Australian-owned company Lynas is quietly shipping rare earth to a processing plant in Malaysia - without a firm plan in place to dispose of dangerous radioactive waste. Wendy Bacon reports.

Originally published at New Matilda.

If a manufacturing plant involving radioactive materials moved into your community, one of the first things you would ask is, "what's going to happen to the waste?"

This is exactly how residents of Kuantan on Malaysia's east coast reacted when the Australian company Lynas announced plans to build LAMP, the world's biggest rare earth processing plant in their area.

Several years later, they have no clear answer. Indeed last week, while the plant that will use concentrate imported from Lynas's rare earth mine at Mount Weld in Western Australia was finally ramping up for production, the Malaysian Government and the company were in direct conflict about what would happen to the waste.

On 8 November, after two years of delays caused by court challenges and inquiries, a halt on a temporary licence granted to protesting citizens in September was lifted. Five days later, Lynas secretly moved 100 containers of rare earth concentrate from a depot at Bilbra Lake and quietly shipped them through Fremantle Port. The containers were unloaded and delivered under police escort to the $800 million plant on 22 November.

But last week, four Malaysian government ministers backed by the entire cabinet declared that Lynas's temporary licence will be cancelled if it does not fulfill a condition to export all radioactive waste from Malaysia. Lynas was forced to call a share trading halt claiming that there is no such condition in its licence, which at this stage is not public. By the end of last week, Lynas's share price fell further to 55 cents, down from $1.21 this time last year.

The 17 rare earth elements are used in many products including mobile phones, flatscreens, missiles and wind turbines. All environmental experts agree that mining, refining and recycling rare earths can have serious, long term consequences if not carefully managed, specifically because the elements are found with thorium, which is mildly radioactive. Ninety-six per cent of global production currently occurs in China, where mines and plants have caused serious environmental degradation.

Lynas continually asserts that their plant is "absolutely safe," but confusion and insufficient planning for waste disposal has sparked local opposition. The campaign includes grassroots campaigning group Save Malaysia Stop Lynas (SMSL), local members of parliament, the Malaysian Green party, Australian Greens MPs and members and Friends of the Earth Australia. Even the Malaysian bar council hosted an event at which an engineering professor and lawyers opposing to the plant spoke. Opposition leader Anwar Ibrahim has pledged the opposition would scrap the plant if it wins national polls next year.

For two years in a row, SMSL delegations from Kuantan have protested outside Lynas's annual general meeting, spoiling executive chairman Nick Curtis's attempts to soothe his anxious shareholders. The delegation's leader, Tan Bun Teet, recently spoke at a NSW parliamentary reception hosted by Greens MP Jamie Parker held after the 20 November meeting. He lives near the plant and told attendees he was angry Curtis had led shareholders to believe the campaign against the plant was small.

Any misunderstandings about the strength of opposition to the plant were resolved when the delegation arrived home to join the last day of a 300 kilometre protest walk from Kuantan to Kuala Lumpar, which by the time it reached the capital had swelled to 20,000 people. When SMSL discovered Lynas had successfully smuggled the concentrate into the plant while they were gone, they issued an angry press statement, saying:

"Lynas must be desperately worried to be doing this secretly. At its AGM on Tuesday in Sydney I was there just to hear its executive chairman Nick Curtis [tell] its shareholders that the Stop Lynas campaign in Malaysia consist of just 10 people! If we are so weak and ineffective, why try to gag us through a defamation action, why ship its ore concentrate in such secrecy and at night using police escort?" (The company, which has already settled two defamation writs with Malaysian media outlets, is suing members of the SMSL campaing.)

Lynas managing director Nick Curtis was not available for interview, but a company spokesperson told New Matilda that the arrival of the containers was kept secret because of threats by green groups to blockade the shipment. Local authorities organised the police escort without a request from Lynas, the spokesperson said.

In asserting the safety of its operations, Lynas continually relies on a report by the International Atomic Energy Agency, commissioned by the Malaysian Government in 2011. The report confirmed that the plant had complied with Malaysian regulations, which meet international standards. But a closer examination of the report's findings is not reassuring. The agency found that the Malaysian Government — which had allowed the company to begin construction without long term, permanent plans for its waste — needed to be strengthened so that it could effectively regulate the industry.

