Malaysia has a comparative advantage in attracting more downstream activities within the rare earth industry when compared to China as it has a very good legal and intellectual property system, said Dr Matthew James, executive vice-president of Strategy & Corporate Communications of Lynas Corporation Ltd.

At the same time, the cost advantage in terms of labour, energy and chemical cost which used to exist in China is no longer apparent and Malaysia is deemed to be a very competitive location due to the high cost increases which occurred in China over the last decade, he added.

"It's what the Chinese export quota (on rare earth) are trying to encourage in China. They are trying to encourage those downstream industries to move to China by restricting the access to rare earth.

"There are many companies that don't want to move their industries into China as they are concerned about the intellectual property protection. These companies are much more inclined to move their industry into Malaysia," he told Bernama in an interview in Lynas headquarters in Sydney, Australia.

China which produces over 90 percent of the world's rare earth had reportedly been slashing its export quota which had restricted global supply, in turn driving prices up.

Meanwhile, the Malaysian rare earth processing plant had been spurring interest with Lynas signing a letter of intent with Siemens Drive Technologies Division in July for magnet production and the joint-venture is expected to be realised end of this year, James said.

He said five locations were being considered for the joint-venture production plant and three of these were in Malaysia.

He said Lynas was also in commercial discussion with other companies about building downstream application operations alongside its plant in Gebeng.

"When you look at the Malaysian industry, some of the downstream electronic industry, automotive component industry already exist,... you can foresee the investment (for Lynas rare earth plant) makes sense to complete the value chain between the raw material that Lynas will provide and the industries concerned," he said.

Plant 60 percent complete

Meanwhile, the Lynas Advanced Material Plant (LAMP) in Gebeng, Kuantan, will have an initial capacity to process 11,000 tonnes of rare earth oxides (REO) per annum, with expansion to 22,000 tonnes p.a.

The plant, which was over 60 percent complete as at end-June, would produce rare earth products along with a series of synthetic mineral products.

SMSL Protest outside Lynas Perth office The RM700 million plant had been embroiled in a controversy, sparked by claims that it would emit radiation detrimental to public health which had led to a visit by the International Atomic Energy Agency (IAEA) from May 29 to June 3.

In its report, the IAEA said the plant once completed later this year, was expected to be safe and fully compliant with international standards but its pre-operational licence is still subject to regulatory approvals.

- Bernama