This specific article also contains 4 separate but related videos. Confirms IMO that IXR is well ahead with regards to their strong ESG credentials. Also, just how very important scaling up the recyling side will be immediately for now and a foreseeable long future. Of specific note is that only a few days ago, the EU just upped their recycling quota to 25% from 15%.
This is a critical and environmental POV, so you've been warned, nethertheless some very valid points.
China is king of these critical metals. The battle over their supply has ensnared Southeast Asia.
The world’s appetite for tiny magnets and electric vehicle batteries is having repercussions such as chemical pollution in unlikely corners of the region, the series Power Scramble finds. Geopolitical tensions mean the fight for resources is heating up
19 Nov 2023
KUALA LUMPUR/SYDNEY/SULAWESI: It is a question that major economies are deliberating: Can anyone break China’s hold on critical metals powering the world’s high-tech applications?
These metals include rare earths, which are used in some of the world’s strongest permanent — and portable — magnets to date and which are essential for just about everything, from the newest gadgets to green technology such as wind turbines.
They include other metals such as nickel, used in electric vehicle (EV), and batteries to also move the world beyond fossil fuels.
As some countries are forced to look beyond China for these resources, some of the places that could help safeguard against supply chain disruptions are emerging in Southeast Asia, for example, Malaysia and Indonesia.
Just last month, the Malaysian government announced that it was permitting a rare earths plant near Kuantan, Pahang, to continue importing and processing the material until 2026 instead of early next year.
The plant, operated by Australian miner Lynas, covers 100 hectares, the size of almost 150 football fields. It is the world’s largest, and Lynas is now the largest processor of rare earths outside China.
Lynas has said the plant could meet nearly a third of global demand, excluding China.
“Malaysia is breaking (China’s) dominance of rare earths,” said foreign affairs and security analyst Collins Chong at the University of Malaya, who has been studying Malaysia’s strategic stake in this sector.
But some people are worried about history repeating itself.
In 1994, a rare earths processing plant in Bukit Merah, Ipoh — a five-hour drive from Kuantan — was shut down after it was blamed for birth defects and leukaemia cases (seven were fatal) in the local community.
The plant, run by Japan’s Mitsubishi Chemicals, had no long-term waste facility, and radioactive materials were stored in rusted drums. This caused radiation leaks, contaminating the area.
Mitsubishi Chemicals donated RM500,000 (S$145,000) to the local community as part of an out-of-court settlement and spent US$100 million (S$136 million) on the clean-up, which took years. A permanent facility for sealing off the waste was built decades later, in 2014.
The incident is little known even elsewhere in Malaysia.
As the CNA series Power Scramble finds out, the world’s appetite for rare earth metals and tiny magnets — which China has had a near monopoly on for decades — has repercussions that are hidden in unlikely corners of the region.
Recent geopolitical tensions, especially between the United States and China, mean the fight for such resources is heating up.
NOT SO RARE, BUT TRICKY TO EXTRACT
Rare earths are a series of 17 elements that have similar chemical properties and so behave similarly.
Their colour-expressing quality, arising from the ways they react to light, is one of the properties that make them valuable. These metals help to give smartphone screens their vivid colours.
But it is rare earths’ magnetic properties that are making the world scramble for their supply. Magnets are essential to electric motors, which use magnetic attraction and repulsion to create continuous motion.
For example, a magnet with neodymium — one of the most sought-after rare earths — added to it is at least 10 times stronger than one made of iron only.
“When you make a magnet really powerful, you can afford to make it really compact,” said Veena Sahajwalla, the director of the University of New South Wales’ Centre for Sustainable Materials Research and Technology.
Think of your iPhone. Think of how compact it is.” Depending on the model, a smartphone could have up to five magnets per speaker, while the camera’s autofocus uses two to four magnets. With the magnets for the microphone and vibration motor, a smartphone could have up to 14 magnets.
Neodymium is no rarer, however, than nickel, which is commonly found in the Earth’s bedrock. The rocks must be mined and crushed to a fine powder to extract the minerals in which both metals are trapped.
