Rare earths mine, Xianjing, China, 2010. (Source: Peter Liu)

Recent news of German rare earths agreements with Kazakhstan and Mongolia, as well as slow progress on an Australian rare earths refinery in Malaysia, indicate that the West may finally be starting to break China’s hold on the industry.

Since the early 1990s, China has been the world leader in rare earth metals mining. With 57 percent of the world’s supply, it expanded massively in the industry due to its vast resources, increasing technological development since the 1980s, and lessening interest in the United States and elsewhere. Today, China controls 97 percent of the industry.

This gives China a powerful strategic advantage when it comes to the clean-energy, high-tech economy. Rare earth metals, a set of 17 elements composed of scandium, yttrium, and the lanthanides, are essential to a variety of “green” products, including hybrid electric cars, wind turbines, and energy efficient light bulbs, as well as standard high-tech products such as cell phones and laptops.

In recent years, China has imposed strict limits on its rare earths exports, leading to growing concern over higher global prices, more expensive supply chains, and growing international dependency on China for both raw materials and finished goods.

Intending to challenge China’s rare earths dominance, Germany recently signed agreements with Kazakhstan and Mongolia that will allow German companies to mine rare earths, and gain access to other resources, in the central Asian countries in exchange for technological investment.

Rare earths are not actually rare.  In fact, they exist all over the world. The challenge with mining rare earths is that they exist in low concentrations and are generally found together with radioactive elements, such as thorium or uranium, making extracting and refining them a difficult, time-consuming and expensive process.

In addition to being expensive, both the mining and refining of rare earths can lead to radioactive pollution without the proper disposal of tailings that contain thorium.

In the United States, strict controls govern tailings disposal. In China, no controls for rare earths exist (and pollution standards are difficult to enforce even where they do). Decades of massive scale and unregulated rare earths mining have caused widespread environmental damage, with some areas, such as the city of Baotou in Inner Mongolia, becoming toxic wastelands.

Malaysia is also familiar with the effects of radiation from the refining of rare earths. It was once home to a Japanese refinery, but the plant closed in 1992 and is now one of Asia’s largest radioactive waste clean-up sites.

Today, Australian mining company Lynas Corp. is set to build a $230 million rare earths refinery plant, the world’s largest and the first rare earths plant outside China in almost 30 years.

Lynas received permission to build the plant several years ago from the Malaysian government, which is eager for the investment. Economic output from the refinery is estimated at almost one percent of Malaysia’s total.

The eruption of angry public protests last year has not to date halted the project, but it has caused delays and increased scrutiny for Lynas Corp. The Malaysia’s Atomic Energy Licensing Board is now telling Lynas it must meet certain key conditions before it can begin the refining process – most notably, a plan for permanent waste disposal.

Permanent waste disposal poses a significant but necessary challenge for rare earths mining. There is little other way to square the problematic tradeoffs between radioactive pollution and development of products for a healthier environment.

As for China’s dominance, it is likely to continue for some time, even with the new Malaysian plant and German agreements. A recent World Trade Organization (WTO) ruling decided that China has violated international trade law by restricting exports on nine industrial metals. Some experts believe that although rare earths were not included in this ruling, the precedent can form the basis of a new case to compel China to lift export limits on rare earths. Other experts, however, point out that even if China were to end export limits, it would not lift limits on domestic production that are designed to prevent further environmental damage – and keep profits high.

Of particular concern to the international community is China’s use of its competitive advantage as a lever in unrelated disputes.  In 2010, for example, China restricted exports to Japan following a dispute over Japan’s arrest of a Chinese fishing captain in the East China Sea.

There is, however, some potentially good news. As China’s central government gains more control over domestic production, it likely will result in stricter environmental regulations, and perhaps increased enforcement. It is also likely to become the leader in safer rare earths mining, given the considerable funding they have put into rare earths research since the 1980s and the vested interest they have in reducing toxic waste.

As for Japan, it is seeking ways to make hybrid and electric cars with either recycled rare earths, or none at all.

Canada's wetlands. (Image by: Chad Delany, Pew)

Canada’s boreal forest is in the news again this week with a study released yesterday by the Pew Environment Group. But while the Pew study argues that the preservation of the forest remains a top global priority, the Canadian timber industry may see a spike in demand for wood from Japan when it begins the rebuilding process following the devastating earthquake and tsunami that hit March 11.

