Chinese financing
Feature image credit:

The demand for rare earth materials outside of China may quickly escalate as one of the largest producers of such materials in China has suspended production.

State-owned Aluminum Corp of China, or Chinalco, recently requested that its rare earth unit in southern China’s Guangxi region (Chinalco Rare Earth & Metals) suspend operations after inspectors found the company breached environmental rules – and more specifically, contaminating water sources.

Chinalco’s leadership team ordered the Guangxi unit to rectify the problems identified quickly, while calling on more than 600 of its subsidiaries to step up their environmental compliance.

The company has also been found guilty of carrying out mining activities outside of its permitted areas and is further dealing with complaints from members of the community.

It is not the first time Chinalco, China’s biggest state-owned aluminium producer, has run afoul of the country’s ever stricter environmental regulations. In May, officials from the company’s Lanzhou branch in the north-western province of Gansu were disciplined for environmental failures.

The rare earths market has started to lift after suffering depressed prices in recent years.

China is the world’s largest producer of rare earth materials but African start-ups could benefit enormously from an increased demand for their product should China limit its production on the back of environmental shut-downs.