China’s Rare-Earth Mining Pollution Problems Provide Opportunities to Other Countries

Anastasia Bogdanova | December 15, 2020 | Views: 195

China is still dealing with the environmental catastrophe of its poorly managed Rare-Earth mining operations and this has opened up opportunities elsewhere.

China’s early dominance of rare earth production may be coming back to bite it. In the 80s and 90s, there was an explosion of rare earth extraction operations in China. This has given the nation control of 80% of the world’s rare earth element (REE) supplies.

However, poor regulatory oversight and illicit extraction operations have taken a serious toll and China is losing its appetite for rare earth extraction as demand is on the cusp of exploding due to the green revolution.

Rare Earth Extraction Has Left a Dirty Legacy in China

The rare earth market is tiny compared to that of precious metals. You can see that in retail brokers where gold and silver are very popular but REEs aren’t even traded. Despite this, rare earth minerals are extremely important.

While China has managed to leverage a near-monopoly over rare earth elements, its operations have left local environments devastated. For example, China water risk (CWR) has reported that operations in Ganzhou caused significant damage to the local water table. This included the release of radioactive materials into the water supply used by nearby population centers.

REE extraction is dirty because of its two primary extraction methods. The first involves topsoil removal. It is then transported to a leaching pond, which uses highly toxic chemicals like ammonium sulfate and ammonium chloride to separate out the elements. This causes erosion, contaminated water, and even air pollution.

The second method is not much better. It involves drilling holes into the ground and pumping chemicals to flush out earth. The resulting mixture is then pumped into the same leaching ponds to separate the REEs.

For a long time, Chinese operations had little to no government oversight and this has led to significant problems for the environment surrounding these sites. It has also led to a reduced appetite in China for domestic rare earth mining operations, which has created opportunities abroad.

Rare Earth Isn’t Actually All That Rare

Unlike precious metals, such as gold, rare earth elements are paradoxically quite common. The challenge lies in extraction, not discovery. China itself only controls around 30% of the planet’s rare earth deposits and largely took dominance over rare earth extraction because other nations like the US were happy to outsource the dirty mining process.

Even China is now beginning to look abroad and has advanced rare earth mining operations across Africa in return for significant infrastructure investments. The nation has also made large investments in Greenlandic mining operations. Other countries, such as the Russian Federation and United States, are beginning to view rare earth elements as a strategic asset and stepping up efforts to control their own supply.

For example, in August 2020, Russia announced its $1.5 billion plan designed to encourage investment in its domestic REE extraction efforts. Russia wants to raise its share of REE outputs to around 10% and become self-sufficient by 2025. The United States has also made significant investments in Greenland in an effort to boost its own rare earth mineral stockpiles. But it has stopped short of accelerating domestic production.

Another potential beneficiary is the European Union. Despite having considerable rare earth element deposits, European nations have been reluctant to exploit them due to environmental costs. Instead, the bloc’s focus has been on recycling efforts. The EU has spent €39 million in research and development for REE recycling in the last decade, with another €100 million in grants on the way.

Europe has also taken the first step to founding an international organization for REE extraction. The Rare Earths Industry Association (REIA) was founded in June 2019 to provide an international forum for discussion surrounding REE extraction. This will theoretically help to diversify supply lines and prevent the major bottlenecks that have occurred due to the Chinese monopoly.

The Sands Are Shifting

As China becomes increasingly concerned about its own environmental impact, there is an opportunity to build significantly more diverse REE extraction centers. A key challenge will be in managing the environmental impact. But improved recycling methods and international oversight could help to mitigate this problem and provide an opportunity for countries around the world.

 

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