Perak State Development Corporation (PKNP), the state investment arm, has clarified today that that it does not intend to be involved in any rare earth refining industry.

In a statement today, PKNP stressed that it's recently announced memorandum of understanding (MOU) with Hong Kong's CVM Mineral Ltd would only be limited to a feasibility study or "exploration" of rare earth mining in the state.

"PKNP and CVM does not intend to develop any project (involving) the processing of rare earth in Perak," said PKNP chief executive Samsudin Hashim.

PKNP's statement comes just 24 hours after news broke that CVM Mineral Ltd and PKNP had inked a MOU on April 16 for a joint-venture exercise to explore and mine rare earth in Bukit Merah, near Menglembu in Perak.

According to CVM Mineral Ltd's announcement to the Hong Kong stock exchange, the joint-venture entails "the exploration and mining of rare earth and other potential minerals and activities related thereto over the land situated at Bukit Merah, Perak".

This has revived fears among opposition parties and activists over the possibility of another radiation contamination scare, which has been blamed for deaths and birth defects in Kampung Bukit Merah in the 1980s.

No environmental concerns

Elaborating on the MOU, Samsudin said that the study period would last six months and it would be cancelled if no approval is granted by the local authorities.

He adds that all cost would be borne by CVM Mineral Ltd and the company would be providing their own experts.

"If the feasibility tests is successful, both parties would study the possibility of a (further) joint-venture, subject to the approval of the authorities," he said.

Samsudin explained that PKNP has a 135.3 million share or 3.85 percent stake in CVM Mineral Ltd which has been operating in Kamunting, Perak and producing magnesium ingots for the domestic and international market.

"CVM has a lot of expertise in the mineral industry and they have extended cooperation with several research centres in Malaysia and China.

"CVM is also in the discussion stage with PKNP and Northern Corridor Implementation Authority (NCIA) to establish a Perak Mineral Centre of Excellence," he said.

He adds that for the purpose of the MOU, PKNP stands to benefit because the results of the feasibility study would provide input on the planning of the state's mineral industry.

Samsudin adds that both PKNP and CVM Mineral Ltd has no relationship with Mitsubishi Chemical Asian Rare Earth plant in Bukit Merah or any other projects in the area.

"Questions about environmental pollution does not arise at this stage," he said.