The Pew study, A Forest of Blue: Canada’s Boreal Forest, the World’s Waterkeeper, focuses on the water dimensions of Canada’s boreal forest, which the Pew Environment Group (PEG) says has received little research attention in the past. In the 76-page paper, Pew highlights the essential ecosystem services that the vast forest provides for both the Canadian and international communities: a “vital bulwark” against biodiversity loss and global warming; 25% of the world’s wetlands, which, when combined with peatlands, store more than 147 billion tonnes of carbon; and a key freshwater contributor to Arctic sea ice through river flow. They estimate that these services are worth $700 billion annually. Canada’s boreal forest represents 54% of the world’s remaining boreal regions, with the only other in Russia.

What makes the boreal forest so essential, the report argues, is its “free-flowing and unfragmented nature.” Its critical role in regulating the global climate comes from cooling caused by the photosynthesis period and heating caused by evapotranspiration, as well as by its contributions to Arctic sea ice from the way it decreases the salinity of the water, allowing it to freeze more quickly. In addition to the Arctic, the Pacific and Atlantic oceans both receive massive amounts of freshwater flow from Canada’s boreal.

The study acknowledges the work currently done by the Canadian government at all levels, and by both local and international organizations, outlined in the Boreal Forest Conservation Framework, to protect the forest, pointing out that more than 12% has already been strictly protected.

Yet the PEG points out that much more needs to be done to protect the 1.4 billion acre boreal ecosystem. Among its recommendations is the need to protect the entire Mackenzie River watershed, which alone covers 20% of Canada’s land mass, and to complete the implementation of the Mackenzie Basin Agreement, which links land-use and water policies to preserve the watershed.

The report also warns of increased industrial pressures in the boreal forest, estimating that 728,000 km² (180 million acres) has been affected by the forestry, mining, oil and gas extraction, and hydropower sectors, and noting that major policy reforms are needed to conserve the forest’s vast water resources. These include reforms to both hydopower and mining policy. Provincial advances, such as Ontario’s new Mining Act, which aims to reduce mining’s environmental footprint and was passed with industry support, should be used as a model for other mining reforms, including those currently underway in British Columbia and Quebec.

PEG’s warnings highlight the ongoing challenge that policymakers and environmental groups face on a regular basis to avoid development in favor of conservation. But in certain dire situations, such pressures are difficult, and perhaps even immoral, to avoid.

The widespread and horrific damage caused by the earthquake and tsunami in Japan, for example, is a case in point. The natural disaster has washed away complete towns and infrastructure, including paper mills and other related businesses. With a devastating death toll (at time of writing) at almost 4,000, a missing toll at more than 15,000, and an estimated half a million people homeless and in temporary shelters where evacuees are surviving on little food and no water or elecriticity, the possibilities for public health problems are likely to increase, and raw materials will be urgently needed for temporary shelter. While those materials may come from China or Australia – despite damage done to Australian suppliers in Japan – news reports say will likely also come from Canada, which has strong relations with Japan, particularly in British Columbia. A report by Canada’s Globe and Mail says that Canadian and Japanese producers have been working together since the Kobe earthquake in 1995 on new products such as engineered wood that is designed to withstand greater earthquake impacts than cement, and that Canada will work to assist the Japanese with housing in both the short and long-term.

While it’s unclear what the Japanese demand will entail in the months ahead in terms of actual felled trees, there is one thing that we can be certain of in this time of crisis: the need for strong conservation in Canada’s boreal forest and the need for timber around the world – whether during periods of unusual crisis or on a more day-to-day basis – will continue their ongoing, challenging balance between serving humanity’s immediate and long-term needs.

Photo courtesy Flickr/dodo_anji

“In bureaucratic system obedience to power and self-goals have pushed self-consciousness and uprightness into darkness.”

These words, written by a forest department official in his retirement letter were in response to the mining controversy that has brought the state of Haryana under scrutiny for indiscriminate mining policies. Following a stern report by the Central Empowered Committee of the Supreme Court, the state of Haryana (which neighbours Punjab), has finally stepped up towards stopping the unsustainable mining in the Aravalli range. The Supreme court has ordered a ban on all mining activities in the region.

