lynas experience, I prefer to discuss REEs in the global context and the future world. This is because Malaysia also has a small reserve of the more expensive HREE, which differs from the cheaper LREE processed by Lynas.

The future Malaysian Government will have to decide whether to explore and produce HREE. My hope is that this decision will be considered from the standpoint of the then technological level of exploration, potential environmental harm, as well as Malaysia's decision on its positioning (or exclusion) from the REE global supply chain.