But isolating neodymium from its mineral is when things get tricky. Rare earths tend to occur together — often, all 17 in the same ore — and as they are chemically similar, they are harder to process than other metals.
“What makes (them) so ‘rare’ is the complexity of extracting them,” said Sahajwalla.
While rare earth projects are spread across the world, China stands out, with 70 per cent of production last year. The US makes up 14 per cent, followed by Australia, Myanmar, and other countries, US Geological Survey data showed.
Even the US must export its rare earth raw materials to China before they can be used in the manufacture of magnets.
“There are enough deposits in the world that can supply rare earths. But … the critical point is who controls the processing technologies,” said Marina Yue Zhang, an associate professor at the Australia-China Relations Institute, University of Technology Sydney.
“China is the only country in the world that’s developed the capacity to cover the entire value chain of 17 rare earth elements. … China has developed the advantages in not just technology but also waste management.”
Lynas managing director and chief executive officer Amanda Lacaze told The New York Times in 2018 that there were “about 100 PhDs in rare earths working in applications inside China” — and none in the West.
It is not only about brainpower but manpower. Zhang said: “In several research institutes related to rare earths processing, China has employed educated engineers (in the) thousands. So, no other country can compete with China on that front.”
The labour-intensive process of separating rare earths is also dirty work that could harm environmental and human health, but China has decades of experience in running these operations, doing it more cheaply than other countries.
If the West wants to set up processing plants on their own soil to separate rare earths, then time, money, and effort would be needed for the infrastructure and safety measures.
WINDS OF CHANGE DRIVING DEMAND
China’s domination of the rare earths supply chain does not stop at the processing but extends downstream. According to estimates, Chinese factories make as much as over 90 per cent of the high-strength rare earth magnets used in the world.
Because of this ready supply, many electronics makers, whether for foreign or domestic brands, have located their manufacturing plants in provinces like Guangdong. What then leaves China are the finished, “Made in China” products, from smartphones to earbuds and more.
“You may be surprised to learn that electronic products account for less than 10 per cent of the total magnetic material applications,” Beijing Magtech CEO Yoki Xu told Power Scramble.
“Among other applications, the most important one is in automobiles. This part already accounts for more than 40 per cent. The next highest consumption is, for example, in energy-saving home appliances and some energy-saving lifts … and wind power generation.
“Anything that needs to move has a motor. … And rare earth magnets have this ability to improve the performance of motors and help them save energy. So this usage is rapidly increasing every year.”
The rare earth magnets in an electric car, for instance, can amount to as much as five kilogrammes, she cited. But, the growth of EVs may not even compare with the need for magnets in the wind turbine sector.
The permanent magnet required for a wind turbine would be in the tonnes. China is building offshore wind power capacity at a breakneck pace.
The country’s operating offshore wind capacity last year — almost half the world’s total — claimed the global top spot for the first time, surpassing Europe. China’s newly installed capacity last year was about double that of Europe, reported Nikkei Asia.
All that infrastructure will require more resources than what China can extract from its mines. In fact, Beijing is now the biggest importer of rare earths, specifically in their raw material form.
Cities around the world need to shift to low-carbon energy, too. “We won’t transition without a really good supply of rare earths,” said Allison Britt, the director of mineral resources, advice, and promotion at Australian government agency Geoscience Australia.
“We’re going to need seven times more than we currently use, which is quite an extraordinary amount of growth.”
Even as demand is set to skyrocket, including for use in defence equipment, China announced tighter export controls last week over rare earths, requiring firms to report transactions and export destinations.
This comes against a backdrop of increasing Sino-American rivalry, with the US Congress passing the Chips Act last year to cut off the sale of high-end chips and related technology to China.
Beijing has “used rare earths as a weapon” before, pointed out Chong. In 2010, following a dispute over the Senkaku/Diaoyutai islands, China halted these exports to Japan before resuming them eventually.
“It showed that (rare earths) can be used as a convenient strategic tool by China to serve its national interest,” he said. “And this shows the need for countries to ensure that they aren’t beholden to certain countries.”
BREAKING NEW GROUND IN MALAYSIA
Having learnt its lessons from the 2010 incident, Japan has invested in Lynas “to ensure a long-term, resilient supply chain” for rare earths.
