- German and Singaporean business interests have been attempting to start a rare earth mine on northwestern Madagascar’s Ampasindava peninsula.
- According to some scientists, going forward with the project would pose grave long-term threats to local people and the surrounding rainforest, including a protected area home to endangered lemurs and other unique wildlife.
- The project has been beset by ownership uncertainty, an ongoing investigation into one of its owners for financial misconduct, and permit delays.
- Now its concession, previously valued at over $1 billion, has been reappraised at just $48 million.
A rare earth mining project in Madagascar that has been in turmoil for the last two years took another blow in September, when its concession, previously valued at over $1 billion, was reappraised at just $48 million. Tantalum Rare Earth Malagasy (TREM), a company owned by firms in Germany and Singapore, holds the rights to the 92-square mile (238-square kilometer) concession, located on the Ampasindava peninsula in northwest Madagascar, just across the water from Nosy Be, the country’s main tourist destination.
Demand for rare earth elements, sometimes called “technology metals,” has risen in recent decades because they are used in the production of smartphones and other modern devices. China dominates the market for rare earths, having produced more than 85 percent of world supply for the last few decades. But the environmental and health impacts of rare earth mining have caused Chinese authorities to restructure the industry and close, or attempt to close, many of the mines. Now investors are looking elsewhere.
TREM’s project would be the first rare earth mine in Madagascar. For now, the project has stalled due to a lack of permits and unstable ownership. According to some scientists, going forward with the project would pose grave long-term threats to local people, who oppose the project, and to the surrounding rainforest, including a protected area home to endangered lemurs and other unique wildlife.
“It will be a nightmare for anything living there — humans, animals, or plants,” a geologist familiar with ionic clay rare earth mining told Mongabay. “It will be a huge disaster. It will destroy the whole peninsula,” added the geologist, who asked not to be named due to the sensitive nature of the situation.
The rare earth deposit in Ampasindava is of an uncommon type known as ionic or ion-adsorption clay. Most similar deposits are near Ganzhou in southeast China, although they make up less than 3 percent of China’s total rare earth reserves. Unlike other rare earth deposits, ionic clay does not contain high levels of the radioactive elements uranium and thorium. However, mining ionic clay still causes extreme environmental and health consequences.
TREM has not yet decided which mining method it would use in Ampasindava. It is considering three techniques: heap leaching, vat leaching, and in-situ leaching. The first two would involve open-pit mining of the ground’s surface. When these techniques have been used on ionic clay mines in China, the results have been dire for local ecosystems. For every ton of rare earth oxide extracted, 300 square meters of vegetation and topsoil are removed, 2,000 tons of tailings are disposed in nearby valleys or streams, and 1,000 tons of highly polluted wastewater is created, according to a 2013 paper by Chinese researchers.
“[S]urface/mountaintop mining for ion-adsorption rare earth ores has become the dominant driver of land-use change and degradation in southern China, causing permanent loss of ecosystem, severe soil erosion, air pollution, biodiversity loss and human health problems,” the authors write.
There are hundreds of millions of tons of tailings from ionic clay mines in the Ganzhou area, and the environmental costs, measured strictly by how much it costs to restore the land, exceed the revenues produced by the rare earths, the Chinese state press has acknowledged.
In fact, if the project goes forward, TREM may not have any choice but to use an open-pit mining technique on most of the concession, according to the geologist familiar with ionic clay mining. The alternative, ostensibly safer in-situ method requires ground that is flat and porous, which is uncommon in ionic clay deposits.
Even if the in-situ leaching method is used, it may not prove much better for the environment. In-situ leaching does not involve highly disruptive surface mining, but it does require huge amounts of ammonium sulfate solution to be pumped into the ground with great force. Rare earth oxides then trickle through the ground to a collection trench — thus the need for porous earth. This method, if not applied with care, can lead to water contamination, mine collapses, and landslides.
