M'SIA HAS AN EDGE OVER CHINA IN ATTRACTING RARE EARTH INDUSTRY DOWNSTREAM ACTIVITIES

By Siti Hawa Othman
SYDNEY (Bernama) - Malaysia has a comparative advantage in
attracting more downstream activities within the rare earth industry when
compared to China as it has a very good legal and intellectual property system,
said Dr Matthew James, Executive Vice-President of Strategy & Corporate
Communications of Lynas Corporation Ltd.

At the same time, the cost advantage in terms of labour, energy and chemical
cost which used to exist in China is no longer apparent and Malaysia is deemed
to be a very competitive location due to the high cost increases which occured
in China over the last decade, he added.

"It's what the Chinese export quota (on rare earth) are trying to encourage
in China. They are trying to encourage those downstream industries to move to
China by restricting the access to rare earth.

"There are many companies that don't want to move their industries into
China as they are concerned about the intellectual property protection. These
companies are much more inclined to move their industry into Malaysia," he told
Bernama in an interview in Lynas headquarters in Sydney, Australia.

China which produces over 90 per cent of the world's rare earth had
reportedly been slashing its export quota which had restricted global supply, in
turn driving prices up.

Meanwhile, the Malaysian rare earth processing plant had been spurring
interest with Lynas signing a letter of intent with Siemens Drive Technologies
Division in July for magnet production and the joint-venture is expected to be
realised end of this year, James said.

He said five locations were being considered for the joint-venture
production plant and three of these were in Malaysia.

He said Lynas was also in commercial discussion with other companies about
building downstream application operations alongside its plant in Gebeng.

"When you look at the Malaysian industry, some of the downstream electronic
industry, automotive component industry already exist,... you can foresee the
investment (for Lynas rare earth plant) makes sense to complete the value chain
between the raw material that Lynas will provide and the industries concerned,"
he said.

Meanwhile, the Lynas Advanced Material Plant (LAMP) in Gebeng, Kuantan, will
have an initial capacity to process 11,000 tonnes of rare earth oxides (REO) per
annum, with expansion to 22,000 tonnes p.a.

The plant, which was over 60 per cent complete as at end-June, would produce
rare earth products along with a series of synthetic mineral products.

The RM700 million (US$233 million) plant had been embroiled in a
controversy, sparked by claims that it would emit radiation detrimental to
public health which had led to a visit by the International Atomic Energy Agency
(IAEA) from May 29 to June
3.

In its report, the IAEA said the plant once completed later this
year, was expected to be safe and fully compliant with international standards
but its pre-operational licence is still subject to regulatory approvals.





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