ASSESSMENTS

A Malaysian Rare Earth Processing Plant Looms Large in the U.S.-China Trade Spat

Aug 19, 2019 | 10:30 GMT

Laborers work at a Lynas plant in Gebeng, 270 kilometers east of Kuala Lumpur, on April 19, 2012. The subject of numerous environmental concerns, the Lynas plant may not help the United States and others find a short-term replacement for Chinese rare earth supplies.

(SAEED KHAN/AFP/Getty Images)

Highlights

The extension of Lynas' mining permit removes a key threat to the global supply of rare earths from outside China — at least for now.
Domestic Malaysian political maneuvering could jeopardize the project, as Prime Minister Mahathir Mohamad maintains a tenuous hold on his coalition government.
Additional rare earth processing plants are likely to come online in the coming years, especially if tensions remain high between the United States and China, thereby slowly reducing the significance of the Malaysian facility.

A key link in the global rare earth supply chain is set to stay in business -- albeit perhaps not for very long. The Malaysian Atomic Energy Licensing Board officially decided on Aug. 15 to extend an operating permit for Pahang state's Australian-owned Lynas Advanced Materials Plant, which processes rare earths that the company mines in Australia, for an additional six months ahead of a Sept. 2 expiration date. The decision addresses an eight-month dispute between Lynas and Kuala Lumpur regarding the processing and disposal of low-level radioactive materials like thorium that are mined alongside rare earths but become waste after the rare earth elements are separated. As the only major processing facility outside of China, the Lynas facility is critical to buyers like Tokyo and Washington, especially at a time when China is threatening to cut off exports of rare earth elements, which are essential in the manufacture of...

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