* Malaysian residents challenge Lynas rare earth license
* Court action may delay June 2012 start-up
* Residents worried plant may contaminate environment, Lynas
By Sonali Paul and James Regan
MELBOURNE, Feb 23 A legal challenge
launched in Malaysia against Australia's Lynas Corp
threatens to delay one the world's few new major sources of rare
earths aimed at alleviating China's stranglehold on global
Residents in Malaysia's Kuantan area have launched court
action to force the government to review its decision to grant
Lynas a temporary operating license to start a rare earths
processing plant in June 2012, Lynas said on Thursday.
The plant has been under construction in eastern Malaysia
since 2010. Malaysian residents and local politicians say they
are worried that radioactive waste from the plant could
contaminate the environment.
Lynas says its plant is safe and is not comparable to a rare
earths plant in Malaysia that was shut by a unit of Mitsubishi
Chemicals in 1992 after residents there blamed the plant for
birth defects and a high number of leukemia cases.
"While Lynas respects the concerns of members of the
community, it does not believe that there is any basis for the
claims made in the proceedings," it said in a statement to the
Australian stock exchange.
"Lynas will take the necessary steps to vigorously protect
its interests in relation to the orders sought in the
China's decision in 2010 to reduce exports of rare earths by
35 percent to safeguard domestic supplies has triggered a global
race to find new sources. China did supply up to 97 percent of
the world market in past years.
Rare earth elements are group of 17 metals essential in
electronic devices found in everything from Apple's
iPhone to Ford's Focus hybrid, as well as in defense
applications and oil refining.
JAPAN SEEKS NEW SOURCES
Japan is the world's biggest consumer of rare earths and is
counting on Lynas to supply 8,500 tonnes a year 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
Lynas expects to process up to 22,000 tonnes of rare earths
annually, or about 20 percent of the world market, through its
Malaysia's Atomic Energy Licensing Board approved a two-year
operating license for Lynas in early February, on condition it
would submit a detailed plan for a permanent disposal facility
for waste from the plant within 10 months.
The Malaysian plant is being designed to process rare earths
dug from Lynas' Mount Weld mine in Australia.
Ian Chalmers, managing Director of Alkane Resources
said it would be at least a year before the effects of any delay
to the Lynas facility reverberated into markets for rare earths.
"If Lynas gets stalled for 12 months, I don't think it will
have a big impact because the market has already factored in
that supply is going to be disjointed until they become a steady
source," Chalmers said.
Alkane has been operating a pilot processing plant in
Australia since 2008 as it gets ready to mine its own lode of
rare earths by the middle of the decade.
In the United States, Molycorp has already started
mining new ore at its Mountain Pass mine and expects to be
producing rare earths at rate of 19,050 tonnes a year by the end
of the third quarter.
Prices for most rare earths have retreated from historic
highs in mid-2010 when China first cut exports.