Few companies in Ganzhou stop production to correct environmental problems

Rare country photo: VCG

About 40-50 percent of rare enterprises in Ganzhou, Jiangxi province in eastern China – most in the middle and downstream segment of the industrial chain – have stopped production in recent days to address environmental issues, industry experts told the Global Times.

Ganzhou is the main production base of Chinese rare countries. As the suspension is expected to last until the end of April, industry analysts predict that the scarcity of rare earths, along with logistical problems in delivering rare earths from Myanmar, could further strain Chinese rare earth exports in April and could affect prices more.

“One of our rare earth processing plants stopped production in late March,” a manager of a state-owned rare earth company in Ganzhou named Yang told the Global Times.

The closures followed before the arrival of no. 4 inspection groups for environmental protection and the environment in Jiangxi on a trip that runs from Wednesday to May 7. The group will explore local environmental activities.

Nearly half of the rare earth producers in Ganzhou have stopped working, say insiders from the local industry. Some, like Yang’s company, closed before the group arrived to correct environmental issues.

Industry insiders said the sudden closures were partly due to 24/7 production, leading to “serious environmental impacts”, such as the discharge of non-standard sewage.

“Since October, all rare earth producers in Ganzhou have been working hard to take advantage of sudden orders and to compensate for losses incurred during the coronavirus outbreak. Most of them did not take a break during the Spring Festival, exacerbating the environmental issue.” who spoke on condition of anonymity, told the Global Times on Thursday.

The director added that most of the suspended plants specialize in the separation of rare earth, a key process in the processing of rare earth oxides that could pollute the environment the most.

“It is necessary to adhere to the rules of environmental protection in everyday work. Those who adhere to strict rules of environmental protection continue to work as usual,” he noted.

The Global Times also learned from several major rare earth magnet manufacturers in Ganzhou that their production was not affected.

It is not clear when the factories will start humming again. Some industry experts expect to be able to continue working until the end of April when environmental problems are resolved.

According to local media reports, the supply of neodymium praseodymium oxide, a key rare earth oxide for making permanent magnets from rare earths, could be cut by 1,200 tonnes a month due to a factory shutdown.

Wu Chenhui, an independent observer of rare earth markets, told the Global Times on Thursday that declining oxide stocks in rare earths would have a “gradual impact”, raising prices in the short term.

“But the impact could spread around the world if production is suspended for more than a month, putting pressure on global supply,” Wu said.

From January to February, Chinese exports of rare countries increased by 28.8 percent compared to last year, to 7,068 tons, customs data showed.