Baotou has built a new SX plant further west to alleviate some of the pollution at Bayan Obo, which incidentally is leaching into the Yellow River, major population centres:
http://en.wikipedia.org/wiki/Yellow_River#/media/File:Major_cities_along_the_Yellow_River.svg
But obviously you are blissfully unaware of the degradation caused by heap leaching Ionic clays in the South, particularly the unregulated illegals:
"Severe damage to the ecological environment. Outdated production processes and techniques in the mining, dressing, smelting and separating of rare earth ores have severely damaged surface vegetation, caused soil erosion, pollution, and acidification, and reduced or even eliminated food crop output. In the past, the outmoded tank leaching and heap leaching techniques were employed at ion-absorption middle and heavy rare earth mines, creating 2,000 tonnes of tailings for the production of every tonne of REO (rare earth oxide). Although more advanced in-situ leaching method has been widely adopted, large quantities of ammonium nitrogen, heavy metal and other pollutants are being produced, resulting in the destruction of vegetation and severe pollution of surface water, ground water and farmland. Light rare earth mines usually contain many associated metals, and large quantities of toxic and hazardous gases, waste water with high concentration of ammonium nitrogen and radioactive residues are generated during the processes of smelting and separating. In some places, the excessive rare earth mining has resulted in landslides, clogged rivers, environmental pollution emergencies, and even major accidents and disasters, causing great damage to people's safety and health, and the ecological environment. At the same time, the restoration and improvement of the environment has also heavily burdened some rare earth production areas."
http://www.china.org.cn/government/whitepaper/2012-06/21/content_25705783.htm
"Shen Danyang, spokesman of China's Ministry of Commerce (MOFCOM), says differently.
"China has reiterated that curbing rare earth mining operations and output was done for the sole purpose of protecting the environment. We didn't mean to protect domestic industry by twisting trade," said Shen. "This is going to take time and we're going to face a lot of pressure, but we're going to fight this to the end.""
http://www.bjreview.com.cn/special/2012-08/13/content_478694.htm
http://www.bjreview.com.cn/special/Rare_Earth_Export_Regulation.htm
Just a few snapshots to illustrate the shallowness of your glib assumptions.
(20min delay)