ANTIMONY : METAL PRICES ON A HIGH AS BEIJING GOES GREEN / THE FINANCIAL TIMES ( RECOMMENDED READING )

Metal prices on a high as Beijing goes green

By Patti Waldmeir in Lengshuijiang, central China

Published: September 14 2010 20:14

China’s efforts to clean its environment are sending some metals prices to record highs as Beijing forces the closure of polluting mines and processing plants.

Although China is known for its appetite for raw materials including oil and copper, it is the largest producer of minerals and metals ranging from coal and lead to little-known commodities such as antimony.

To see graph click on: http://www.ft.com/cms/7ca9cf00-c027-11df-b77d-00144feab49a.jpg)

The impact of Beijing’s environmental push has been felt most acutely in the market for antimony, a metal used for fireproofing items, including children’s clothing.

China produces 90 per cent of output.

Lengshuijiang, known as the world’s antimony capital, is where much of it is mined.

Indeed, China’s dominance in antimony is so great that any change in its environmental policy is felt immediately in trading and prices.

As Beijing has clamped down on polluting mining, the antimony price has risen to a high of nearly $11,000 a tonne, a 150 per cent increase since January 2009.

A decade ago the metal, for which there are no real substitutes, traded as low as $1,200.

China has been trying for years to force closures of environmentally inefficient producers of metals including steel and lead.

But local officials, who rely on mines and processing plants for jobs, tax revenues and sometimes bribes, have thwarted Beijing’s intentions.

This year, in a sign that the government is serious about forcing local authorities to comply with a plan for making commodities production greener, about a third of antimony capacity across China has been shuttered, European traders say.

The price spikes are hurting users, who have little option but to continue buying the small amounts of antimony available.

“Consumers are hand to mouth due to the high prices,” Allan Kerr, an antimony trader at Wogen in London, says.

The drive to cut pollution and improve safety in mines has also pushed higher the cost of coal, lead, tin and rare earth metals.

In Lengshuijiang, in a remote area of mountainous Hunan province, officials have closed over 100 illegal mines and processing facilities, leaving only two large processors still functioning.

A handful of other facilities could reopen once they comply with environmental regulations, but the rest will remain permanently closed, industry executives and officials in the area say.

“The government is very serious this time,” Jiang Yongsheng, an unlicensed antimony processor forced out of business by the Lengshuijiang government, says.

His facility was razed and he sees no way to re-enter the business soon.

Years of indiscriminate mining have stripped the area’s lush vegetation, turning it into a moonscape of naked dirt and mine tailings, or leftovers.

One small child was seen playing among the toxic refuse when the Financial Times visited.
His face and body was covered in dust.

Five hundred families have been moved from homes that nestle between piles of ore tailings that rise high above their roofs.

“The sky is always grey here,” one resident, who grew up on Xikuangshan, a nearby hill where antimony mining is concentrated, says.

Local officials do not release figures for cancer deaths due to antimony-related air pollution, but nor do they try to hide the fact that local residents report a high rate of lung cancer.

Community groups have protested at lung cancer deaths and poisoning related to antimony processing.

Unlike in other areas of China, where such protests are quickly suppressed, Lengshuijiang officials have begun taking steps to clean the area’s soils, air, food and water, with a programme of closures and consolidation.

Beijing has managed to get its way in Lengshuijiang, to a degree that is rare in the rest of the country, where green edicts often fall on deaf ears.

Lengshuijiang had been under pressure for years to clean up, but last year Beijing declared the city one of 44 “natural resource exhausted cities”.

Wen Jiabao, premier, visited Hunan to drive home the point: time to get serious on the environment.

The execution of a couple of local government officials who took bribes from illegal mines in another Hunan city and a Lengshuijiang mine accident in which 26 miners died, clinched the matter.

Tong Fangping, a professor at the Hunan Institute of the Chinese Academy of Forestry, says: “One hundred per cent of illegal mines have been closed and not reopened. Government supervision is very strict.”

With antimony prices so high, illegal producers might be tempted to pay bribes to resume production. But one illegal antimony miner says “no one would dare”.

The verdict from residents, antimony producers and officials is unwavering: “The government is really serious this time.”

That could be bad news for the fire retardant industry.

Additional reporting by Shirley Chen in Lengshuijiang and Javier Blas in London

Copyright The Financial Times Limited 2010.