The company mines the metals in Mount Weld, Western Australia — which holds “one of the best rare earth materials in the world”, said Chong — processes them in Malaysia, where “it’s more cost-effective”, and exports the eventual products to markets worldwide.
The plant near Kuantan has been processing rare earths for more than 10 years, which also involves processing radioactive materials contained in the ores. The International Atomic Energy Agency has said Lynas meets all the requirements for radiation safety.
But Malaysian Nature Society (Pahang) chair Noor Jehan Abu Bakar is worried because a permanent disposal facility for low-level radioactive waste is being built only now, “after a lot of protests from the local community”.
“There’s already been exposure for more than 10 years,” she said. While there has been no evidence of people falling sick, she attributed her worries to “what happened in Bukit Merah in the late 80s and 90s”.
Lynas, however, says the comparisons are unscientific as the Bukit Merah residues had 50 times the radioactivity that Lynas residues have.
Chong, too, dismisses the idea that history will repeat itself in Kuantan. “This is an entirely different setting, and Lynas has proven itself to be strictly adhering to all the regulations in place,” he said
What is now breaking ground in Malaysia is rare earth mining itself.
Last year, a rare earth mine in Perak was approved as a pilot project. The northern state’s deposits were estimated last year to be worth US$20 billion, while the estimated worth of Malaysia’s total reserves is RM809.6 billion.
“In Malaysia … there’s a lot of new guidelines to be created so that rare earth mining is safe,” said Damien Thanam Divean, the president of the Association for the Protection of Natural Heritage of Malaysia.
But there are miners who do not want to wait for laws to be drafted, as evidenced by the illegal mines that have been uncovered this year.
One of the mines is in Kuala Pilah district, Negeri Sembilan, where an investigation is under way.
Damien, who has closely followed this problem of illegal mining, said the Kuala Pilah operation extended “a few kilometres inside the forest” and used pipes and toxic acid to pump rare earths out of the ground.
“The quality of the pipes is very questionable. We don’t know whether these pipes were manufactured for such an operation. There’s a high risk of toxic acid … leaking into the ground.”
He also fretted that the pond where the waste was stored was “not a proper pond”, compared to the “purpose-built” mine in Perak, where the pools have a “proper cement base” and an alarm system to detect any leaks.
So far, no illnesses have been reported in Kuala Pilah. But the illegal mine, which authorities have sealed off, is surrounded by palm oil plantations, and if the operation had continued, it “would’ve definitely damaged the harvest”, he added.
Quite how many illegal mines are still running and escaping detection is not clear, but he knows a handful “have been busted” and “Chinese nationals have been arrested, from mine owners to labourers”.
IS YOUR SMARTPHONE KILLING KACHIN?
Worries about environmental damage caused by rare earth mining have surfaced in China, too.
Since 2016, China has intensified efforts to clean up the industry and closed many toxic mines in Ganzhou, known as its “rare earth kingdom”, in the southern province of Jiangxi
But this, along with worries about dwindling deposits, meant China needed new sources of raw materials. Mines have popped up in places where the regulatory regime is not as rigorous.
One of them is neighbouring Myanmar, which has rich deposits. Thousands of people have crossed over to set up and work in its new mines, bringing with them the money, technology, and equipment to keep supplying China with rare earths.
Since the military coup in 2021, it has been reported that illegal mining has surged. “There’s a lot of activists around there now. They’ve been (keeping track), and we know that that’s illegal mining,” said pro-democracy activist Lewis Myihtoi.
“The mining companies … don’t get permits. When they (mine) illegally, they don’t have to pay all the costs — the legal costs, all the consultations, all the right procedures. So they can cut costs.”
Tun Aung Shwe, the Myanmar civilian government’s representative in Australia, said the illegal mining area in Kachin state, which borders China, could be “equivalent to the size of Singapore”.
“These (mines) are owned by Chinese business firms and local owners,” he added. “Because of the illegal practices, Myanmar rare earths are really cheap for China.
Our concern is the lack of (regulation) and lack of compliance (with) environmental practice.” Pools of toxic material in Kachin can be seen in Google Earth imagery. These are lined with plastic sheets, which could tear or corrode over time.
