Malaysia imposes 3-month ban on bauxite mining; may dent China stockpiles

* To ban bauxite mining for three months, effective Jan. 15
* To also freeze new bauxite export permits for the period
* Malaysia warns ban could be extended if firms do not comply (Recasts, adds trader and analyst comment)
Rozanna Latiff Reuters 6 Jan 16;

KUALA LUMPUR, Jan 6 (Reuters) - Malaysia imposed a three-month ban on bauxite mining following an alarm over its environmental impact, in a move that could dent stockpiles at the world's biggest buyer of the aluminium-making ingredient, China.

Malaysia's largely unregulated bauxite mining industry has boomed in the past two years to meet demand from top aluminium producer China, but the frenetic pace of digging has led to a public outcry with many complaining of water contamination and destruction of the environment.

Just last month, bauxite mining was blamed for turning the waters and seas red near Kuantan, the capital of Malaysia's third-largest state and key bauxite producer Pahang.

"Everything (bauxite mining) will come to a complete stop on Jan. 15," said Wan Junaidi Tuanku Jaafar, Malaysia's natural resources and environment minister. The ban may be extended if mining firms do not comply with regulations, he cautioned.

In the first month, stockpiles at the Kuantan port will be cleared and cleaning facilities will be installed, while in the second month, stockpiles in 11 other locations will be cleared, Wan Junaidi said on Wednesday.

Regulations will be imposed on the transport of bauxite as well as cleaning of mining sites, the minister said.

"The Cabinet has decided to leave it to the industry to take measures to protect the environment. But if they cannot do what we, the federal and state governments, want them to do, then we will have no choice but to extend the moratorium."

Malaysia will also freeze new bauxite export permits for the three months, although existing permit holders can export from their stocks over the period.

"I see little to no impact on China (aluminium production), unless things change at the end of the three months," said Paul Adkins, managing director of Beijing-based consultancy AZ China. "Exports will continue, using the stockpile at port."

The three-month mining ban could shave about 6 million tonnes off China's current bauxite stockpiles of around 25-30 million tonnes, Adkins said earlier this week.

Malaysia accounted for over 40 percent of China's 49 million tonnes of bauxite imports across January to November last year. In 2013, it had shipped only 162,000 tonnes to China.

The Southeast Asian nation has been exporting increasing amounts of the raw material to China, filling in a supply gap after Indonesia banned bauxite exports in early 2014.

While a longer Malaysian mining ban could prompt China to look to other suppliers such as Australia or India for bauxite imports, industry participants do not expect Malaysia to extend the ban as bauxite mining brings in a lot of revenue.

"In the short-term, the ban will be a heavy blow to the industry. But in the long run, with proper procedures and if everyone can do it in the right way, bauxite mining should be a good thing," said Johnny Wong, director at Kuantan-based bauxite miner Ideal Mineral Resources Bhd. (Additional reporting by Melanie Burton in Melbourne, writing by Praveen Menon; Editing by Himani Sarkar)

Malaysia to Ban Bauxite Mining for 3 Months to Cut Pollution
* Country supplied more than 40% of China's imports last year
* Suspension starts Jan. 15 as government seeks to tighten rules
Anuradha Raghu and Ranjeetha Pakiam Bloomberg 6 Jan 16;

Malaysia, the biggest shipper of bauxite to China, will stop mining ore for three months to cut river and sea pollution, Natural Resources and Environment Minister Wan Junaidi Jaafar said.

The ban takes effect from Jan. 15 in Pahang, the largest producing state, Wan Junaidi told reporters. Exports will be allowed during the moratorium to reduce port inventories, and after the suspension the government will limit bauxite production to the capacity to ship the material, he said on Wednesday.

Malaysia supplied more than 40 percent of China’s imports of the aluminum-making raw material last year after Indonesia imposed a ban on shipments in January 2014. China produces about half the world’s aluminum used in everything from aircraft to door frames and drink cans. The country’s exports of the metal and its products surged 36 percent in November from the previous month, helping push global prices down 19 percent in 2015.

The ban would have to last longer than six months before it starts to hurt China, said Paul Adkins, managing director of consultancy AZ China Ltd. “I doubt there will be much of a price spike reaction. The market is acutely aware that Chinese smelters appear to be slowing down, and with so much material in stockpile, there will be no interest by Chinese buyers to pay more.”

Water Resources

Red dust from trucks carrying ore to Kuantan port had blanketed roads, trees and plants, threatening air purity and water resources, said Fuziah Salleh, member of parliament for Kuantan, capital of Pahang. The government should suspend exports until proper laws are in place to ensure mining is sustainable and to curb illegal operations, she said Tuesday.

