Mining fear and suspicion

Let’s refine the disclosure standards

A LOT of money doesn’t make one project better. Let’s get that straight. First. Foremost.
The thick flow of mega projects costing tens of billions of ringgit has hogged space in local business sheets in recent months. One can’t be blamed for being overwhelmed, let alone trying to digest the social, economic and the environmental implications of these projects.
So you’d think that it would have been easy for a RM700mil project to get buried under the thicket of limelight, left alone to do its thing quietly, fuss-free until absolutely necessary for it to come out. Not this one (although, quite surprisingly, it almost did).
It was the New York Times which lifted the dusty cloak off the “colossal project” being built in a small, industrial town in Kuantan, Pahang called Gebeng. Potentially, Malaysia will be host to the world’s largest and first refinery for rare-earth metals outside China, which is being built by a subsidiary of Lynas Corp, a major public-listed Australian mining company. The plant’s targeted completion date is the third quarter of this year.
Why would the New York Times, followed by a herd of Australian, Japanese and Canadian leading newspapers which played up this angle over the week, give a rip about this project, which in relative terms (US$250mil) was not mega, you ask? (After all, the last time in recent memory that a New York-based newspaper dedicated editorial space to Malaysia, it was on the social scene of a “chubby” Malaysian’s glitzy and lavish lifestyle in Manhattan).
Here’s why: China’s controls 97% of the world’s rare-earths industry. Its sheer dominance of these precious commodities, which many countries rely on for their business and national security needs, has been a rattling point for major consumers such as the United States, the European Union and Japan. (Rare earths are found in cell phones, radar and high-end applications, including compact fluorescent light bulbs, flat-panel displays, iPads, automotive catalytic converters and rechargeable batteries for electric and hybrid vehicles, among many other things).
Not helping is Beijing’s perceived arrogance over its near monopoly. It recently moved to limit its rare-earth exports which further cemented the nagging suspicion that it is hoarding the crucial elements.
And now, the crux: if Malaysia’s rare-earth project takes off, the refinery could meet nearly a third of the world’s (ex-China) demand for rare-earth materials, which would dilute the leverage China currently basks in. Indeed, this could very well be the balm to soothe the frayed nerves of the Americans, Europeans and Japanese.
Sadly, closer to home, it’s au contraire; this very project is drawing heated criticisms, not least due to its potential hazards. Rare earths may not be radioactive themselves but almost every rare-earth ore deposit contains, in varying degrees, a slightly radioactive element.
The project itself is not new. In fact, it has been in the making for eight years before it commenced in 2008. In early 2009, it hit a snag for reasons not quite clear, which led to an abrupt halt in works. By the time work resumed in late 2009, it was forgotten – up to now.
But questions abound. If the United States is currently aggressively pushing for research and development of these elements in order to eventually spur private investments in this sector, perhaps Malaysia, a developing economy, should walk before it runs as well?
Has a detailed feasibility study been carried out from the socio-environment perspective and was one carried out before the construction of the plant had begun? If so, can we have a look-see, please?
Malaysia’s track record in this area is not blemish-free. In 1985, a rare-earth refinery in Bukit Merah, Perak was set up and eventually shut down in 1992 due to a radioactive botch up; the mess, till today, is still being cleaned up by Japan’s Mitsubishi Chemicals in an exercise that is said to cost US$100mil.
The Malaysian public, and especially the people of Gebeng, deserve to be convinced and assuaged that this new refinery is safe. What they don’t deserve is to watch the processing plant being built to completion with little or no information forthcoming.
If the United States, Canada and Australia have rare earths but had stopped mining them in the 1990s, then why are we getting into this?
Those with political wiles will say that this project draws in the much-needed foreign direct investment into the country while creating job opportunities. But that still does not steal away the imperative for the Malaysian public to have access to sufficient information throughout the process of the project.
This task does not have to be borne by the Government alone. Surely Lynas, with a market value of A$3.5bil can pitch in, especially given its experience dealing with the even more vociferous ultra-green lobbyists in Australia?
● Business editor Anita Gabriel thinks public wrangling over controversial projects can be drastically reduced if those involved pay careful attention to reaching out to the masses. Is that so hard to do?

