Technical Assistance Consultant’s Report Project Number: 51013-001 February 2020 People’s Republic of China: Improving Ecological Protection and Poverty Alleviation in the Mining Area in Ganzhou, Jiangxi (Financed by the Technical Assistance Special Fund-Others) Prepared by NAREE International Limited in association with NAREE Consulting Limited Hong Kong, China For the Jiangxi Committee of the Chinese People’s Political Consultative Conference This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. NᴧREE TA-9480 PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Ganzhou, Jiangxi Final Report November 2019 Submitted to: Asian Development Bank and Jiangxi People’s Political Consultative Conference Prepared by: NAREE International Limited in association with NAREE Consulting Limited Asian Development Bank TA No. 9480 PRC Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Ganzhou, Jiangxi Final Report 26 November 2019 Final Report NᴧREE CURRENCY EQUIVALENTS (as of 13 September 2019) Currency Unit = yuan (CNY) $1.00 = CNY 7.0738 CNY1.00 = $0.1413 Fiscal Year January – December ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AML Abandoned Mine Lands Reclamation Fund (US) CAPEX Capital expenditure CBA Cost benefit analysis CEA Cost effectiveness analysis CERCLA Comprehensive Environmental Compensation and Liability Act (1980), US CIIT Commission of Industry and Information Technology DFR Draft Final Report DRC Development and Reform Commission EA Executing Agency EC European Commission EIA Environmental Impact Assessment ELD Environmental Liability Directive (EU) EMS Environmental Management System EPA Environmental Protection Agency (US) ES Ecosystem sources EU European Union FYP Five-Year-Plan GDP Gross Domestic Product IA Implementing Agency IDES Index of Dependence on Ecosystem Services IFIs International financial institutions JPG Jiangxi Provincial Government JPPCC Jiangxi People’s Political Consultative Conference KSTA Knowledge and Support Technical Assistance LCA Least cost analysis MA Millennium Ecosystem Assessment OPEX Operating expenditure PMO Project Management Office PRC People’s Republic of China RE Rare earths REEs Rare earth elements REO Rare-earth Oxides SCP Stakeholder Consultation Plan SMRCA Surface Mining and Reclamation Act (1977), US. TA Technical Assistance TAR Technical Assistance Report TOR Terms of Reference WB World Bank WTP Willingness to Pay WEIGHTS AND MEASURES MT - Metric ton TA-9480 PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Ganzhou Jiangxi NAREE International Limited (Hong Kong) in association with NAREE Consulting Limited (PRC) i Final Report NᴧREE 1 hectare 15 mu 1 mu - 0.067 ha NOTES (i) The fiscal year (FY) of the Government of the People’s Republic of China ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2019 ends on 31 December 2019. (ii) In this report, "$" refers to US dollars TA-9480 PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Ganzhou Jiangxi NAREE International Limited (Hong Kong) in association with NAREE Consulting Limited (PRC) ii Final Report NᴧREE PROJECT LOCATION MAP TA-9480 PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Jiangxi Province NAREE International Limited (Hong Kong) in association with NAREE Consulting Limited (PRC) iii Final Report NᴧREE EXECUTIVE SUMMARY 1. This report is prepared for the Knowledge and Support Technical Assistance (KSTA): TA 9480-PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Ganzhou, Jiangxi. As required by ToR, this report is prepared based on the mid-term report and constructive comments from ADB, PMO and relevant Jiangxi provincial departments. 2. This report introduces the mining process of rare earth mines in Jiangxi Province, including pool leaching, heap leaching, and in-situ leaching methods; and, examines mining impacts of different processes on domestic water, production water and physical health and safety of life and property, i.e. 1500 – 2400 tons of tailings are generated for production of 1 ton of mixed rare earth oxide and will involve a land occupation of 0.020-0.033 ha if stockpiled at an average thickness of 8m. In general, the pool leaching and heap leaching processes have been banned since 2007 due to serious vegetation damage, soil erosion, soil acidification, and water pollution, however, the damage caused by the ecological environment and the impact on the production and life of the villagers still persist. At present, the in-situ leaching process, although there are few advantages such as less damage to surface plants, no tailings discharge, less waste soil, and high utilization rate of rare earth resources. However, it does not avoid soil acidification and high heavy metal content and water pollution, especially major problems such as groundwater pollution risk). 