“Things are just out of control at the moment,” Fuziah said. “I’m very concerned that the damage may be irreversible.”

All the inventories at Kuantan port have to be exported or moved to a central area equipped with proper drainage, washing bays and filtration, Wan Junaidi, the minister, said in Kuala Lumpur. The government will extend the moratorium if industry fails to take the necessary steps within three months, he said. The central stockpile will only be accessible to legal miners, preventing illicit operations, he said.

Malaysia supplied 21 million metric tons of China’s imports of 49 million tons in the first 11 months of 2015, according to Chinese customs. While the government is allowing shipments under existing permits, it has stopped issuing new export licenses, the ministry said. After the three-month mining ban, the provision of new permits will be limited to port capacity, it said.

The north-eastern state of Terengganu already froze new bauxite mining applications in September, citing environmental concerns.

Malaysia to Ban Bauxite Mining for Three Months
Malaysia will place a temporary ban on aluminum-rich bauxite in response to pollution concerns in the state of Pahang
BIMAN MUKHERJI and CELINE FERNANDEZ Asian Wall Street Journal 6 Jan 16;

KUALA LUMPUR, Malaysia—Malaysia on Wednesday imposed a three-month ban on bauxite mining beginning later this month amid worries over its environmental impact, potentially affecting exports of the aluminum-making ore to Chinese smelters.

Malaysia emerged last year as a major provider of bauxite after leading producer Indonesia banned ore exports to encourage more processing at home. From January to November, Malaysia exported some 20 million metric tons of bauxite to China, the world’s biggest aluminum producer. That was nearly half China’s total bauxite imports and a sharp increase from 3.25 million tons in the same period in 2014.

Industry experts had earlier said Malaysia’s entry into the industry was a game-changer, opening a new source of bauxite to meet demand for aluminum, a metal used in cars and beverage cans that is often valued for its environmentally friendly properties.

But concerns about flimsy regulation and a lack of environmental safeguards on bauxite mining were heightened last week after environmentalists and residents blamed waste from the extraction process for polluting the waters off eastern Malaysia after days of torrential rains.

“Beginning 15 January, everything will come to a standstill,” Malaysia’s natural resources and environment minister, Wan Junaidi Tuanku Jaafar, told a news conference.

Mr. Wan Junaidi said the government would also freeze new permits for the export of bauxite for three months.

The recent rainstorms led to a sharp increase in the runoff from washed ore leaching into the river systems in Pahang state, where the bulk of the mining takes place.

Environmentalists have said the runoff has increased the risk of contamination of seafood caught in the area around the town of Kuantan, as well as blighting one of the country’s most popular tourism destinations.

The residue from bauxite mining, a red sludge, can include naturally occurring chemicals and minerals such as arsenic and mercury, and heavy metals including strontium and cesium. Residents in Kuantan have complained of skin inflammation and deteriorating air quality because of the way in which waste from mining is handled.

It isn’t yet clear how the ban would affect Malaysia’s exports over the longer term. Any disruption in supplies would probably force Chinese producers to turn to higher-cost suppliers in Australia and India, said Ivan Szpakowski, head of Asia commodities research at Citi.

“China will continue to export aluminum products, though this will make them slightly less competitive,” he said.

A Chinese aluminum-industry executive said any impact from Malaysia’s decision may take a while to play out as China still has substantial stockpiles of bauxite imported from Indonesia before that country’s export ban.

Chinese producers of certain metals including aluminum have recently stepped up exports as domestic consumption has slowed, which in turn has suppressed international prices. Three-month aluminum prices on the London Metal Exchange were trading Wednesday at $1,468.50 a ton, close to a six-year low touched last year.

Malaysian bauxite exports to China are cheaper than those from rivals such as Australia, but considered to be of poorer quality. Some of the larger mining companies in Malaysia’s highly fragmented industry have bought better quality equipment in response, to reduce pollution and to dig out higher-quality bauxite.

Even if Malaysia were to follow Indonesia by banning bauxite outright, it is unlikely to spur investment in the ore’s processing within the country, Citi’s Mr. Szpakowski said.

“There is little incentive for a producer to invest in refining of the metal in the country, as at the current pace of mining Malaysia is likely to exhaust its bauxite reserves in less than 10 years,” he said.

Any demand from China is likely positive for Australian mining companies, which are the second-largest suppliers to China. Malaysia’s temporary export ban comes just weeks after mining giant Rio Tinto approved a $1.9 billion Amrun bauxite project in Australia, betting Chinese demand for the commodity would rise.

The apparent ease with which many companies have obtained licenses to mine bauxite in Malaysia has stirred concerns about the long-term impact of the industry.

