By Lee Tan and K.K. Tan
Australian rare earth miner Lynas Corporation is once again in the media spotlight after revealing that it would not be able to remove its radioactive waste from Malaysia by September 2019 when its operating licence will expire.
Auditors Ernst and Young highlighted the risk to the company in a note attached to Lynas' interim financial report released on 28 February 2019: "These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity's ability to continue as a going concern."
Lynas' rare earth supply chain has been tainted due to controversies over its location of the processing plant in Malaysia, where opposition to it has remained strong since 2011. Its Malaysian plant was constructed with the blessing of the ousted kleptocratic Prime Minister Najib Razak. Lynas never managed to obtain the social licence to operate there.
However, it managed to obtain relevant licences to operate, despite not having a viable, safe solution for its radionuclides, heavy metals and chemicals contaminated waste from a processing stream known as water-leached purification (WLP). Lynas gave Malaysia the undertaking to removing the WLP waste from Malaysia in order to obtain its operating licence.
All was working well for Lynas – from a penny stock worth about 30c in 2015, its stock value climbed to a high of A$2.70 in April 2018. It would have continued to climb as world demand for rare earth elements rises. However, the stunning result of the general election in Malaysia that ended the 61-year reign of the National Front Coalition (known as Barisan Nasional or BN) turned the political dynamic against Lynas.
Malaysians have voted for change following years of corruption and racially-divisive, toxic politics. The straw that broke the camel's back was a series of serious crimes and multi-billion international corruption scandals linked to ousted Prime Minister Najib Razak, his wife and several high-ranking officers in his party.
Rare earth processing has long been linked to disastrous environmental consequences as it leaves behind massive amounts of radioactive waste that is also contaminated with toxic heavy metals and chemicals including arsenic. More stringent environmental safeguards in most advanced industrialised nations have resulted in China being a dominant supplier of rare earth oxides since the 1980s, despite the abundance of deposits around the world.
Rare earth minerals are strategic commodities in advanced high and smart technological sectors, used in a broad range of digital or electronic gadgets from mobile phones to high-power scud missiles. They are essential elements critical for low-emissions and renewable energy technologies.
Lynas claims that its processing plant creates zero harm and that its 'residue storage facility' is constructed based on best practice standards. However, Malaysia's Executive Review Committee on Lynas, commissioned by the current government, has found serious groundwater contamination with toxic heavy metals such as nickel, chromium, lead and mercury.
These data were collected from Lynas' own monitoring data from test stations around its waste storage area and its final effluent discharge point. The maximum recorded contamination level of 96,110 micrograms/litre was from Lynas' effluent discharge point, labelled as GW13. This reading is over 1,000 times higher than the Dutch intervention level of 75 micrograms/litre. Yet Lynas has nefariously tried to disassociate its poor waste handling from the pollution.
The location of Lynas' residue storage facility on a peat mangrove has likely enhanced the dispersion of the pollutants. Unlike countries with stricter environmental law enforcement, Lynas has not been ordered to stop the contamination and/or to start to remediation to clean up the pollution.
Not far from Lynas' premises, about 50 families depend on groundwater directly for their daily uses. If Lynas' contamination spreads further afield ‒ which is highly likely since it is located on a low-lying peatland subject to frequent floods ‒ the entire Balok riverine flood plain and its estuary may be increasingly affected.
The limited amount of data reported in the Review Report is just the tip of the iceberg of the real extent of Lynas' pollution. Despite a change of federal government, the two regulators that have failed to independently monitor and regulate Lynas – Atomic Energy Licensing Board (AELB) and Department of Environment (DoE) – and the state Government of Pahang (where Lynas is located) remained unchanged from the previous regime. Lynas has produced and piled up 1.5 million tonnes of toxic wastes over the past seven years. Malaysian regulations only allow on-site accumulation of a maximum of 20 tonnes for 180 days.
Malaysians have no access to Lynas' full monitoring data, hence the level of pollution from other key parameters of concern, including thorium, present in the WLP waste, has yet to be determined, even though they are serious public and environmental health hazards.
Unlike other more visible mining disasters linked to Australian miners, Lynas has committed a crime of slow violence like that of the Minamata disaster in Japan. It will take 20‒40 years for the real impacts to be felt since exposure to a cocktail of low-level radioactive material like thorium and uranium, toxic heavy metals and chemicals often takes time to affect human and environmental health.
It was Japan's need for rare earth elements and its more stringent environmental safeguards since its era of pollution in the late 1960s that has resulted in Japan injecting capital into the cash-strapped Lynas' proposal back in 2011. If Lynas fails to remove its radioactive waste from Malaysia and clean up the pollution, this will be a toxic re-run financed by Japan and a second toxic rare earth legacy it is leaving for Malaysia. Twenty years ago, Mitsubishi part-owned Malaysia's first rare earth processing plant in Bukit Merah in the state of Perak. It ended with Mitsubishi spending over US$100 million quietly building a permanent dump to bury its radioactive waste and the entire plant and contaminated soil.
Lynas' radioactive waste generated to date amounts to over 450,000 metric tonnes and is still being generated. It is already 40 times more than that generated by Asian Rare Earth in Bukit Merah. Although the radioactivity of WLP waste is much lower, it is 6‒8 times higher than the legal limit for radiological concentration of 1 Bq/g. Lynas' current WLP waste storage is estimated to result in an effective dose of 14 mSv/year, which is 14 times higher than the international standard of 1 mSv/year.
If Malaysia ended up having to deal with Lynas' radioactive waste and the contaminated groundwater, the implication for the Balok Mangrove and local communities is serious. Lynas' plant is only 5 km from the South China Sea. The Balok mangrove and flood plain supports a myriad of marine and aquatic plants and organisms. The estuary and the sea are a rich fishing ground for many fishing communities dotted along the coast. In recent years, thriving and expanding tourism industries have created jobs and economic activities that support a growing population in the coastal strip.
Peat is a porous and acidic medium, and combined with frequent tropical deluges and high tidal intrusions, Lynas' contaminants are likely to spread faster than in other landscapes – both through surface overflows of leachate and leakages from its inappropriate lining. If the contamination is not arrested in time and Lynas' WLP waste remains in its current state and location, the entire Balok Mangrove flood plain, the Balok River and its estuary may be contaminated with Lynas' contaminants eventually. This will decimate the seafood industry of local fishermen and ruin the region's tourism industries that employ and sustain many more than the 600 jobs at Lynas' processing plant.
As a listed company with the Australian Stock Exchange (ASX), Lynas should have acted with transparency, responsibly and ethically to comply with the ASX Corporate Governance Principle. Yet Lynas continues to claim that it is a zero-harm operation. Lynas has no track record in the safe design and operation of any rare earth plant.
Australian mining corporations have long been associated with environmental disasters and human rights violations in developing nations. The self-regulating report-based ASX Corporate Governance Principle, though it looks good on paper, has not worked to hold these recalcitrant miners in check with their operations overseas.
There is a need for legally binding regulations to hold Australian corporations like Lynas accountable and responsible for their activities overseas. They need to adhere to the same environmental and human rights standards as required in Australia, over and beyond merely reporting to its shareholders via the ASX or ASIC.
Lee Tan is a postgraduate research candidate at RMIT University. Dr K.K. Tan was a professor of Chemical Engineering before his retirement in 2017.
Published in Chain Reaction #135, April 2019. National magazine of Friends of the Earth Australia. www.foe.org.au/chain_reaction
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