From recalcitrant to Lynas deal, is there a thaw in Malaysia-Aussie relations?

The Pakatan Harapan government under Tun Dr Mahathir Mohamad has given its approval to the controversial Lynas and this could be a sign of a thaw in the Mahathir-Australia relationship.

But the deal is a blow to activists while Lynas got a tougher deal that it would have expected under the Najib Razak regime.

Malaysian green activists would find themselves aghast and in disbelief had the Najib Razak regime renewed the controversial Lynas licence but they are no where to be found this time around.

Dr Mahathir gave his approval for the rare earth plant to carry on its activities in Gebeng, Pahang and he is leading a government with parties that led fights against Lynas, the Party Keadilan Rakyat of Anwar Ibrahim and the Democratic Action Party of Lim Guan Eng, Finance Minister in the Pakatan government.

The decision came after high level meetings between Malaysian and Australian officials which is not documented in the media, but we can trace the ‘good vibes’ between both countries based on official statements.

Earlier this year Dr Mahathir had already given his tacit agreement, in private, to allow Lynas to continue its operations. There was no way Dr Mahathir was ever going to cancel the license and lose yet another business worth US$800 million.

The damage was already done with the Lynas project in which Malaysia lost 1 sq km of land as the area is still not safe, which also led to losses in terms of areas meant for development, says Dr M.

He says the radiation effects triggered fear among the community, Malaysia don’t want a repeat of this.

With Dr Mahathir agreeing to the Lynas project, it is perhaps a turning point in the Malaysian-Australian relations. Dr Mahathir is known for his not so-pro Aussie stance and everyone remember the 1992 outburst from then Australian PM Paul Keating.

Keating once labeled Dr Mahathir ‘recalcitrant’ and this sparked a row that lead to Malaysia launching a “Buy Australian Last” campaign. A trade war was averted, and Australia kowtowed to Dr Mahathir in the long run.

Dr Mahathir outsmarted the negotiators in the Lynas deal ending in the Aussie company agreeing to a tougher deal.

Malaysia halted the process for renewing its licence because of waste disposal concerns. But In April, Dr Mahathir made it clear Lynas would be able to continue to operate in Malaysia if it, or a potential suitor like Wesfarmers, removed the radioactive elements before it reached the country.

According to Dr M, Lynas will clean the raw materials first, crack it and decontaminate it somewhere in regard to radioactivity before transporting it to Malaysia. Last year a Malaysian government ministry imposed fresh conditions on Lynas’s licence to operate.

Lynas is the only significant rare earth producer outside China. Rare earth is the name for a group of 17 metals used in batteries, computers, televisions and smartphones. The product is currently at the centre of the growing trade war between the US and China. China controls most of the rare earth production and has threatened to use it a weapon in the trade war against the US.