Lynas’s LAMP facility is secure regardless of Malaysian Electoral Outcome
Lynas Corp (ASX: LYC) has started production in February and is close to concluding the last legal obstacles brought forth by the Save Malaysia Stop Lynas (SMSL) campaign. The SMSL’s efforts were politically exploited and used by the opposition Pakatan Rakyat (PR) party, led by Anwar Ibrahim, for political gain, trying to accumulate political capital with local Kuantan communities in view of an important political election that must be held by next June. To this effect, the ruling Barisan Nasional (BN) party, led by Prime Minister Najib Razak has backed Lynas in the highly politicized dispute-exploited by the opposition Pakatan Rakyat party-has started its campaign in the region that is home to Lynas’s Advanced Material Plant (LAMP) processing facility. The BN places great importance in winning support in Kuantan, because it is the state capital of Pahang, PM Najib Razak’s home state.
The BN is launching a major effort to ensure that support by unveiling a series of infrastructure and investment initiatives, allocating some RM 100 million to this end. The BN has also promised to fund a proposed Chinese private school in a clear effort to appeal to the Chinese community – said to have been among the main LAMP detractors over the past few years. The election is expected to be called soon as has to take place before June; given the results of the previous vote, the opposition has a stronger chance than in previous elections. The political season will add some uncertainty lingering over Lynas in the next few weeks; however, most Malaysian pundits suggest the odds are still in favor of a BN victory.
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Until a few months ago, meanwhile, a victory by the opposition PR Party was considered to have been rather complicated for Lynas, given the party’s exploitation of the SMSL campaign for its own political gain. Nevertheless, during a visit to Australia, PR leader Anwar Ibrahim in an interview with the ‘Sydney Morning Herald’ Anwar Ibrahim was quoted as saying: “If Lynas can come out with a convincing argument there is no risk to people’s safety and security I will be the first to champion the plant there.” After some criticisms, another leading figure in the PR party, Indera Mahkota Azan Ismail, who represents the Gebeng Industrial Area where the Lynas ‘s LAMP is located, defended Ibrahim’s stance on Lynas. The MP suggested that closing the Lynas plant if it is proven to have met all safety and security requirements would not be rational. This stance takes a clear departure from the SMSL campaign and is essentially in line with the provisions of Lynas’s Temporary Operating License conditions.
The opposition to LAMP and some of the less rational arguments against it materialized around in the aftermath of the Fukushima nuclear meltdown in Japan in 2011. The tsunami that caused the Fukushima meltdown set off a series of political and environmentalist tsunamis worldwide, and especially in the region, which forced governments to rethink energy policies. The repercussions were felt in all continents; Germany decided to cut nuclear energy altogether and Japan shut down all nuclear reactors, even if these accounted for about a third of all power generation in the highly industrialized country. East and Southeast Asia saw the most dramatic fallout, including at the social and populist level and campaigns such as SMSL received a boost. However, just as Japan’s stance on nuclear power is following a general worldwide trend that is recognizing its necessity, the economic powers of South East Asia, Indonesia, Vietnam and the Philippines are realizing that nuclear energy is the best solution to confronting their reliance on carbon energy sources.
Nuclear power is being proposed as the best path to energy security, even – or especially – after considering the renewable wind or solar energy sources. Southeast nations are therefore expected to start expanding nuclear power projects in the next five years, especially as annual economic growth rates in the region are expected to remain well above 5%, which means, among other things, a definite increase in energy demand at all levels. Even the tiny state of Singapore – surrounded by Malaysia – is considering nuclear power. If Indonesia, a major oil producer and exporter, is considering nuclear energy, surely Malaysia, which also has large oil reserves, cannot be far behind. This reality has surely been studied by the leadership and technocrats in both the leading political parties competing in the next Malaysian elections. The general climate in the region is showing a propensity for more rational evaluation of crucial development and industrial growth policies, all of which should strengthen Lynas’s position.
For those still inclined to fear a PR victory; regional complications have emerged that will make this more unlikely. The PR’s links to some Islamist elements is not likely to play well in view of a growing dispute from Philippine Muslim extremist elements, related to the infamous Moro National Liberation Front, (who is leading a separatist campaign in the Philippines themselves) who staged an invasion of the Malaysian region of Sabah last February. The Malaysian government, backed by the Philippine government, has retaliated militarily against the group with links to the Abu Sayyaf Group (ASG), is accused of extremely brutal violence (some of the invading members murdered Malaysian police officers in their attack using extremely brutal methods) and said to be linked to al-Qaida.
The BN has used the raid in Sabah to accuse the opposition of having links to the Philippine rebels. Reuters claimed an anonymous Filipino military source of accusing a Malaysian opposition politician of inviting the rebels to “discuss land issues”. The Malaysian government has interceded in talks between the Philippines and its Islamist rebel groups and potential talks between opposition members and the various parties involved are likely and not necessarily for sinister ends. Nevertheless, in a politically sensitive period such as an election, the BN can leverage these, along with noted suspicious links between the PK and Islamist factions, to score more political points in the election by presenting the opposition as irresponsible and not sufficiently mature to lead. The Sabah issues can also be expected to dominate the headlines and the concerns of most Malays, leaving SMSL and its political allies in the shadows.