3. According to the national policy, the Ganzhou Municipal Government has taken corresponding measures, which are embodied in the two aspects of soil and vegetation restoration and water quality improvement. However, we found that there are still problems for the remediation of abandoned rare earth mines (AREMs) in Ganzhou, such as “focusing more on the superficial aspects but less on the essential aspects”, “focusing more on the symptoms but less on the causes”, “focusing more on large mines but less on small ones”, “focusing more on the short-term effect but less on the long-term effect”, and “many works are still at the stage of exploration”. 4. This report pays close attention to abandoned rare mines impacts by using Dingnan County as an example, because this county has a history of rare earth mining since the 1980s. It has various abandoned mines left over by mining techniques such as pool dipping, heap leaching and in situ leaching with a strong research value. The project team collected a lot of useful information through the “one-on-one, face-to-face” survey with the villagers, and also collected a wealth of soil and water samples. 5. The survey of community residents found that: (1) The production and domestic water of residents are affected by abandoned mines. (2) The impacts of abandoned mines on villagers are as follows: the agricultural harvest is reduced and in some cases there is failure to harvest; the villagers need to find new water sources to avoid the impact of abandoned mines; the vast majority of villagers believe that AREMs affect everyone's health; some villagers' houses are also affected by geological disasters caused by abandoned mines. 6. The water and soil experiment found that: (1) soil still shows strong acidity. The soil fertility and nutrient preservation have not been effectively improved. (2) Groundwater consumed by residents and spring water drawn from the mountains do not meet the sanitary standards for drinking water. (3) There is a problem of the linkage between water pollution and soil pollution in abandoned mines, and the problem of water and soil pollution is still severe in the tailings area that has been shut down for more than 10 years. Therefore, abandoned mine management is a systematic and long-term project. 7. The government is mainly responsible for terrain remediation, soil erosion prevention and vegetation re-greening., and the pursuit of ecological benefits; while private sectors and individuals are more concerned about how to use the AREMs to potentially achieve bring TA-9480 PRC: Improving Ecological Protection and Poverty Alleviation Outcomes in the Mining Area in Jiangxi Province NAREE International Limited (Hong Kong) in association with NAREE Consulting Limited (PRC) iv Final Report NᴧREE economic benefits can be summarized with four models: “Forest-Fruit-Grass, Forest-Grass- Vegetable, Pig-Bioprocess-Forestry (fruit trees), and Industrial Park”. The remediation of RE mines in Ganzhou Prefecture is still limited. The remediation of AREMs is still at the stage of phytoremediation, but the attention to water and soil quality improvement is not enough, and this is precisely the main factors affecting villagers' production, livelihood and physical health. The participation of private sector is still in the early stage, and the economic benefits of AREMs still remain small; the problems of inadequate technology and poor land transfer mechanism are still major constraints; and the quality of drinking water for the villagers needs to be improved. These are the main issues which have to be addressed by central and regional governments. 8. International experience in the remediation of AREMs is limited. The major producers of rare earths apart from China internationally are Australia, Brazil, Russia and the United States. However rare earth mining in Australia and the US are in remote areas compared to mining in Jiangxi province and Dingnan County where mining and associated remediation is carried out in areas with resident populations with all the associated risks. Other countries with RE deposits are Canada, India, Malaysia, Vietnam and in Europe, Greenland1 and Sweden. Other countries may have RE deposits but they are not exploited commercially. International experience in the remediation of AREMs is limited. 9. Following on from international experience the impact analysis of mining