“And that’s exactly what happens,” said Jonathan Liljeblad, an associate professor at the Australian National University College of Law. “Then the chemicals leach out, into the soil, the groundwater.
“It has severe consequences that include cancers, like bowel, kidney, and brain tumours. It also impacts the heart and … has been found to affect pregnancy and fertility.”
A mine worker told Myanmar journalist “Naing” (names withheld) that when the chemicals come into contact with his skin, he gets a rash and develops swelling. Personal protective equipment is provided, but “not proper ones”, he said.
He added that he was paid in Chinese currency at a daily rate of 130 yuan (S$24) as a “casual worker”.
The locals, meanwhile, are facing a shortage of drinking water because of the pollution, according to a Kachin villager, who added: “Previously, we could eat the river fish we catch here but not any more.”
“The outside world hardly knows what’s happening,” he said. “The (military-backed) Border Guard Force is very strong. They use their power to silence people. Everyone is afraid.”
Media reports, for example in the Associated Press, have said the illegal mines are in areas controlled by junta-linked militia, which means the rare earth profits the junta gets from the militia “may be fuelling a violent crackdown against civilians”.
This is why illegal rare earth mining worries activists such as Myihtoi. “That’s how (the military forces) get all the weapons. And then back to killing us,” he said.
NOT JUST A NICKEL-AND-DIME DISPUTE
The environmental and human costs of the exploitation of raw materials sometimes also get neglected when it comes to battery production.
It is a market China dominates, too. Six of the 10 largest EV battery makers are Chinese companies, and the country accounts for more than 70 per cent of market share by shipments.
China is not, however, the largest source of nickel, which is becoming a core part of EV batteries. Instead, the world’s largest nickel miner is Indonesia, which accounts for about half of global production.
The skyrocketing demand for battery components has reverberated across the archipelago, even on the island of Wawonii off the coast of Sulawesi.
Roughly the size of Singapore, the island is dotted with fishing and farming villages — whose tranquillity has recently been disrupted by nickel mining.
“It’s destroyed our main water sources,” said farmer “Ismail”, who plants cashew nuts and nutmeg and supplements his income by fishing. He spoke to the programme Insight on the condition of anonymity.
“The water … is needed for our plantations. Since it started becoming polluted with mud, I’ve had to ferry clean water from another place, quite far from where I live, using my motorbike.”
The mines are operated by Gema Kreasi Perdana, which has secured mining concessions covering 1,800 hectares on the island.
During the dry season, “nickel ore dust flies everywhere”, said Andi Rahman, the director of the Indonesian Forum for the Environment’s Southeast Sulawesi chapter.
This is an important issue because dust covers leaves — which stops photosynthesis. And it is happening on Ismail’s farm, so he is potentially facing “another harvest failure”, he lamented.
Then there is the issue of land rights; in parts of rural Indonesia, land ownership is often murky. “Land disputes are always a big problem in the mining areas,” said senior fellow Siwage Dharma Negara of the ISEAS – Yusof Ishak Institute.
“The government gives the concession or permit to the mining companies to operate, but in many cases, … the concession area (is already occupied by) a certain community.”
Wawonii Island.
The dispute in Wawonii has sparked demonstrations, riots and, in some cases, armed confrontations as villagers asserted their land rights.
“Until now there’s no clear certainty over what their rights are, as their land’s been forcibly seized by the nickel mining company,” said Andi.
Indonesian Nickel Miners Association secretary-general Meidy Katrin Lengkey cautioned against generalising the situation, however.
“Companies aren’t careless,” she said. “There are people who claim the land belongs to them even though it belongs to the state. This means (the mining companies) must compensate for their ‘losses’.
But there are also errant companies. There’s land owned by the community, but because the company feels it has power, it just takes over the land.” The story of Wawonii reflects what is happening across the globe — a battle to secure critical metals. Just this week, when the US and Indonesian presidents met for discussions, a potential minerals partnership focused on nickel was on the agenda.
Will sustainability always be a priority, however, as demand grows? That is a question that will bear on the lives of more and more people in the region going forward.
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