China gains if Lynas is curbed, says economist

Lynas is awaiting renewal of its Malaysian operating licence, which will expire in September. (Bernama pic)

PETALING JAYA: China will benefit the most if Malaysia curbs the operations of rare-earth producer Lynas, says an economist.

Barjoyai Bardai of Universiti Tun Abdul Razak told FMT that Malaysia’s ties with Japan may also be affected, as Japan depends on Lynas for one third of its rare-earth needs.

Malaysia has set a license-renewal condition on Lynas that more than 400,000 tonnes of waste produced at its processing plant in Pahang should be sent to Australia, but Australia has refused to accept the waste.

Barjoyai Bardai.

Barjoyai said the Malaysian government was in a difficult position as Pakatan Harapan had for years told the public that the waste is harmful, though Lynas has said the material is low-risk.

“We have to look for ways to manage the waste, perhaps we can engage the more technologically advanced Japanese to help us find ways to reuse the waste.”

Harvard University professor Joseph S Nye Jr recently recounted Japan’s strong ties with Lynas, which meets nearly one third of Japan’s rare-earth demands.

Barjoyai said Japan was the world’s biggest importer of rare earths. China, the world’s biggest rare-earth exporter, was also steadily reducing its exports, which made Lynas even more important to Japan.

“Any disruption to Lynas will affect the Japanese. This, in turn, can affect Malaysia at a time when we are seeking economic assistance from Japan,” he said.

China’s monopoly over rare-earth supplies will grow stronger if Lynas’ operations are disrupted.

Yeah Kim Leng.

Another economist, Yeah Kim Leng, said the prolonged US-China trade war may force rare-earth users to diversify their sources of supply. “Malaysia will benefit from any increased export of rare earths, and greater dependence on Lynas will benefit Malaysia,” said Yeah, who is attached to the Sunway University Business School.

“The main issue with Lynas relates to the disposal of wastes, but Lynas and the government must reach a more permanent resolution. Any disruption of Lynas’s operations would strengthen China’s control over the rare-earth supplies.”

The Malaysian operating license for Lynas expires in September. The government has said the license would be renewed, but environment minister Yeo Bee Yin said last year that Lynas must remove its wastes before its license can be renewed.