Lynas Corp. (LYC) Chief Executive Officer Nicholas Curtis said he underestimated the power of Facebook and Twitter when his mining company decided to build the world’s biggest rare-earths plant in Malaysia.
Lynas is now counting the cost as thousands of tons of unprocessed raw materials pile up at its Mount Weld mine in Western Australia while it waits for a promised refining permit. Local residents, worried about possible contamination from the Pahang plant, have used new media to rally local and foreign opposition to the facility.
In hindsight, “I’d have dealt with the emerging community debate by the social media a little bit more intensely, a little bit earlier,” Curtis said in a phone interview from Sydney on June 29.
“We probably didn’t recognize the power of the social media to create an issue.”
There are more than 12 million Facebook users in Malaysia, according to Facebook Inc., highlighting the importance of social media engagement in Southeast Asia’s third-largest economy.
Lynas, which was partly lured to Malaysia by 12 years of tax-free status, doesn’t have any other means to refine until the plant opens, nor a backup plan to process its raw materials elsewhere, Curtis said. Lynas has lost half its value in the past year in Sydney trading.
The hold-up has repercussions for clients that planned to use its rare earths in hybrid car batteries and advanced magnate technology, he said.
Some prospective customers have reversed plans to open factories near the Malaysian plant, instead opening factories in China, which currently supplies 90 percent of the world’s rare earths, Curtis said. He declined to name companies for confidentiality reasons.
‘Money and Anxiety’
“These delays are costing us a significant amount of money and anxiety with our customer base,” said Curtis, declining to provide client names. “They are monitoring very carefully.”
Rare earth minerals, 17 chemically similar elements, are used in Apple Inc.’s (AAPL) iPod music players, in addition to flat- screen televisions, magnets and hybrid cars. The materials are also used to make goods such as Boeing Co. (BA) helicopter blades, Nokia Oyj (NOK1V) mobile phones and Toyota Motor Corp. (7203) wind turbines.
“The destabilizing of our licensing has in fact destabilized their commitment to investing downstream in Malaysia,” Curtis said. “That’s bad for the Malaysian economy in the longer-term.”
Protests, including a march on Parliament, escalated following leakages at nuclear power plants after Japan’s earthquake and tsunami in March last year. While technologies used in rare-earth processing are different, local residents and non-governmental organizations are concerned about the risks of radiation and what will happen to the waste.
Lobby Campaign
Save Malaysia, Stop Lynas!, a lobby group, has more than 40,000 followers on its Facebook page. It also uses a blog site and Twitter Inc.’s blogging service. Other sites sprang up as the campaign became known nationally and abroad.
“Malaysian national media is controlled by several political parties,” said Jade Lee, a Malaysian environmental consultant and protester now based in Melbourne. “Social media doesn’t have that level of control so people can speak freely and share their views.”
The Australian miner has filed defamation suits against Save Malaysia, Save Lynas! and online news portal Free Malaysia Today, according to a statement from the company.
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