Protesters Use Social Media, Blogs to Warn That Rare Earth Mining Plant Is Unsafe

By Commodity HQ  FEB 21, 2013 11:25 AM

Retired math teacher Tan Bun Teet and his "Save Malaysia, Stop Lynas" campaigners have drawn nationwide support.

 


As the world’s voracious appetite for all things commodity continues to grow, it is perhaps no surprise to see frequent backlash from the public, particularly eco-conscious groups. In recent months, Sydney-based mining firm Lynas (ASX:LYC) has fallen under the media spotlight as an unlikely opponent managed to gather enough support to disrupt the company’s plans to expand its operations.

With the support of Twitter, Facebook (NASDAQ:FB), and the good ol’ World Wide Web, retired math teacher Tan Bun Teet and his “Save Malaysia, Stop Lynas” campaigners have drawn nationwide support through an Internet-based campaign to challenge the environmental impact of the rare earths mining company’s refinery plans.

Rare Earths – A “Dirty” Business

It was almost five years ago when Lynas first broke ground for a new refining plant in Kuantan, Malaysia. The local government fully supported the rare earths company’s plans, as they hoped the new venture would have the potential to weaken China’s dominance of the world trade in these rare commodities. Not surprisingly, however, local residents were quick to oppose Lynas’ new plant, as concerns over safety and environmental consequences were brought to the surface.

While harmless by themselves, rare earths mining and refining is a somewhat controversial process. These elements are frequently mixed with potentially dangerous radioactive ores in the separation process, and the disposal of this low-grade radioactive waste has often come under scrutiny.

Though the Malaysian government has deemed that Lynas’ new plant is indeed safe, protesters remain unconvinced, stating that the authorities improperly awarded the firm an operating license. Last month, however, the High Court in Kuantan ruled that the government and Lynas took all the necessary steps to ensure the safety of the plant.

Who Will Come Out On Top?

Meanwhile, Wall Street has seemingly sided with the rare earths company, with JPMorgan Chase upgrading its recommendation on the stock to “buy” from “hold.” And though from a judiciary and legal standpoint it looks as though Lynas will come out of this mess with a victory, Mr. Tan and his group vow to continue to file actions specifically targeted at hindering the company’s ability to receive additional funding in hopes of ultimately forcing the firm to back down.

And while this issue may seem like a somewhat isolated case, investors should not be surprised to see even more environmental groups challenge this controversial corner of the commodities market in the near future.

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Editor's note: This article by Daniela Pylypczak was originally published on Commodity HQ. 
No positions in stocks mentioned.