Water contamination could spell trouble not just for public health but for the local economy. The streams in TREM’s mining concession serve as the water source for cash crops such as cacao, pepper, coffee, and vanilla. Thus far, no environmental impact study of the project has been completed, so it is difficult to know how severe the effects, both onsite and downstream, could be.
Some scientists working on the peninsula have expressed concern about the project. If it goes forward, the mine is likely to reduce the habitat of the Endangered Mittermeier sportive lemur (Lepilemur mittermeieri), which lives only on the peninsula, Leslie Wilmet, a doctoral student in conservation biology at the University of Liège and Gembloux Agro-Bio Tech in Belgium who studies the lemurs, told Mongabay in August. “The problem with the TREM project will be that lots of forests will disappear,” she said at the time. “We don’t know if the species will survive or not if the project goes on.”
Delays in the TREM project are due not so much to environmental concerns as to management setbacks. ISR Capital, a Singapore-listed firm trying to take a majority stake in TREM, is under investigation for financial misconduct. The company has been linked to John Soh Chee Wen, who currently faces charges for some of the worst financial crimes in Singapore’s history. David Rigoll, a high-flying UK-based investor and ISR’s largest shareholder used to be a leading shareholder and executive at Tantalus Rare Earth AG (TRE AG), the German firm that has owned TREM since 2009. (Rigoll himself has previously been caught up in a stock scandal.)
TRE AG poured over $30 million into the Madagascar project, its sole holding, but ran out of funds and filed for bankruptcy in 2015. In a two-part deal, it sold TREM to REO Magnetic, a private company in Singapore. In September of this year, the second part of the deal, for the remaining 40 percent of TREM, was canceled. TRE AG now retains that 40-percent ownership of TREM; a recent filing indicates that it might still try to sell the stake.
On paper, the other 60 percent is owned by REO Magnetic, but ISR Capital made a deal to buy this stake from REO over a year ago. The Singapore stock exchange has not yet approved the deal; last year, the exchange refused to accept two appraisals commissioned by ISR, each of which valued the “Madagascar asset” at over $1 billion. Behre Dolbear Australia (BDA), the North Sydney-based consultancy ISR commissioned for the latest appraisal, referred to the two previous appraisals as of “limited credibility,” and to their methodologies as “quite inappropriate” and in “direct contradiction” of industry standards.
Although the new appraisal indicates that TREM is worth less than 5 percent of previous estimates, in making it BDA relied on assumptions that Mongabay’s previous reporting suggests may not bear out. The valuation assumes that new permits for exploration and pilot testing are forthcoming. Yet TREM currently has no permit of any kind; the company’s exploration permit expired in January and although it applied for a permit renewal last December, the government has yet to issue one nearly a year later. Also, BDA acknowledges in the report that it did not review any environmental studies and did not conduct an independent social assessment. That is, BDA apparently did not speak to people in Ampasindava. The report cites only TREM’s opinion of what those people think, casting them as supportive of the project; in reality, many locals strongly oppose it.
And while BDA is qualified and respected in the field, it’s unclear if it has any experience with ionic clay rare earth mines — few people outside of China do. (Queried by Mongabay about its experience in this specific field, BDA declined to comment.)
In addition to the concession’s devaluation, ISR Capital faces other challenges in moving the project forward. This week, ISR’s stock price dropped to an all-time low, which could make fundraising for the project difficult, especially since ionic clay mining is a specialized field in which ISR has no experience. In fact, as a company, ISR has no track record whatsoever in the mining industry, as the BDA report acknowledges.
ISR, REO, TRE AG, TREM, and the prime minister’s office in Madagascar did not respond to requests for comment.
Banner image: An endangered Sambirano mouse lemur (Microcebus sambiranensis), which is found only in two or three small populations in northwest Madagascar, including one on the Ampasindava peninsula. Photo by Leslie Wilmet.
Yang, X.J., & Lin, A., Li, X-L., Wu, Y., Zhou, W., Chen, Z. (2013). China’s ion-adsorption rare earth resources, mining consequences and preservation. Environmental Development 8 131(6).
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