There are obviously many who want to believe Rare Earths are rare.
That is not true at all. What had been rare was commercial demand.
Today, even at the minute amounts used, it all adds up to a serious
business. What China did was to set out to supply the whole global
market which they have done.
Yet rumbles on pricing advantage has merely activated the exploration
genie and we already have a serious back-load of viable prospects and
that opens the door to high grade discoveries which can quickly enter
the supply chain.
China has become the masters of the metallurgy but that only takes
you so far. It all can be quickly replicated.
You do need a center of global expertise because of the complexity
and China is as good a place as any, particularly since toxicity is a
serious issue. This type of processing is nasty
Inside China's
secret toxic unobtainium mine
By RICHARD JONES
IN BAIYUN OBO, INNER MONGOLIA
UPDATED: 11:19 GMT, 10 January 2010
Elements that rule the
globe
Rare-earths are
so-called because when they were first discovered in the 19th Century
in Sweden, they were believed to be some of the most uncommon
elements.
But through further
scientific discovery, rare-earths have been found to be relatively
abundant in the Earth's crust. However, the high cost of extraction
means that only areas with rich deposits are worth exploiting.
Rare-earth metals are
typically malleable. They also have high electrical conductivity.
They are often
extracted from minerals through a process that involves dissolving
elements in different liquids - usually water and a solvent.
There are 17
rare-earths and their purposes include being used in shielding for
nuclear reactors, fibre optics, flatscreen displays and earthquake
monitoring equipment.
One rare-earth,
erbium, acts as a natural amplifier so it is used in fibre-optic
cables to boost signals. Terbium generates a change in an electrical
circuit when the metal is compressed. That is why it is often found
in earthquake monitoring devices for detecting movement along
fault-lines.
Sometimes rare-earth
elements are combined in alloys to create strong magnets, which are
used in wind turbines. The magnets are a crucial part of the
generators that convert the rotational motion of the turbine blades
into electricity.
The magnets can be
made from rare-earths neodymium and samarium, although they are
extremely brittle and also vulnerable to corrosion, so are usually
plated or coated.
Another rare-earth,
dysprosium, is used in many of the advanced electric motors and
battery systems in hybrid vehicles because magnets containing the
element can be much lighter and therefore more energy efficient.
Dysprosium has a
tendency to soak up neutrons - the tiny particles that occur in atoms
and are produced in nuclear reactions. Metal rods containing
dysprosium are also used in nuclear reactors to control the rate at
which neutrons are available. The magnetic properties of dysprosium
alloys make them useful in CD players.
Cerium is used in
catalytic converters, which cut carbon dioxide emissions from
vehicles, while praseodymium creates a yellow colour in ceramics. In
alloys, lanthanum softens a metal, making it easier to work with and
sometimes more durable too.
Last week it was
reported that China - which has a global monopoly on the production
of rare-earth metals - is now threatening to cut off vital supplies
to the West. A shortage would jeopardise the manufacturing and
development of green technologies such as wind turbines and
low-energy lightbulbs. RICHARD JONES is the first Western journalist
to visit the rare-earth mines in Inner Mongolia to discover why China
is unwilling to give up its precious elements...
It looks like a scene from an apocalyptic science-fiction movie. High on the frozen plains of Inner Mongolia, giant trucks rumble across the floor of a lunar-like crater so vast that it looks as if it might have been gouged out by a meteorite.
As we peer down at the
eerie spectacle from the crater's edge, a security guard behind us
barks out in Mandarin: 'Explosives! Move away!' Seconds later, a
deafening crack rings out and part of a 660ft high rock face is
brought crashing down.
Booming business:
Explosives tear down yet more rock in the vast Baiyun Obo mine
When the dust settles,
170-ton dumper trucks close in to scoop up the rocks. They are taken
to refineries where rare-earth metals - known in the mining industry
as 'unobtainiums' because they are so scarce - will be extracted
using boiling acid and other toxic chemicals.
This two-mile-wide
crater in one of the most remote corners of China is the secretive
Baiyun Obo mine. It's the world's biggest mine and the largest single
source of rare-earths, the metallic elements that are driving the
global revolution in green technology.
The rare-earths
blasted out of rocks here feed more than 77 per cent of global demand
for elements such as terbium, which power low-energy lightbulbs;
neodymium, which powers wind turbines; and lanthanum, which powers
the batteries of hybrid cars such as the Toyota Prius.
