China Tries to Clean Up Toxic Legacy of Its Rare Earth Riches – by Kieth Bradsher (New York Times – October 22, 2013)

http://www.nytimes.com/

TIANJIN, China — In northern China, near the Mongolian border, radioactively contaminated leaks from two decades of rare earth refining have been slowly trickling underground toward the Yellow River, a crucial water source for 150 million people.

In Jiangxi province in south-central China, the national government has seized control of rare earth mining districts from provincial officials after finding widespread illegal strip-mining of rare earth metals.

And in Guangdong province in southeastern China, regulators are struggling to repair rice fields and streams destroyed by powerful acids and other runoff from open-pit rare earth mines that are often run by violent organized crime syndicates.

Communities scattered across China face heavy environmental damage that accumulated through two decades of nearly unregulated rare earth mining and refining. While the Chinese government has begun spending billions of dollars to clean up the damage, the environmental impact is becoming an international trade issue, with a World Trade Organization panel in Geneva expected to issue a crucial draft report on Wednesday.

Arriving three years after an international tempest over the rare earths trade and 19 months after the World Trade Organization litigation was actually filed, the coming decision may not make a big difference to the rare earth industry itself, industry executives and officials said. But the case does seem to have had the unintended effect of helping to goad China into a major environmental cleanup.

China, the world’s dominant producer of rare earth metals, quietly and unilaterally imposed taxes and annual tonnage limits on its rare earth exports seven years ago. It then gradually raised the taxes and lowered the tonnage limits in subsequent years, slowly throttling supplies to overseas manufacturers.

China contends that these export restrictions are needed to protect its environment. The United States, the European Union and Japan have challenged China’s taxes and quotas at the World Trade Organization. They note that China has done little to limit rare earth consumption within its borders.

The rare earth case “will be a landmark case in terms of both export restrictions and the environment,” said James Bacchus, the former two-term chairman of the W.T.O. appeals tribunal in Geneva.

China has made ample supplies available to manufacturers within China that produce crucial components for a host of products like laptop computers, compact fluorescent bulbs, wind turbines and electric cars. Some Western and Japanese companies have moved factories to China to make sure that they have access to rare earths.

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