Lynas asked Malaysia’s top court to review its licence in April, saying current requirements on radiation are different from what was initially agreed.

Extraction and refining usually rely on harsh chemicals, produce a lot of waste, and are expensive and labour-intensive, although there are newer, greener ways to pluck rare earths from the ground.

“I think there’s a growing realisation that Lynas being in Malaysia gives [the government] a unique position and that they should take full advantage of that,” Lacaze told This Week in Asia on August 2.

“It’s not a loan. It’s a grant, which is even better,” she said.

Rare earths have a somewhat misleading name, given their widespread use and relative abundance. They are reasonably plentiful, but are often only found in a particular location in only small amounts.

Magnets made using rare earths still operate effectively at high temperatures, making them useful for electric vehicles and wind turbines. The elements are also crucial for the US defence industry. Each F-35 stealth combat jet requires about 417kg (920 pounds) of rare earths, according to the US Department of Defence.

As early as 2010, the US was growing concerned about China’s dominance of the industry. A dispute that year between Japan and China prompted Beijing to impose a brief unofficial embargo, as it dawned on governments around the world that China produced 97 per cent of rare earth oxides.

Mining for the elements has since diversified, with many other nations including Brazil, India and Russia also involved.

But China still dominates the later production stages, producing 87 per cent of the world’s refined oxides in 2019, according to the International Energy Agency. That year, Lynas produced 12 per cent at its Malaysian plant, with the lion’s share of that exported to Japan.

According to Lacaze, a lack of policies to support the industry in the US, Australia and European countries puts them on the back foot.

“What sets China and Japan apart is that policies are set and continue to be supported over a long period of time. While unfortunately in Australia, the US and the EU, they tend to be more done on electoral cycles,” she said.

Now, however, she thinks that things have started to change, at least in the US, with its 2022 Inflation Reduction Act – which aims to curb inflation partly through investing in green energy – and a proposed bill to subsidise magnet production.

Even if the US administration changes after next year’s presidential election, Lacaze expects those policies to stick.

“When I was in Washington in 2018, the only thing that Trump really did successfully was to align both sides of the house on China. So, the chances that they’ll change their mind when there is a change of government, I think, are a lot less.”

Still, many industry analysts have been privately sceptical about the Texas project’s viability.

Lacaze admits that without cash incentives, the US would not be top of Lynas’ list for new refining locations. Unlike Malaysia, America is not a “low-cost jurisdiction”, although she emphasises this is not due to Kuala Lumpur having looser environmental standards.

Simple geography is another big factor. The US is much further away from Lynas’ Australian mine and centres of magnet production in East Asia than from Malaysia. The Texas plant, on the other hand, risks what Lacaze calls “rare earth tourism”.

Ores shipped into America could be refined and then shipped right back across the Pacific to Japan or Vietnam.

Another issue for Lynas is that entering a new nation and building complex industries from scratch is always challenging. After the firm secured Japanese investment in 2010 it did not open its Malaysian plant until 2013, hitting maximum production capacity in 2016.

Lynas has also faced delays at the new plant it is building in Australia, but Lacaze said she is “very confident” it will be up and running before the January deadline set by the Malaysian govenment for Lynas to cease refining operations that produce radioactive waste at its plant in Kuantan, in the state of Pahang.

The current plan is for operations to start at the Australian plant in September, she said.

It was originally planned to open earlier, but Lacaze described that completion schedule as “arbitrary”, and based on the deadlines set by the Malaysian government.

Nonetheless, the company is hoping it will not have to alter its Malaysian operations, hence its application for a judicial review of the changes to its licence.

“Our position has always been that we were invited into Malaysia on a certain set of conditions. We put a billion dollars on the ground in Malaysia. And to arbitrarily vary those conditions is not OK,” Lacaze said.

Radioactive waste products at the Lynas plant have long been a particular cause for concern. While repeated reports have found no evidence of contamination and that risks are low, the past weighs heavily. A Mitsubishi rare-earths plant that once operated in Malaysia closed in 1994 amid accusations of irradiating the local community.

Helpfully for Lynas, the political winds may be shifting in its favour.

Politicians that had opposed the plant in opposition appear to be changing their tune now that they’re in power. “Malaysia now understands … that these [rare earths] are key drivers in new technologies and new industries”, Lacaze said.

Malaysia has its own deposits and industries – car, electronics, and petrochemicals – that can make use of them.

Still, Lacaze is playing it safe, saying that until the licence is “sorted”, the firm will not lay “another dollar on the ground” in Malaysia.

This is especially the case when the US is rolling out the red carpet. “I forget which president said it, but he said you can rely on Americans to do the right thing, but only once they’ve exhausted all other options. And once they have decided to do it, they can execute [actions] like nobody else.”