A dearth of CEO talent. Really?

IS banker Datuk Tajuddin Atan, ex-boss of RHB Capital Bhd, an exceptional candidate to head Bursa Malaysia Bhd?
If you pause or shrug your shoulder, it could mean less that Tajuddin is a poor choice but more of this - if a candidate whose professional track record is not glaringly relevant to the new job as head of the stock exchange, could we then be choosing less than the best available candidate?
Bursa Malaysia needs to do a great deal of heavy lifting to woo quality companies, local and foreign, to list on its platform amidst an extraordinary global wave of exchange mergers promising to crank up competition. That’s also the unfinished job left behind by his predecessor Datuk Yusli Mohamed Yusoff.
Can an individual from a different field fill these gaps? Can Bursa afford to have a CEO with a resume, impressive nevertheless, which suggests he knows very little about marketing a stock exchange, courting investors/companies, cracking down on misconduct and creating a robust liquid trading platform? And does Bursa have the luxury, in an environment bursting with competition, for its CEO to be learning on the job?
(Note: Tajuddin may well outperform expectations but that’s really not the point of this column).
Tan Sri Zarinah Anwar’s term as the Securities Commission chairman, it is believed, will be extended by one year come April.
And if market wags are to be believed, Zarinah had wanted to step down but instead, was asked to stay on as the search for a successor had been in vain.
That throws up more questions.
Is our top talent pool so thin that those in a position to decide on such high-profile appointments have to keep wading in the same waters?
Zarinah’s term expires end March but there’s nary an official word on that. On the other hand, in Hong Kong, things are vastly different.
The CEO search for Hong Kong’s Securities & Futures Commission has begun with admirable openness - the selection panel recently put out an ad in the South China Morning Post on the global search for a CEO, both local and foreign, five months before the departure of its current CEO Martin Wheatley. Wheatley, who had worked with the London Stock Exchange for 18 years, will end his six-year tenure with the Hong Kong market regulator in June this year.
In Singapore, the recruitment process for the top seat of its stock exchange SGX, literally walks the extra mile, casting its net far and wide for a suitable candidate. In mid 2009, Swede Magnus Bocker, who was prior to that the executive vice-president of Nasdaq OMX Group, which owns and operates the Nasdaq stock market and seven European stock exchanges in the Nordic and Baltic regions, was appointed to helm the exchange which is Asia’s second largest listed bourse.
On the other hand, there is also the argument that one need not look that far in the CEO hunt and that there could be potential successors within the organisation.
“The best internal candidates often aren’t broadly known outside the company, but that doesn’t mean they should be discarded. Such a candidate is often greeted with a yawn and perhaps even disappointment from outside the company, but goes on to great success,” Professor Joseph Grundfest, a former commissioner at the Securities and Exchange Commission had reportedly said some time back, when asked to comment on the dearth of CEO talent on Wall Street.
Executive search firm Egon Zehnder International provides the flipside (in an article posted on its website): “Internal candidates have been promoted and evaluated on the basis of their performance, not their potential. Their experiences and their accomplishments, no matter how impressive, simply may not be relevant to what the company will need most.”
Malaysia, with a much-trumpeted aspiration to turn itself into a high-income nation and plan to draw talent back into the country, needs to seriously assess the way it scours the landscape for suitable candidates to head prominent institutions, including government-linked companies. It is not that the choices are flawed, but merely that they are perceivably, not a result of an exhaustive hunt.

* Business editor Anita Gabriel understands that the search for CEOs or those in top spots can be exasperating. But there exists a nagging suspicion that apart from merit and virtue, there are other over riding factors limiting the hunt.