Saving Earth vs rare earth mining

RARE earths are fast becoming Malaysia’s new economic El Dorado.

With global demand rising for minerals essential to electric vehicles, wind turbines, electronics and defence technologies, the temptation to exploit the country’s substantial deposits is understandable.

Notably this week, opposition leader Datuk Seri Hamzah Zainuddin proposed establishing a national rare earth corporation modelled on Petroliam Nasional Bhd (PETRONAS) to develop an industry that could reduce Malaysia’s dependence on petroleum revenues.

Some estimates put the country’s non-radioactive rare earth resources at more than RM800bil.

Deposits have been identified in several states, including Terengganu, Kelantan, Kedah and Perlis.

Industry players are understandably enthusiastic.

They want a clear national policy governing everything from environmental impact assessments (EIAs) and extraction to processing and downstream manufacturing. A PETRONAS-style national entity, they argue, could bring order to the industry, curb illegal exports and attract serious investors.

These arguments deserve consideration. Malaysia should certainly explore opportunities to diversify its economy and develop industries with long-term strategic value.

But amid the excitement over billions of ringgit in potential mineral wealth, one question is receiving far too little attention – what happens when the mining ends but the environmental damage remains?

China’s experience a warning

China dominates the global rare earth industry, but its success has come with a substantial environmental legacy.

In Baotou, Inner Mongolia, decades of rare earth processing have generated enormous quantities of industrial tailings.

Scientific studies have documented contamination of groundwater and surrounding soil, while thorium-bearing waste has raised concerns about how to manage this radioactive-residue.

In Jiangxi province, where rare earths have been extracted from clay deposits, mining has damaged hillsides, destroyed vegetation and polluted waterways.

Chemical leaching has contributed to contamination from a number of substances.

The Chinese government itself acknowledged these problems in a 2012 white paper, describing environmental damage associated with rare earth extraction.

China has since tightened regulations and invested in rehabilitation. But restoring damaged ecosystems is neither simple nor cheap.

These problems may not be peculiar to China.

Some Malaysian rare earth deposits involve similar ion-absorption clay, making the Chinese experience relevant.

Although such deposits may contain relatively low levels of radioactive material, that does not make their extraction environmentally harmless.

Chemicals used in leaching can contaminate groundwater and rivers. Mining can damage forests, disrupt ecosystems and threaten agricultural livelihoods. Poorly managed waste can leave communities bearing the costs.

The term “non-radioactive rare earths” should not become a convenient substitute for environmental safety.

Can Malaysia enforce its own rules?

There is another uncomfortable question that policymakers and industry advocates must confront.

Does Malaysia have the regulatory independence, enforcement capacity and institutional integrity necessary to oversee a potentially lucrative but environmentally hazardous industry?

Our experience with illegal logging, river pollution, illegal mining and environmental violations offers reasons for concern.

Environmental laws and impact assessments already exist. Yet, enforcement has too often been undermined by weak monitoring, fragmented responsibilities, political interference and corruption risks.

A rare-earth industry worth hundreds of billions of ringgit would create powerful commercial incentives.

Mining concessions, land approvals, processing licences and export permits could become especially valuable.

Who will ensure that environmental assessments are genuinely independent rather than exercises in obtaining approval?

Who will monitor groundwater contamination over decades? Who will investigate politically connected operators if violations occur?

And who will pay when a mining company disappears, leaving polluted rivers, damaged forests and abandoned waste behind?

A national corporation is not a magic solution. However, the proposal for a PETRONAS-style rare earth entity has some merits.

A national body could coordinate development, improve transparency over mineral resources and help ensure that Malaysia captures more value from processing and manufacturing.

But creating another powerful corporation will not automatically prevent illegal mining, environmental destruction or corruption.

Indeed, concentrating commercial and regulatory influence within the same institutional structure could create additional conflicts of interest.

If Malaysia establishes such an entity, its commercial activities must be clearly separated from environmental regulation and enforcement.

The regulators must have the authority, resources and independence to reject projects, suspend operations and prosecute offenders, regardless of political connections.

Safeguards before profits

Before accelerating rare earth mining, Malaysia needs more than an investment-friendly policy framework.

It needs comprehensive environmental baseline studies, transparent and independently reviewed EIAs, enforceable groundwater-monitoring requirements, public disclosure of mining concessions and beneficial ownership, and meaningful consultation with affected communities.

Mining should be barred in critical water catchments, protected forests and other ecologically sensitive areas.

Operators must provide substantial rehabilitation bonds, ensuring that taxpayers do not inherit the cleanup bill, while environmental monitoring data should be publicly accessible.

Malaysia must show that it can enforce these safeguards before approving mining on a large commercial scale.

The RM800bil figure also deserves perspective. It represents an estimate of resources, not guaranteed revenue or profits. Extraction costs, processing technology, market prices, environmental obligations and rehabilitation expenses will determine how much wealth can actually be realised.

Rare earth development may offer Malaysia an important economic opportunity. But natural resources are not a blessing if their exploitation destroys the very environment on which communities depend.

The real test of national leadership is not how quickly we can dig these minerals out of the ground.

It is whether we have the wisdom to leave them there until we can prove that extracting them will not impose unacceptable costs on future generations.