But is this a little too late? Despite the lapse of a seven year lease that had ravaged the range, and a Supreme Court labelling the area as a prohibited mining zone, the Haryana government proceeded to auction two quarries in the area earlier this month.  The Forest Survey of India made satellite imagery available to the public that clearly documents the land change:  water bodies in the area have dried up and the region is suffering severe droughts.  According to this article, local people have said that not only have nearby lakes dried up in the space of three months but also that large scale sand mining was taking place, “damaging the water retention capacity” leaving few traces of the lake and “truck marks all around”. There are clearly bureaucratic loopholes aplenty, allowing the culpability to bounce from the irrigation department to fisheries to mining. The unchecked mining also played an important role in decreasing the ground water level.

The mining groups argue that the high demand for construction is forcing them to look beyond the outer limits of the national capital and to mine indiscriminately, bringing to the fore once again the often used argument of the perceived conflictual nature of development and environmental sustainability in India.

The Centre for Science and Environment recently released a  report detailing the “environmental and social footprints of mining in India”. In it, it highlights the sheer lack of regulation in mining that has spawned a booming illegal trade, adversely affecting the environment and not allowing for any recourse to legal aid by the people who work in the mines or live in the surrounding areas.  The states tend to turn a blind eye because of the profits and the overall ‘development’ that ensues.

Unsustainable mining practices are rampant all over India. Parts of Karnataka that have witnessed unsustainable mining now suffer from a host of problems: from a lack of access to water, to unsafe and illegal labour conditions, health problems, environmental devastation and pollution. Orissa is another good example. The already palpable pressure on land will only get more severe, and although the government has brought out a national biodiversity plan which lays out best practice guidelines, Indian authorities need to really take control of biodiversity conservation and land change, step up initiatives to protect the natural habitat, and soon. A sustainable approach would of course require addressing the issues mentioned before: the problems of EIAs , inclusion of participatory methods, introduction of regulation and importantly better accountability of those in public service and positions of power.   

Last week, from the midst of COP-14 in Poland, I reported that the major developed countries were engaged in something of a waiting game on emissions targets, each waiting to see what others would do before announcing their own.  

As you may remember, on Wednesday of last week Canada, Australia and Japan pulled the text on 2020 emissions targets from one of the conference texts.  The absence of the targets (25-40%) left states waiting to see if others would commit before they did in a classic example of game theory.

Australia put itself in the best position in this game by delaying announcement of its targets until today–two days after the end of the Poznan COP-14.  It has now pledged a 5-15% cut by 2020, as well as an auction-based cap-and-trade system covering 75% of emissions.  Permits will be auctioned with a maximum price of A$40, with the system becoming operational by mid-2010. 

The emission target is much lower than other major developed countries, especially in Europe and increasingly the USA where targets are 20%.  You’ll also notice that this number is a range, and not a particularly narrow one.  If ‘other countries’ (read: USA, Canada, Japan) do not take on targets themselves in Copenhagen–meaning that there would not be a global emissions cut for developed countries–Australia will take the 5% option.  If a global deal is reached then the numbers move up, presumably on some kind of undefined sliding scale.  The definition of these numbers will, in turn, shape the domestic carbon market price. 

Effectively, Australia has managed to keep it hand in the game by allowing itself some room for maneuver into the future.  It has the advantageous position of having made a commitment but also allowing itself remaining competitive by altering that commitment in such an uncertain political process.

From the inside, however, this position looks less advantageous; Prime Minister Rudd is under significant pressure from the mining lobby in Australia, who, according to reports in the corridors at Poznan, were pushing for the abandonment of the cuts completely.  On the other hand, Rudd has consistently run on a green political platform, building expectations from both NGOs and European Leaders over the past year of major emissions cuts.  

Rather than a carefully calculated game theory move, Australia’s announcement today is more of the sum of the pressures Rudd faces from various sides.  

An interesting question to emerge from this announcement is just how many more countries will use this ‘targets range’ in their discussion about interim targets this year.  The EU has said 20%, with a possibility of 30%; now Australia is 5 to 15%.  Are we seeing the overcoming of traditional game playing where an early mover incentives other change?  Maybe in this, the most complex of games, countries will all set ranges and then simply negotiate to a common point–thus partially overcoming some of risk taken by the earlier players, which has often disincentivised action.

It’s certainly a ‘one to watch’ for 2009.