At present, there are 22 legal mine operators in the state of Pahang, with an unknown number of illegal mining companies, officials said. Malaysia’s government last week stopped approving new permits to export bauxite, and these licenses will be subject to more stringent scrutiny when they resume being issued.

“We are trying to find a permanent solution, but a permanent solution needs time,” Pahang Chief Minister Adnan Yaakob said.

—Kersten Zhang in Beijing and Rhiannon Hoyle in Sydney contributed to this article.

China fuels red boom in global bauxite trade
RAZAK AHMAD The Star 7 Jan 16;

KUALA LUMPUR: Malaysia is a small player in the global bauxite industry but strong demand from China has fuelled a red boom in the country.

Bauxite is processed into aluminium oxide or alumina before being smelted to extract aluminium, which is used in all kinds of products ranging from packaging to aeroplanes.

In 2013, Malaysia reportedly produced 208,770 tonnes of bauxite, a tiny figure compared to world leader Australia which produced 81 million tonnes.

The following year saw a three-fold jump in Malaysia’s production to 962,799 tonnes, according to figures from the Minerals and Geoscience Department.

Last year, Malaysia produced an estimated 20 million tonnes to overtake Australia as the biggest bauxite exporter to China.

The staggering jump in production is partly to fill a void left by Indonesia which restricted exports in 2014 to compel local companies to develop smelters, add value and create more jobs.

Strong demand from China over the past few years has made bauxite mining a lucrative business in Malaysia.

Mining operations have, however, left many areas covered in red dust and created worries about river and sea water contamination.

Despite the big profits, questions have been raised on how long the current bauxite boom can last.

Reuters reported that the price of aluminium fell last November to its lowest in six years as China’s economic growth slowed, creating an oversupply.

It has also been noted that Malaysia has a relatively small reserve of bauxite.

Bloomberg quoted mining company Rio Tinto Group’s chief executive officer for aluminium Alf Barrios as saying that “Malaysia can only maintain its current level of production for another three or four years before its reserves run out”.

The Minerals and Geoscience Department in its 2014 Compendium states that Malaysia’s aluminium/bauxite reserves currently stand at 18 million metric tonnes valued at RM1bil.

Researcher: Long-term exposure to bauxite dust can lead to Alzheimer
The Star 6 Jan 16;

KUANTAN: Long-term exposure to bauxite dust can lead to miners and residents living along transport routes developing Alzheimer's disease, said Research fellow at Universiti Sultan Zainal Abidin's (UniSZA) Air Quality Division of the East Coast Environmental Research Institute, Dr Azman Azid.

He said bauxite contained aluminium hydroxide and if inhaled, the bauxite dust, which is released into the air over a long period of time, could block the oxygen supply to the blood and nervous system.

"When the brain does not get sufficient oxygen, a person is exposed to the risk of Alzheimers or suffer memory loss," he told Bernama when contacted here today.

He said, based on a study conducted by the institute at several affected areas in the last few months including at the Bukit Goh Tahfiz School, located near the main bauxite transport routes, found that the air pollution there had exceeded the hazardous level and recorded an Air Pollutant Index reading of 468.

Azman described the air pollution in the area as serious and he estimated that the suspended particles less than 10 microns had reached levels over 200 ug/m3 (microgrammes per cubic metre), exceeding the standards set by the Malaysian Ambient Air Quality Guidelines of 150 ug/m3.

Azman also voiced concern over some residents and workers who seemed to be neglecting their own health as they did not wear safety masks, adding that those people were facing breathing difficulties, coughs, allergies, itchy eyes as well as liver problems.

"Besides mining workers, others who are at risk are babies, children and senior citizens as they have a higher breathing air requirements and weaker body immunity system," he said.

According to Azman, the pollution problem could be reduced if the relevant law enforcement agencies had taken appropriate action when bauxite-mining activity began in the district.

"Personally, I think the relevant agencies including the Department of Environment should have monitored the situation from the beginning especially in the aspect of the implementation of the mining works.

"The dust can be reduced if all lorries carrying bauxite properly cover their load and the roads used to transport are washed with water.

"At the same time, buffers should also be built along the routes to filter the water used to clean up the dirty roads before it flows into rivers," he said.

He said the Department of Safety and Health (Dosh) should also play its role by ensuring those working in the bauxite industry always wear safety masks to prevent their health from being affected.

Meanwhile, Pahang Health director Datuk Dr Zainal Ariffin Omar said there was a theory saying that aluminium poisoning through air pollution could cause Alzheimers disease.

"However, so far there is no conclusive evidence that aluminium poisoning through the air can cause the disease. It's just a theory without medical evidence," he said.

At the same time he did not deny that the number of patients who sought treatment for respiratory diseases such as asthma, colds and coughs in the government clinics and hospitals and in the state had recorded an increase. - Bernama

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