China's Rare Earth Mining Catastrophe

Last December, China's Commerce Minister, Chen Deming, said the country "has no choice" but to take stringent measures to clean up its rare earths industry, placing export controls on some of the world's most vital elements.

Beijing cut exports for the first half of 2011 by 35 percent, following a 72 percent reduction for the second half of last year. While most of the attention in the world's press centered on what was regarded as a strategic decision, Chinese officials said they could no longer afford the damage to their environment. With one third of the world's rare earth reserves, the country at that point was delivering 95 percent of the world's exports of 17 different rare earth substances, which go into a wide and growing variety of crucial industries from computer to catalytic converters to wind farms to many more.

The fact is that the country faces massive damage from mining and smelting. Over the last two or three years China has begun to face up to the fact that the rare earths mining industry is beset by widespread illegal mining, virtually complete lack of worker safety guidelines or measures, which has wrecked a broad swath of the country and left thousands of miners suffering from a variety of deadly diseases with pneumoconiosis, or black lung disease the most prevalent. Doing something about the destruction has become imperative.

Google "China rare earths environmental damage" and hundreds of stories will appear. The industry in China produces five times the waste gas, including fluorine and sulfur dioxide as the total flared off annually by all miners and oil refiners in the United States, according to a speech by Xu Xu, the chairman of the Chinese Chamber of Commerce of Metals, Minerals, and Chemicals Importers and Exporters in December in Beijing, who was quoted in a variety of publications. In addition to that, Xu was quoted as saying, the industry produces 13 billion meters of gas and 25 million tons of wastewater filled with cancer-causing heavy metals including cadmium and others.

These are some issues that are being considered in Australia, California and Malaysia as the world scrambles for additional supplies to replace those China is shutting down. Excluding China, global industries will require 55,000 to 60,000 metric tons of rare earth metals in 2011, with a third to a half coming from China. There is always the question in China whether environmental rules will do any good. Some authorities estimate that fully half the rare earth metals being produced in China are smuggled out of the country after being mixed with other ores to disguise them. Nonetheless, the Ministry of Environmental Protection announced that further emissions caps for 15 types of pollutants related to rare earth mining and smelting will go into effect on Oct. 1, probably constricting the supply more .

Cindy Hurst, an analyst for the U.S. Army's Foreign Military Studies Office in Fort Leavenworth quoted the Chinese Society of Rare Earths in an article for the website The Cutting Edge that "Every ton of rare earth produced (in China) generates approximately 8.5 kilograms of fluorine and 13 kg of dust; and using concentrated sulfuric acid high temperature calcination techniques to produce approximately one ton of calcined rare earth ore generates 9,600 to 12,000 cubic meters of waste gas containing dust concentrate, hydrofluoric acid, sulfur dioxide, and sulfuric acid, approximately 75 cubic meters of acidic wastewater plus about one ton of radioactive waste residue (containing water)."

All of the rare earth enterprises in the Baotou region of China, Hurst wrote, "produce roughly 10 million metric tons of all varieties of wastewater every year, most it discharged without being effectively treated, which not only contaminates potable water for daily living, but also contaminates the surrounding water environment and irrigated farmlands." In addition, each ton of rare earths produces 2,000 tons of mine tailings, which often contain radioactive thorium.

Despite those dangers, it appears certain that the appetite for rare earth minerals can only grow, and the attendant dangers. And if China can't supply them, other countries will. In California, a mine in Mountain Pass near the Mojave Desert is being reopened after closing nine years ago because of environmental issues. The mine, being reopened by a company called Molycorp Inc., will have to answer to 18 different California regulatory agencies, spending US$2.4 million annually on monitoring and compliance.

Malaysia, where a wholly-owned Australian firm called Lynas Corporation Ltd is seeking open a US$595 million processing plant for ore shipped from Australia, is currently on the firing line, with environmentalists and opposition political parties dead set against its opening. Lynas says the plant is nearing completion and could start processing ore in September.

On June 4, with protesters waving signs outside the Kelantan hotel where they were staying, an international panel of independent experts arrived to inspect the plant. The panel has since returned to Vienna to renew its findings and is expected to submit its report to the Malaysian government at the end of the month.

Lynas has been struggling to open the plant since 2006, It received its original license in January 2008. The political fallout, especially since the West Australian government announced 10 days ago that it would refuse to accept waste material from the plant, has been heavy, with some observers forecasting that the plant wouldn't open until after national elections projected for later this year or early next.

Malaysian government officials say improved processing techniques have considerably ameliorated any environmental damage and that extraction will use far less damaging techniques to produce more rare earth ores.

Mustapa Mohamed, Malaysia's minister of international trade and industry, took to the New Straits Times newspaper last week to say the government had carefully considered the Lynas proposal and that when it was first submitted in 2006, "it raised questions that went beyond the ambit of (the country's) economic considerations."

The government, he wrote, was " well aware then that the rare earth industry was associated with health and safety issues, especially after the experience of the Asian Rare Earth (ARE) project in Perak in the early 1990s." In that particular incident, a Mitsubishi Chemical subsidiary processing indigenous rare earths ended up with a US$100 million bill and eight deaths from leukemia that were laid to contamination at the plant.

Thus, Mustapa wrote, "it was pertinent to ask what impact the Lynas project would have on public health. How will it affect the environment and the livelihood of people living in its vicinity? Are these risks measurable, and within acceptable limits? Do we have the rules, regulations and institutional framework to monitor and manage these risks? “

Lynas, he said, was granted its manufacturing license after being required to comply with a long list of safety standards defining the acceptable amount of radiation that can be released into the atmosphere throughout the process from construction to decommissioning and remediation.

The Fukushima nuclear plant near meltdown in Japan in the March 11 earthquake, he said, had raised extensive debate and that "some people living in the vicinity of the Lynas site believed the project would pose unacceptable health and safety risks to human life and the environment. In the view of some at least, the project should be terminated."

Thus, he said, he asked the International Atomic Energy Agency to appoint the nine-member panel to study the safety issues. The health and safety of the populace, he said, is the government's number-one priority, one that "overrides all other considerations, and any decision on Lynas will not be made at its expense."

He said the construction of the plant and its incipient risk "highlights the need for investors to be responsible corporate citizens in their host country. They should adhere to standards of conduct and governance which are not in any way inferior to those practiced in their home country. I think these are legitimate expectations, and no enlightened investor will have any quarrel with them."