Saturday, 3 December 2011

OPEN LETTER TO LYNAS SHAREHOLDERS


DEAR SHAREHOLDERS,

There are many risks associated with the rare earth project in Malaysia which you have not been told. Lynas Corporation is not a typical mining company with fixed asset and a sound track record of practical experience in the mining sector. Nick Curtis is a merchant banker, not a miner. The company’s investment is only as flimsy as what his PR team have managed to spin, hoping that the truth on the ground will never surface because they are out of mind and therefore should be out of sight.

What are the risks associated with the Malaysian rare earth plant?
• Poor location – siting a highly polluting plant near a highly populated area is a big mistake. It has now become the target for Malaysia’s biggest environmental protest action.

• No informed consent from local people - the plant was constructed without any public consultation and least of all the informed consent of the local people.

• The project was badly managed by different contractors and sub-contractors with no experience in rare earth processing anywhere.

• Most people work for Lynas Corporation to cash in on the windfall of the surge in share values and not for the sustainability or the success of the project, causing massive cost over-run and shonky construction.

• The critical part of the plant – the concrete tanks in the processing area are defective due to the omission of the damp proofing membrane at the base of the tank and poor workmanship resulting in serious leakage and cracks. They are expensive and time consuming to fix if at all possible.

• Experienced industrial engineers projected that even if Lynas has summarily fixed the construction problem, it will take at least 3 months for all engineering work to be completed for operation, and another 3 or 4 months for production. The monsoon raining season has just started. No work will be possible in this period and Lynas will probably encounter other flood related problems soon stalling its project completion further. This contrasts with Lynas’ repeatedly unrealistic claim of a January production.

• The Malaysian Government mandated Lynas to provide a long-term waste management plan which Lynas will never be able to satisfactorily produced because there is no safe way to manage radioactive waste. So far, all of the waste management plans submitted by Lynas have been rejected by the Malaysian government.

• Cutting corners and doing it cheap in Malaysia – whilst Lynas managed to by-passed the more stringent Australian laws and procedure to fast track the rare earth plant in Malaysia, Lynas has overlooked that this has sparked outrage and anger amongst Malaysians to challenge their government.

• Ethically minded Australians will not support this project. Some will help the Malaysians to stop it in Australia. The campaign has only just started. You can still divest before it is too late.

• Even if the Malaysian Government decided against all odds to issue Lynas the pre-operating licence, there will be court actions. Cases are being prepared by the various groups both in Australia and in Malaysia potentially stalling the project indefinitely.

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