When I read this Reuter’s report which I briefly describe below, I thought it would be interesting to explain how my business partners Dato Yap Lim Sen and I were involved in this kind of business and why the Government stopped our operation about 50 years ago.

Last month a Malaysian Politician said the Australian’s Lynas Corp which is the only significant producer of rare earth outside China through its processing plant in Malaysia should be closed, denting the company’s stock and further unnerving the rare earths market.

China’s decision to limit domestic rare earth production to 45,000 tonnes for the second half of 2018 – the lowest in more than five years – provides only enough supply for China’s domestic buyers. — Reuters

LONDON/HOUSTON: The Chinese government is limiting domestic production of rare earth minerals in the second half of the year, a move likely to crimp international exports and send prices for the critical materials soaring, according to data from Adamas Intelligence.

China is by far the world’s largest producer and consumer of rare earths, a group of 17 elements used to make electric vehicles and consumer electronics. The move is already forcing manufacturers to scour the globe for alternative supplies.

For the second half of 2018, China’s quota for rare earth separation and smelting has been cut 36 per cent, an attempt to better control the market, according to Adamas, a research firm that closely tracks the rare earths industry.

The US military is worried about China’s dominance of the rare earths market, calling it a “significant and growing risk,” according to a Pentagon study released earlier this month.

Research into rare earth alternatives has come up largely empty, leaving manufacturers beholden to the specialized minerals just as demand for batteries for electric vehicles and other products that use the materials is soaring.  

As you know Malaysia was the largest tin producer in the world about 50 years ago, before the introduction of aluminium as an alternative.

Tin is separated from the clay and sand by using water. In the process of extracting tin ore, a tin tailing called amang is produced which contained many other rare earths. We need to use magnetic separators to extract the rare earth from the amang.  

Among all the rare earths we extracted, the most valuable was yttrium oxide which we sold at US$ 30 per ounce. The demand was larger than supply due to the demand for the production of colour television tubes. Before that period, all televisions were just black and white.

We founded BEH Minerals Sdn Bhd in 26 Oct 1965 and we sold our yttrium oxide to Mitsubishi Chemical, one of the world’s largest chemical companies. In the process of removing the oxide from the yttrium oxide, a by-product is known to cause cancer and the Japanese Government forbidden Mitsubishi from doing this process in Japan. At that time Cancer was not curable.

As a result, Mitsubishi joint venture with us to start a plant in Jalan Lahat, Perak in 1965. Unfortunately, the Malaysian politicians took advantage of the situation to declare that there were more cancer cases in the area than in any other place in Malaysia. This prompted the Government to stop our operation. As a result, we lost about Rm 10 million which was a huge sum to us in those days. I think Rm 10 million in 1960 is now worth more than Rm 100 million.

We sued Mitsubishi, being a leading chemical company for mis-leading us. The legal battle dragged on for a long time until we nearly exhausted all our funds. Finally, we settled with Mitsubishi who agreed to compensate us Rm 10 million which was to be used for only Charity purpose. That was how we founded Yayasan Teratai Foundation in Ipoh, Perak.