They are also used in
mobile phones, computers, iPods, LCD screens, washing machines,
digital cameras and X-ray machines, as well as missile guidance
systems and even space rockets. Industries reliant on the rare-earths
are estimated to be worth an astonishing £3trillion, or five per
cent of global GDP.
I was the first
Western journalist to set foot inside the mine. What I saw at Baiyun
Obo and the poisoned refineries it feeds raises disturbing questions
about the future we are buying into - and who will control it.
A brave worker agreed
to smuggle me past tight security and the police patrolling the
perimeter in four-wheel-drive vehicles to show me around the site
which is run by the state-controlled Inner Mongolia Baotou Steel
Rare-Earth Hi-Tech Company.
On the crater floor,
Terex dumper trucks, the largest in China, towered over us as they
shifted 168 tons of rare-earth rock. It's a 24-hour-a-day operation.
The rocks are full of
rare-earth metals combined with iron ore, and the rare-earths are
extracted as a supplementary process to the iron-ore extraction,
making it the most productive source of rare-earths on the planet.
It is a source upon
which the Western world has become dependent. In 2008, China supplied
139,000 tons worldwide, 97 per cent of the world's total rare-earth
production.
The architect of
modern China, Deng Xiaoping, realised the significance of the
elements lurking in the arid wastes of Inner Mongolia almost 20 years
ago when he said: 'There is oil in the Middle East but there is
rare-earth in China.'
His pride is shared by
mine worker Shang Liqing, who drove me to a vantage point overlooking
the huge main mine.
'This isn't just the
rare-earth home town of China but of the entire world,' he said.
Describing how the
mining business has transformed the small town of Baiyun Obo, he
explained: 'The roads here were dirt tracks only a few years ago and
the workers used to live in shacks. Now they live in apartment
buildings. There are no beggars in this town any more. Anyone can
make money out of these rocks.'
That is why some
farmers from the grasslands and plateaus surrounding the mines have
given up working the land. In He Jiao, 30 miles south of Baiyun Obo,
exfarmer Liu said he was earning far more money working at the mine.
'I can make much more
money and easier money, too,' he boasted. 'I work nine months a year
and I still make five times as much. Soon, we will leave this house
and move to a new apartment I have bought.'
But the new-found
wealth has come at an appalling environmental price, turning the town
and the surrounding areas into a poisoned, arid wasteland littered
with unregulated refineries where the rare-earths are extracted from
rocks.
The crude refineries
squat along the valleys north of the town, surrounded by partly
frozen red-coloured 'tailing lakes' up to a square mile in size where
rocks are kept before being processed.
The land is scarred
with toxic runoffs from the refining process and pock-marked with
craters and trenches left by the huge trucks that transport the rocks
across ice and mud. Rusting machinery lies scattered along the valley
floor, giving it the appearance of a war zone.
Around 100 miles south
of Baiyun Obo, larger rare-earth refineries sit around the banks of
the world's largest tailing lake, Baogang - seven square miles of
evil-smelling toxic waste that shows the shocking extent of this
industry's impact.
It is a scene that
Chinese officials, and particularly those from Baotou Steel, do not
want the world to see. Several villages close to the lake have
already been relocated because of pollution and only minutes after we
reached the lake, security guards hired by the mining company arrived
to hustle us away.
At a remote processing
plant called He Jiao Mu Qu, in nearby Guyan county, workers showed me
around what must be one of the most toxic factory floors anywhere.
They earn relatively high salaries - 1,600 yuan (£145) a month for
removing rare-earth from rocks.
Inside the factory,
boiling sulphuric acid flows in open trenches and boiling yellow lava
spews out of kilns at the end of rotating steel pipes. The
sulphur-filled air stings the eyes and burns the lungs. Workers'
clothes were peppered with acid burns.
'We start out with
uniforms but they soon get burnt away by the acid,' I was told by one
worker whose trousers were a honeycomb of acid burns. 'They give us
gloves and masks. But the masks don't do much. I have trouble
breathing at the end of every 12-hour shift.'
Another worker, Guo Fu
Qiang, said: 'The money is quite good. But our boss doesn't pay us
anything extra for working in the summer heat or freezing winters,
and none of us has accident insurance.'
