China’s environmental watchdog to launch new inspections, minor metals participants downplay impact

From 2019, Chinese central government regulators will begin a new round of environmental protection inspections in the country’s metals and mining industry, which will take about four years to complete.

The affected regions include all 31 provinces – including districts and cities – in China that were included in an earlier round of environmental inspections that took place over the past three years, according to Liu Changgen, head of the Chinese Ministry of Ecology and Environment’s central inspection office.

This year and over the next two years, central government inspectors will once again carry out environmental supervision in those 31 provinces, Liu said at the Ministry of Ecology and Environment’s monthly press conference last December.

The central inspection team will then begin subsequent checks in 2022, reporting the progress made since earlier inspections. If the feedback is not positive then the local government officials will be pushed to carry out measures against those found to be violating environmental regulations, he added.

The exact timing and structure of the new environmental protection plan have not yet been released, so it is not yet certain which provinces and metals will bear the brunt of this second round of inspections.

But while no regions have officially been named in the upcoming inspections, major minor metal production hubs Yunnan for silicon and germanium, Shannxi for magnesium, Hunan for antimony and bismuth and Jiangxi for tungsten were targeted in checks that took place last year.

Minor metals market participants downplay impact
Despite the upcoming inspections and threat of possible further disruption to operations and production, minor metals market participants have downplayed the impact on their respective markets, particularly those for tungsten and magnesium. This is because many of the previously non-compliant producers have already left the market permanently, participants told Fastmarkets.

“Those smelters that do not meet the required environmental standards have already been shut down since the middle of last year. Therefore, the new inspections will not really have a big impact on production this year,” a China-based ammonium paratungstate (APT) producer said.

Participants in China’s magnesium market cited similar reasons as to why the inspections are unlikely to have a major impact on the country’s total magnesium output this year.

"It is normal for environmental protection inspections to have become more stringent recently, [but] magnesium refineries have also made corresponding improvements [in line with these stricter regulations,” a China-based magnesium producer said.

“Therefore, the second round of environmental inspections are likely to have a limited impact on total magnesium output in China this year due to most of the remaining producers already meeting the environmental requirements,” the producer added.

Some markets have greater number of non-compliant producers
But the same cannot be said for some other markets, such as China’s graphite market, which still have a number of active producers who do not comply with the latest environmental standards, market participants told Fastmarkets.

“Some flake graphite producers that do not meet the environmental-protection requirements will temporarily stop production, only to resume production after environmental protection inspections are complete,” one Chinese graphite producer said. “So the overall affected output in 2019 in China depends on how rigorous the environmental inspections are and how long inspections last next year.”

Susan Zou, in Shanghai, contributed to this report.

Huaqing Fu

huaqing.fu@fastmarkets.com

Published

Huaqing Fu

January 10, 2019

09:40 GMT

Shanghai