Lynas ignored 2011 warning to stop relying on political sway

Kuantan MP Fuziah says Lynas misled the public with a narrative that is just half-truth

by NG MIN SHEN / pic by ISMAIL CHE RUS

RARE earths miner Lynas Corp Ltd did not heed the signs despite being warned about the potential fallout from its lack of engagement with the local community over its operations in Malaysia by an advisory firm eight years ago, said Kuantan MP Fuziah Salleh (picture).

Earlier this week, The Sydney Morning Herald and The Age claimed the Australian newspapers had obtained a confidential report given to Lynas in 2011 from Futureye.

The report noted the mining company’s strategy of relying on political willpower would eventually backfire.

“As far as I remember, Lynas engaged with whom they think they can convince, and they only want their narratives,” Fuziah told The Malaysian Reserve (TMR) when asked to comment on the report.

The Australia-listed mining firm, which operates a processing plant in Kuantan, Pahang, has been embroiled in controversy due to the accumulation of radioactive waste stored on-site at the plant.

The group is currently facing problems obtaining licence renewals to operate here, after the government said in December last year the firm must first remove its radioactive waste from the country, as per its commitment made in 2012.

“Basically, all Lynas did was mislead the public with a narrative which is just half-truth,” said Fuziah, who has long spoken out against the firm over the years.

According to the Australian media, the 2011 report concluded that Lynas was in “urgent need” of winning the local community’s support for the future of its Malaysian operations.

It added that failure to procure such support would jeopardise the company’s Malaysian business, as well as its reputation as a “good corporate citizen” in Australia.

“If Lynas is convinced that its political support in Malaysia is so unwavering that it will withstand deep and broad community opposition, then outrage management should be at most a peripheral strategy, aimed at diminishing the reputational cost of a company-government partnership that has largely ignored stakeholder concerns and intends to continue to ignore them,” read the report.

Lynas’ management was warned that past experience has shown “many such situations unravel”.

“Government officials can betray their unenforceable promises to corporations with impunity, and routinely do so when it would be politically costly for them to stay the course,” it noted.

The report said Lynas’ failure to “engage meaningfully” during the two years it had been in Malaysia (at the time) was leading to the escalation of community outrage, which would extend beyond the firm’s control unless it began immediate engagement.

It also warned of the dangers of relying on the Barisan Nasional-led government, which was in power at the time under the leadership of former Prime Minister (PM) Datuk Seri Mohd Najib Razak.

“Corruption (or suspected corruption) is a serious issue that requires proactive management by Lynas…whether there is a direct allegation of any corrupt practice in relation to the project or not, it is essential that Lynas publicly commits to non-corrupt practices.

“It needs to make it credible that senior management in Australia is actually scrutinising managers and contractors in a way that would make corrupt practices hard to carry out,” it said.

Lynas, the only rare earths miner outside of China, has been operating its Lynas Advanced Materials Plant (LAMP) in Kuantan, Pahang, since 2012.

The group is currently fighting off a A$1.5 billion (RM4.34 billion) takeover bid by Australian conglomerate Wesfarmers Ltd, which controls home improvement retailer Bunnings Warehouse, retail chain Kmart Australia Ltd and department store chain Target Australia.

Although Wesfarmers’ offer was rejected by Lynas, Wesfarmers said it is still interested in acquiring the miner.

In fact, the conglomerate came under fire for holding talks with PM Tun Dr Mahathir Mohamad, as critics suggested the group is attempting to obtain approval from Malaysian authorities for a hostile takeover of Lynas.

Following the meeting between Dr Mahathir and Wesfarmers CEO Rob Scott, the PM said there were parties interested in acquiring Lynas who promised to remove radioactivity from the raw materials to be shipped to Malaysia.

However, Dr Mahathir did not specify which companies were interested in Lynas.

Speaking to TMR after Lynas rejected the takeover offer, Fuziah had said this was positive news for Malaysia as it would be difficult to hold the new owner of Lynas to the agreements in place.