A worker in an
adjoining factory warehouse insisted he would never work on the
factory floor, however much he was offered. 'It's suicide,' he said.
'If you work in there long enough, you will die of cancer.'
Ironically, as the
environment surrounding the mines in Inner Mongolia becomes more
poisoned, demand for green technology in the West is driving up
demand for rare-earth metals. Worldwide consumption is expected to
hit 200,000 tons a year.
China has a virtual
monopoly on the market but has been cutting export quotas in each of
the past three years, saying it needs rare-earths for its own
increasingly hi-tech industrial output and that the West should begin
to source its own.
John Kaiser, a
California-based mining expert and rare-earths specialist, said: 'If
the world gets really serious about green technology, it could result
in a scale of demand that rare-earth suppliers would be unable to
cope with.
'Low pricing from
China has killed the rest of the world's ability to produce
rare-earths. The mines could not compete on price. Health and safety
laws [in the West] are very different, too. We know there's billions
of dollars' worth in the ground outside China but it would take that
much to get it out at the moment.'
China's decision to
cut export quotas has already set alarm bells ringing. The United
States imports all its rare-earths and more than a billion dollars'
worth of goods consumed in America every year contain rare-earth
elements.
'Industries are
snooping all over the world for alternative supplies of rare-earths,
but any new facility is going to take five to ten years to come
online,' Kaiser said.
Only two new
rare-earths mining projects are currently planned outside China - one
in Mountain Pass, California, the other in Mount Wells, Australia.
Neither, however, will be in production until at least 2014, and
neither will be on the same scale as Baiyun Obo.
'The rest of the world
needs to exploit their own resources,' Yu Jingxue, sales manager for
the Inner Mongolia Baotou Steel Rare-Earth International Trading
Company, told us. 'China has already supplied the rest of the world
with 90 per cent of its rare-earths. We need our rare-earths for
ourselves.'
Although China says it
needs the metals for its own developing industries, some experts
believe Beijing is using the tactic of restricting supply to force
manufacturers to bring their factories and technological secrets to
China.
Dudley Kingsnorth, an
independent rareearths marketing consultant, said: 'The Chinese will
not deny the rest of the world rare-earths but the price will be that
the West needs to move its manufacturing facilities to China in order
to get access. Then it becomes a question of sovereign risk.
Countries and manufacturers don't want to have 60 to 70 per cent of
their manufacturing in one country.'
China has made clear
its desire to shift from its traditional role as the 'world's
workshop' with low-tech, labour-intensive factories, to more
high-tech manufacturing. It may use its near-monopoly on rare-earths
to make possible that leap forward.
'At the moment, China
dominates rare-earths supply but only employs hundreds of workers to
get it out of the ground,' Kingsnorth said. 'To refine it further,
they employ thousands more workers.
'But to get real value
added and produce the end products - the phones, the cars, and the
hard disks - China can employ millions of people. And to support its
economic growth China will need to supply 300 million jobs by 2020.'
Kaiser warned: 'It's
the long term that manufacturers need to worry about. Toyota, for
example, does not have a long-term guarantee of supply. If it wants
to plan for the future and pump out millions of electric cars, it
needs to invest in a guaranteed supply.'
It is a situation
China already seems aware of. After a recent visit to Japan, where he
met executives from electronics firms such as Panasonic-Si Hu, of the
Baotou Rare-Earth High Tech Zone Committee, told the official China
Weekly magazine that the Japanese were 'dying for rare-earths'.
In what sounded like a
cruel taunt, he added: 'Without rare-earths they cannot survive. If
they cannot get the raw material, they'll tear their face off.'
The supply situation
may also have a more chilling aspect to it - it may allow China to
exert influence over the production of missile and rocket systems in
the West, says Kaiser.
'Dysprosium, for
instance, allows systems to work under extreme conditions,' he
explained. 'The US military doesn't want to buy it on the open
market. They need a guaranteed supply and it's becoming a problem.
'If China was the only
place in the world that rare-earths existed, there would be a war.
There is no immediate crisis but a looming crisis that needs to be
dealt with.'
That looming crisis is
epitomised in the huge piles of rare-earths rocks littering the floor
of the crater at the Baiyun Obo mine. 'We've got mountains of it
stockpiled,' said Shang Liqing gleefully. 'There is more to come,
too. Even my great-greatgrandchildren won't see the end of this
mine.'
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