Malaysia rejects Lynas lawsuit against opponents of its rare earth project

The High Court of Malaysia  today rejected Australian miner Lynas Corp’s (ASX:LYC) application for an injunction against pressure groups that oppose the company’s rare earth plant (LAMP), informs The Malaysian Insider.

Lynas’ action, filed yesterday in Kuala Lumpur, targeted mainly independent media Free Malaysia Today and blog-based opinionated opposition group Save Malaysia Stop Lynas (SMSL).

SMSL lawyer Datuk Bastian Pius Vendargon told reporters the judge dismissed the application, but ordered a hearing for next week.

“Only after May 9, the new date will be set for hearing of injunction,” he added.

LAMP has been under attack from residents, environmentalists and even filmmakers since Lynas started building it in 2010.

“This concerted political campaign, which is based on misinformation, is sabotaging the science- based, regulatory process established in Malaysia and confidence in that process,” said Lynas chairman Nicholas Curtis.

"The specific comments we won’t go into, but they are  – in our opinion and our legal opinion – targeted and defamatory and those comments should be shut down,” Curtis added.

Last month, analysts from Foster Stockbroking said market confidence was building in Lynas, after the Malaysian High Court dismissed complaints against the company. However, there is still an outstanding appeal against the plant to the Malaysian Minister of Science, Technology and Innovation, whose resolution could change Lynas’ plant's fate.

Critics of the project believe that allowing the $230 million refinery will jeopardize Malaysian’s well-being and the environment. Supporters, on the other hand, remark it is set to become one of the few sources outside China to process rare earths and produce metals used in high-tech equipment from weapons to cell phones.

Malaysia’s government recently instituted a Parliamentary committee, expected to report by the end of June, aimed at raising awareness of the controversial plant, rather than deciding on matters such as the approvals process and ongoing operations.

Currently, more than 90% of rare earths metals are processed in China, which has increased export restrictions on these elements as it claims it needs to guarantee domestic supplies and protect the environment. The policy has generated protests from foreign manufacturers who rely on Chinese rare earths. They argue China’s restrictions aim to raise rare earth prices artificially to give its own producers higher profits.

LAMP, originally scheduled to start processing rare earths in the third quarter of 2011, could help stabilize rare earth prices.