A rare earth extracting company named Asia Rare Earth Sdn Bhd (ARE) was established in 1979 for yttrium extraction in Bukit Merah, Perak with the biggest shareholders for the company being the Mitsubishi Chemical Industries Ltd and Beh Minerals (both with 35% share) together with Tabung Haji and other Bumiputera businessmen owning lesser shares.

Since the ARE started its operation, residents from a nearby town of Papan began to complain of an unpleasant odour and smoke from the factory where they also had reported breathing difficulties as a result of the pollution.

The residents later discovered in 1984 that the extracting company of ARE had built a waste channel to a disposal site near their town under the consent of the state government of Perak.

[1] Upon knowing that the state government were in part involved in the activities, around 6,700 residents from the affected town of Papan and several others from nearby towns signed a petition that was subsequently sent to various government departments, including the Menteri Besar of Perak, the Prime Minister of Malaysia, the Health Ministry and the Science, Technology, and Environment Ministry while 3,000 residents including women and children participated in a peaceful assembly and another 200 blocked the road to the waste disposal site.

[1] The committee was visited by a local environmentalist group Sahabat Alam Malaysia (SAM) who measured the radiation levels at the open space and pool near the factory with the conclusion that the radiation in these places was 88 times higher than the upper limit allowed by the International Commission on Radiological Protection (ICRP) with a memorandum then being submitted to the country Prime Minister.

[5] In 1985, eight of the town residents including one who is a cancer victim brought the case to the High Court with 1,500 people from the affected area present to hear the verdict.