It recommended that the company lodge its intended plans for long term storage of waste, waste disposal and for decommissioning the plant at end of its life. This crucial information had been omitted from previous company Radiation Impact Assessments compiled in 2008 and 2010. As the plant's opponents were quick to point out, no company would have been allowed to begin construction before this information was lodged and independently assessed in Australia.

Shortly after the agency's report came out, the New York Times reported that documents supplied to them by Lynas engineers showed structural cracks, air pockets and leaks in concrete shells for 70 containment tanks that would hold toxic plant materials. They were also critical of the materials used to construct the tanks.

The Lynas spokesman dismissed the engineers' complaints in the New York Times article, saying: "The reality is that any concrete construction will quite often have cracks when concrete dries, it's normal and those cracks will subsequently get filled in when concrete dried. Any pockets would have been filled in before the leak proof lining that is put into the concrete ... These are guaranteed by an independent contractor."

Lynas company documents show that three weeks after the agency's report came out it had filed the recommended plans with Malaysian authorities. But it is unclear how detailed these plans were and what exactly the company promised to do. Lynas told New Matilda that it has filed a Permanent Disposal Facility plan but that it is "commercially in confidence". New Matilda asked for a copy but did not receive one. Patersons Securities analyst Andrew Harrington was reported in The Australian last week to have told his investor clients that the licence did require a permanent disposal facility to be agreed between Lynas and the government but that this was still being discussed.

Lynas's spokesperson says the residue contains naturally occurring radiation but this is much lower than minimum level occurring naturally in environment, and should not be described as hazardous

The company says it plans to transform the residue into synthetic gypsum for road building and other projects, a process being used successfully in the oil and gas industries, but yet to be done in the rare earth industry. "Lots of work has been done by a whole bunch of academic and commercial organisations as to whether this residual material is capable of being used in this work," the spokesperson said. "They are all very confident it will work." He said they have already had expressions of interest but he could not "say one way or the other ... everything these guys say or do is blown up and is capable of being taken out of context".

The company had planned to sell at least some of the gypsum in Malaysia, if the government gives permission. Failing this, Lynas will pursue customers in Indonesia, the United States and Australia, but the company's spokesperson declined to give further details on this matter. In any case, nothing more can be done until there is enough residue for pilot production.

Asked whether there are plans for safely decommissioning the plant, the spokesperson said this was really "academic" because there is enough raw material to keep the plant operating for 50 years. But the company has previously talked about a life of 20 years; if the plant operates for longer than that, the amount of radioactive waste, which can last for hundreds of years, will be much greater. Even if the plan to process the waste into secondary products is successful, there is no guarantee an export market for synthetic gypsum will be stable.

Given the company's optimistic plans to produce gypsum, it is hard to understand why in March this year it applied to the South Australian government to import waste from the plant back into Australia. In answer to a question by Greens Senator Scott Ludlam on 30 October this year, senator Joe Ludwig, speaking on behalf of the Minister for Health, said that an application from Lynas was currently under consideration by the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA). "ARPANSA requested more information from Lynas Corporation on 2 April 2012," Ludwig said. "Lynas Corporation has yet to respond and the application cannot progress until the requested information is received."

The South Australian government would also have to approve the import of the waste. New Matilda has asked the company about this application and will report its answer tomorrow.

The International Atomic Energy Agency report also found that the Malaysian Atomic Energy Licensing Board should improve the transparency, visibility and public understanding of its approach to regulation and that Lynas should improve communication with residents and stakeholders. The company admitted that it had fallen down in that area and since the report was published, has done 15,000 community consultations and improved its information and monitoring plans.

Eighteen months later, as Malaysia's burgeoning environmental movement gains confidence and the country heads towards its national elections in 2013, it is unlikely to win over its angry opponents. They remain unsatisfied that an untested recycling process should replace firm plans for safe permanent storage of waste for the life of the plant and afterwards. Even if Lynas makes all its plans and contingencies public it may be too late.

Lynas will be in court in Malaysia on 19 December. The SMSL campaigners will be appealing against the Kuantan High Court decision to lift its stay on the company being able to exercise its rights to proceed under the temporary licence.