Illegal exploitation of rare earth metals still rampant

(Ecns.cn) -- A large number of unauthorized groups are secretly exploiting rare earth minerals in Ganzhou of East China's Jiangxi Province in spite of stricter environmental policies by the government to regulate the sector.

The illegal activity is contributing greatly to an already serious pollution problem, but because of its high profitability the business appeals enormously to local people, both civilians and officials, notes China Economic Weekly.

Statistics show that money spent on tackling the pollution spawned by rare earth mining in Ganzhou greatly exceeded the industry's earnings in Jiangxi Province last year, yet the pollution is often irreversible.

Since last year, China has put great effort into rare earth integration and tried to solve the problem of excess supply while reducing pollution. However, those efforts seem unlikely to succeed.

Defying regulations

Two years ago, Pan Juan's husband discovered rare earth deposits in a county in Ganzhou and later bought the land use rights under the pretense of planting fruit trees, reports China Economic Weekly.

According to Pan, they planted trees only on the outer edge of the land, while secretly exploiting rare earth minerals and selling them for high profits. The price of the materials reaches as high as 400,000 yuan (US$63,400) per ton, making the profits almost as good as dealing drugs, added Pan.

Late last year, the government began cleaning up the rare earth industry by expanding environmental controls, strengthening inspections and implementing stricter rare earth environmental policies. Crackdowns have focused on illegal exploitation, black market transactions and smuggling.

Since then, many legal small-scale companies have shut down production, but people like Pan's husband have been unwilling to stop.

During last Spring Festival, Pan said her husband would work covertly at the mine from 7 p.m. till 7 a.m. the following day, and then process the rare earth into oxides in the afternoon.

Loopholes

Since the government has tightened its control over the industry, the number of mines in Ganzhou has been reduced from more than 1,000 to 100, and rare earth production has been limited within quotas, says China Economic Weekly.

China has issued a total of 103 rare earth mining licenses, and Ganzhou alone holds 88 of them. In 2004, the city handed over all of its licenses to the newly founded Ganzhou Rare Earth Mineral Industry Co Ltd, hoping for total control of the resources.

However, because of stricter government quotas, the company can only produce 9,000 tons of rare earth every year, according to an official. If the company happens to produce 1,000 tons more this year, then it can only produce 8,000 tons the next year, he added.

Yet the policy has its loopholes. Because the company was co-founded by the city and eight rare earth-rich counties, the eight branches of the company can hand over their quotas to private mine contractors whose products can be bought by the company and sold downstream to firms in the city for further processing.

According to the official, some mine contractors produce more rare earth than the quotas, but hide it from the company and smuggle it out to other places. And because rare earth deposits are everywhere in Ganzhou, it is very difficult for authorities to canvas the entire area.

Meanwhile, enticed by the high margins of the business, more and more farmers are also learning how to exploit rare earth, which makes unauthorized mining and processing impossible to guard against completely.

Village directors, township heads and officials at local mineral resource bureaus are also involved, and their collusion with private miners makes the illegal activity even more difficult to detect, notes China Economic Weekly.

The price of exploitation

On April 8, 2012, China set up a rare earth association to streamline the industry's development. At the launch ceremony, Su Bo, vice minister of Industry and Information Technology, revealed that spending to tackle the environmental pollution in Ganzhou was about 38 billion yuan (US$6 billion), but that the profits earned by Ganzhou Rare Earth Mineral Industry Co Ltd were only 6.4 billion yuan (US$1 billion).

Because mining rare earth materials is devastating to nature, Su said the government is looking to further tighten its regulations over the industry.

In recent years, the "soaking-mine method" has been widely adopted, in which workers pour large amounts of vitriol ammonia into the mountain and then distil the rare earth minerals after certain reactions. However, that poisonous liquor is left behind and can leach into underground water sources.

The environmental protection department estimates that wastewater from the rare earth industry is over 20 million tons every year, and that the amount of ammonia nitrogen is between 300 milligrams and 5,000 milligrams per liter, which is hundreds of times the national standard.

In the past, the traditional process was to remove trees and grass first, and then peel off the topsoil. The damage caused by the so-called "remove mountain campaign" is still visible, said Liu Zhiwei, a Party secretary at Longnan County's mineral resources bureau in Jiangxi.

Rare earth refers to a group of 15 specific elements known as lanthanides, plus scandium and yttrium, used for everything from smart phones to guided missiles. While some rare earth metals are relatively common, they are dispersed in a way that makes it difficult to find deposits with high enough ore grades to exploit economically.