Sunday, September 16, 2012

Future Rare Earth Processing Plants Likely to Trigger Public Protests In Concerned Countries Due To Health And Environmental Concerns; Companies Likely To Decrease Their Dependence On China

Executive Summary:
While rare earth mining and processing companies like Australian Lynas and US Molicorp tend to decrease their dependence on Chinese resources, they are likely to face multiple challenges.  Costs are highly likely to be one of the decisive factors for the location of rare earth processing plants. However, the public opinion’s safety concerns are likely to remain a major  challenge for rare earth companies. Moreover, social media, in countries with significant Internet access and government controlled news sources, is likely to remain one of the most effective tools for public campaigns.

Lynas, an Australian based company, received a temporary operating license for the world’s biggest rare earth processing facility in Malaysia. Production will begin in October 2012. Molycorp recently reopened its rare earth mine in Mountain Pass, California which was closed down in 2002 because of low-cost Chinese production. It is believed that the increased activity of Lynas and Molycorp in the production of light rare-earth elements will weaken world market prices due to the growth in supply. Lynas will likely face the following challenges: health and safety concerns for locals, renewing the temporary license and activists trying to shut plant down after Malaysia’s elections.

Protesters at the Lynas’ office in Australia
While Lynas’ Mount Weld mine  is located in Western Australia, the company established its processing plant in Malaysia. According to Lynas, the main reason for this move was Malaysia’s lower costs. As the mining related costs are highly likely to be higher in Australia than in China, Lynas had to decrease its rare earth processing costs to remain competitive in the world market.
Malaysian activist are geared up to blockade the ore shipments from Australia once it has been mined and to demonstrate one of the biggest examples of civil obedience in the nation. This has been sparked by major health and safety concerns for the locals. Mitsubishi mined rare earths in the 80’s in Malaysia’s Perak State and it is thought that they were responsible for birth defects and and leukemia among residents. Malaysia’s Prime Minister, Najib Razak, has said that the plant is “factually and scientifically safe”.
It is likely that health risk related concerns about rare earth processing plants will be one of the key agendas for future plants all over the world.
The example of Malaysia shows the role of  social media where the ruling political parties have a tight grip on traditional news sources but they were unable to handle social media so average Malaysians were able to carry out a huge protest against Lynas’ rare earth processing plant.  While Lynas ultimately received the temporary operating licence from Malaysian authorities, the country’s Facebook and Twitter users were able to postpone the licence grant, causing financial damages to the company. Nevertheless, Lynas’ underestimation of the role of social media also contributed to the protesters’ success.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked in a team. The subject is highly complex and the time available for the task was adequate.

Methods And Processes:
Using Gmail - our group shared contact information amongst ourselves. This included e-mail address, phone numbers, twitter handles and google plus information. That way, we had multiple methods of communication. We used google docs to create, share and work on our SFAR and called each other to coordinate our next steps. We then used google hangouts whilst simultaneously working in google docs to write our SFAR. We then independently brushed up and refined our work before submitting to the Blogger platform.
The use of these collaborative tools was essential as we have very different schedules. The ability to work on things separately was useful but the ability to work simultaneously without being in the same room was essential. The combination of google docs and hangout were perfect for our needs and allowed us to work without any communication delays that we would have found with e-mail or texting. I found the screen share function of google hangouts particularly useful for sharing pictures that I thought we could insert into the final product.

Dean Atkins -
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