Rare-earth mining in China comes at a heavy cost for local villages Pollution is poisoning the farms and villages of the region that processes the precious minerals. From the air it looks like a huge lake, fed by many tributaries, but on the ground it turns out to be 2 murky expanse of water, in which no fish or algae can survive. The shore is coated with a black crust, so thick you can walk on it, Into this huge, 10 sq km tailings pond nearby factories discharge water loaded with chemicals used to process the 17 most sought after ‘minerals in the world, collectively known as rare earths. The town of Baotou, in Inner Mongolia, the largest Chinese source of these strategic ‘elements, essential to advanced technology, from smartphones to GPS receivers, but also to wind farms and, above all, electric cars. The minerals are mined at Bayan Obo, 120km farther north, then brought to Baotou for processing. ‘The concentration of rare earths in the ore is very low, so they must be separated and purified, using hydro-metallurgical techniques and acid baths. China accounts for 97% of global output of these precious substances, with two-thirds produced in Baotou. The foul waters of the tailings pond contain all sorts of toxic chemicals, but also radioactive elements such as thorium which, if ingested, cause cancers of the pancreas and lungs, and leukaemia. "Before the factories were built, there were just fields here as far as the eye can see. In the place of this radioactive sludge, there were watermelons, aubergines and tomatoes,” says Li Guirong with a sigh. ‘Towards the end of the 1980s, Li explains, crops in nearby villages started to fail: "Plants grew badly. They would flower all right, but sometimes there was no fruit or they were small ‘or smelt awful." Ten years later the villagers had to accept that vegetables simply would not ‘grow any longer. In the village of Xinguang Sancun much as in all those near the Baotou factories — farmers let some fields run wild and stopped planting anything but wheat and ‘corn. A study by the municipal environmental protection agency showed that rare-carth minerals ‘were the source of their problems. The minerals themselves caused pollution, but also the dozens of new factories that had sprung up around the processing facilities and a fossil-fuel power station feeding Baotou's new industrial fabric. Residents of what was now known as the "rare-carth capital of the world" were inhaling solvent vapour, particularly sulphuric acid, as well as coal dust, clearly visible in the air between houses.Now the soil and groundwater are saturated with toxic substances. Five years ago Li had to get rid of his sick pigs, the last survivors of a collection of cows, horses, chickens and goats, killed off by the toxins. ‘The farmers have moved away. Most of the small brick houses in Xinguang Sancun, huddling close to one another, are going to rack and ruin. In just 10 years the population has dropped from 2,000 to 300 people. Lu Yongging, 56, was one of the first to go. "I couldn't feed my family any longer," he says. He tried his luck at Baotou, working as a mason, then carrying bricks in a factory, finally resorting to selling vegetables at local markets, with odd jobs on the side, Registered as farmers in their identity papers, the refugees from Xinguang Sancun are treated as second- class citizens and mercilessly exploited. The farmers who have stayed on tend to gather near the mahjong hall. "I have aching legs, like many of the villagers. There's a lot of diabetes, osteoporosis and chest problems. Al the families are affected by illness,” says He Guixiang, 60. "I've been knocking on government doors for nearly 20 years," she says. "To begin with Id go every day, except Sundays." By maintaining the pressure, the villagers have obtained the promise of financial compensation, as yet only partly fulfilled. There has been talk of new housing, too. Neatly arranged tower blocks have gone up a few kilometres west of their homes. They were funded by compensation paid by Baogang to the local government. Table 1: key economic indicators Inner Mongolia 2016 2017 2018 2019 GDP per capita ($) 14,550 11,430 13,110 13,000 ‘Unemployment % 2.5 2.8 3.6 37 HDI ranking 0.733 0.730 0.736 0.737 Gini co-efficient 0370 0373 0378 (0.388Questions: (a) Define the following terms i, Gross national income (GNI) /2 marks] ii, Inflation rate [2 marks] (b) i, Caleulate the % change in GDP in 2017, 2018 and 2019. [3 marks] ii, Define Green Domestic Product. [2 marks] (© Describe the likely impact of the mining earths industry on the region's gross domestic product (GDP) and green domestic product. /4 marks] (d) Ilustrate using a diagram why the mining of rare earths is an example of over production ofa demerit good. /4 marks] (©) Explain using a diagram how the Inner Mongolian government could reduce the impact, caused by negative externalities arising from the production of rare earths. 4 marks] (0 Using a Lorenz curve diagram, explain what happened to income inequality in Inner ‘Mongolia between 2016 and 2019 (Table 1). /4 marks] (g) Using information from the text/data and your knowledge of economics, discuss the economic impact on economic growth and development in Inner Mongolia arising from the mining of rare earths? (15 marks]