China’s REE Environmental Case.

When I saw so many forests turn to dead bare hills because of rare earths exploiting. I only feel sad,” Sun said, “The hills are not what you see. It’s deteriorating from within.”

While a growing scandal engulfs the Communist Party in China, it hasn’t stopped a growing Chinese PR campaign designed I  think, to shore up China’s REE export regime defence at the World Trade Organisation. Below, the English language, heavily foreign read, China Daily gets with the program.  China Daily is China’s semi-official English language “window into China.” My guess is that it’s an attempt to try to get the international “greenies” to rally to their cause. China is being exploited selling REE “gold” for the price of “cabbage” to use their folksy comparison.

The environmental cost of rare earths
Updated: 2012-04-10 18:38
China has been paying a hard price exploiting its rare earths resources. It’s said that a year’s gold is sold at the price of cabbage.

Jiangxi province, rich in rare earths minerals in China, earned 32.9 billion yuan ($4.89 billion) from this industry last year, but it has to spend 38 billion yuan to tackle the environmental pollution in Ganzhou, one city in the province, according to an Economic Information report.

Huge price to pay

The way to get rare earth materials is devastating to nature and the damage is irreversible. It used to be described as the “remove mountain campaign” in Ganzhou, Economic Information reported.

A traditional process to get this mineral will eradicate trees and grass first and peel off topsoil of the earth. What’s more, the waste water coming from the chemical reaction is full of ammonia nitrogen and heavy metals, which are extremely harmful to people’s health and the nature.

While the argument may or may not rally the environmentalists to China’s cause, it carries little weight in a dispute over export taxes and quotas that discriminate in favour of China’s domestic firms. Remediating the environment is not best tackled by setting up a two tier pricing mechanism favouring manufacturers inside China against those outside.

As to selling gold for the price of cabbage. Welcome to the world of Richard Nixon’s fiat-currency dollar reserve standard. Every goods and natural resource of real present, or future intrinsic value, is today exchanged for essentially worthless paper currency.  Currency that can be electronically magicked into existence out of nothing. Since 1971 we have been living in a world of ever depreciating floating fiat currencies. We consume today, tomorrow’s resources with gay abandon. Tomorrow will never come we pretend, although it very nearly arrived in 2008, and still seems to be lurking just around the corner for the rest of this decade.

China might have a better defence under the doctrines of scarcity, in that they oversupply REEs in relation to their reserves, and necessity, they need them now and in the future for their own needs. They might want to badger the G-20 into monetary reform, but that will likely take an even bigger crisis than 2008. While the present system exists, the west needs to get on with developing more Molycorp’s and Lynas’s.

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