Modern technology depends on rare earth metals, but their extraction is inflicting an all-too-common cost on shared resources. Rare earth metals, known as "industrial gold," are still being illegally mined across the mountainous areas of Guangdong Province, despite a recent crackdown.

Guangdong is at the center of illegal mining of rare earth, which destroyed local environment and undermined revenue when smuggled to foreign countries. In order to curb the trend, seven rare earth producing cities in Guangdong signed a contract with the provincial government-backed Guangdong Rare Earth Industry Group on July 7, with one of the aims of protecting the precious resources.

It takes over three hours by coach to travel from Guangzhou, the capital city of Guangdong, to Xinfeng county in Shaoguan, known for its deposits of heavy rare earth metals. Shatian and Yaotian, the county's chief towns, are notorious for their illegal mining. More than 30 illegal mining sites were found in February in the so-called "capital of the underground rare earth trade," according to Guangzhou-based Nanfang Daily.

According to the report, illegal exploitation is an "open secret" in the area, and even local officials and farmers are involved.

Similar cases have not only happened in Guangdong, but also in adjacent Guangxi Zhuang Autonomous Region and Jiangxi and Fujian provinces, where illegal mining is rampant and officials and local villagers also take a share of the profit.

The cost of this business is low, at least for the participants. The resources were taken for free, no heed is paid to the environment, and the metals are easy to extract. And the prices on the market can be as high as 400,000 yuan ($62,720) a ton.

Eleven officials in Xinfeng were disciplined in May, according to local media. So far, it is still unknown whether they were involved in the trade, or simply failed to root the problem out. But local people say at least some of them were personally involved.

Crackdown can't last

"You can make the same profits in this business as smuggling drugs, but the risks are much lower," Yu Haibin, vice captain of the supervision team of the Xinfeng County Land & Resources Bureau, told the Global Times.

Drug dealers in China can face a death penalty, but people involved in illegally mining rare earth are only sentenced to seven years in prison at most, according to the law.

Yu admitted that the supervision campaign has been tightened since February and it does have a chilling effect on illegal mining. However, this model cannot last long because of the high cost of stringent supervision and the ease of finding rare earth metal deposits.

"It is difficult for my team, with just 22 staff members, to supervise such a large area," said Yu. Xinfeng covers over 2,000 square kilometers, and over 80 percent of it is mountainous.

Yu said the team's work is arduous. When they roam the mountains during the day, suspects could run away when they see them approaching. The supervision team cannot do the job at night since it is dangerous.

Yu's judgment is echoed by illegal miners who have temporarily halted their work amid the crackdown. But they are just waiting for things to ease off.

The rare earth trade is so prominent in Xinfeng that even a taxi driver could be closely involved in the business, as he enthusiastically introduces the mining area to visitors.

A driver surnamed Luo, who specializes in rural routes, said no one dared to extract rare earth metals at the moment due to the rigid supervision. He said some "bosses" made huge profits last year, but this year they had lost several millions of yuan and fled.

Luo stopped several times while driving around the village of Yangshi, where illegal mining activities were exposed in the media in February, to point out possible sites.

On the way up the mountain, Luo talked to a middle-aged man who has been in the business of illegal mining for several years.

"The mine is on the mountain, just three kilometers from here and I can show you the way," said Luo's friend.

Luo said it is not a bad time to take up the business because of the low prices of renting a mine, which, thanks to the government's tight supervision, has dropped by two-thirds.

He said people can rent the mine now from his friends and keep it, then sublease it to others once the scrutiny loosens up.

The mountains have been partitioned to farmers who have the right to deal with their assets, either planting trees for their own use or renting the land to others.

"The rental depends on what the mountain is used for," said Luo, adding that it costs much more if the mountains are used to exploit rare earth. Villagers can make hefty profits while keeping their hands nominally clean of the process.

However, Luo's remarks were dismissed by Yu who said the situation was not so grave.

Underground market

Liao Zijing, vice director of the Publicity Department of Xinfeng government, believes the illegal mining of rare earth metals has much to do with the social environment and its eradication needs cooperation from different organizations.

Liao said businessmen are getting into the trade due to increasingly high prices of rare earth metals. Besides, mining is very easy. "People just need tractors and shovels, and everyone can do it," said Liao.

There is a huge underground market for illegally mined rare earth metals, said Liao, adding that some enterprises buy rare earth metals at low prices without regard as to their origin.

According to customs statistics, the amount of rare earth smuggled out of China was 1.2 times that exported through formal channels in 2011. China's customs office last year recorded 18,600 tons of rare earth exported.

Liao and Yu said they hope that legal mining status will be granted to local operations, allowing for resources to be protected more effectively. The rare earth mines in Xinfeng haven't been legitimately opened to mining enterprises so far.

"When villagers see big enterprises not only extract rare earth metals, but also take good care of the environment, they will realize how bad illegal exploitation is and the importance of environmental protection," said Yu.
Thus, it is hoped the villagers will stop leasing the land to illegal miners.

Pressing situation

Liao's opinion is shared by Chen Zhanheng, vice secretary of the Association of China Rare Earth Industry, which was newly founded in April.

"This phenomenon [illegally mining rare earth metals] has existed for a long time, and people know this, but little was done to stop it," Chen told the Global Times, adding that the resources are distributed too widely, neglected by the country and were not even viewed as potential mines.

Chen said that only when landslide accidents occurred in Gutian, Fujian Province were 12 illegal mining spots found after mountain-to-mountain investigation. "Besides, most people can get a share from the business as well," said Chen, adding that is why supervision was not practiced in some places.

 "If illegal buying didn't exist, illegal mining wouldn't happen, either," said Chen, adding that legal mining will be under threat if the illegal business isn't stopped.

China is facing pressure not only domestically but also from international buyers to produce low-cost rare earth metals.

Japan is typical. According to previous reports, Japan's rare earth metal stockpiles could be used for several decades, but it still keeps asking China to export more.

In 2011, 56 percent of China's rare earth exports were purchased by Japan. China's rare earth reserves account for 23 percent of the world's total, but over 90 percent of the world's demand is supplied by China, according to a White Paper on Rare Earth Policy issued on June 20 by the State Council. Other countries closed their rare earth mines after being undercut by low-cost Chinese exports.

For Hong Guangyan, a retired researcher with the Changchun Institute of Applied Chemistry in Jilin Province, the situation at home is much more complicated, and solutions to the problem cannot only depend on legitimate mining.

 "It poses a challenge partly because we haven't got an ideal way. In each province, they want the provincial enterprises to control the mining, while for the country, State-owned enterprises are favored," said Hong to the Global Times.

Hong said even in places where underground resources are taken either by individual bosses or by big enterprises legally, unlike Guangdong, local people still didn't get the benefits they deserve.

"No matter who exploits the resources, resource tax and environmental protection tax must be introduced to guarantee justice," said Hong, adding that China should also improve technology to make products that use the metals instead of just selling resources.