Tibet’s resource curse


December 19, 2011 8:51 pm

Gabriel Lafitte, www.chinadialogue.net

Chinese geologists exploring Tibet in the 1960s criss-crossed the plateau, searching for the mineral wealth they assumed must be abundant, but had not yet discovered. In remote alpine deserts, the geological expeditions came upon lakes which were slowly drying-up due to long-term climate shifts. High on the empty Chang Tang plain in western Tibet, they found lakes already dry, their beds a shimmering salt pan.

Testing the various salts, the geologists discovered a scientific curiosity. One lake in particular, Drangyer Tsaka (Zabuye), held an extraordinary concentration of lithium salts; measurements of 660 parts per million (ppm) of lithium were recorded. Only in the Atacama Desert of the Andes had such levels of lithium been discovered.

For decades, these findings were known only to a handful of geologists. Lithium was a metal in moderate demand, for unglamorous uses in the manufacture of ceramics and industrial greases and, in tiny amounts, as a psychiatric anti-depressant. China satisfied its modest need for lithium by mining a lithium-rich mineral ore at Yichun, in eastern China’s Jiangxi province. Should that prove insufficient, there were other salt lakes on the Tibetan Plateau, far from lonely Drangyer Tsaka.

In the Tsaidam Basin of northern Tibet, geologists found not only salt lakes, but also oil, asbestos, lead, zinc; and in Tso Ngonpo (Qinghai Lake) they found minerals that could be used for developing submarine-based nuclear missiles.

So valuable were the lakes in the Tsaidam Basin that a railway was built more than three decades ago, enabling tanker wagons to haul millions of tonnes of oil to Lanzhou, the capital of Gansu province. The availability of so many minerals in one basin, as well as gas fields discovered and exploited later, provided the raw materials for a major industrial base. Golmud, formerly a camel-train stop on the long haul between Lanzhou and Lhasa, became an industrial city, with petrochemical plants that produced plastics, fuel, fertilisers and explosives. The salts of the many salt lakes were essential inputs.

One such lake, Charhan (or Da Qaidam), in the arid Tsaidam Basin stood out for its high level of lithium salts, mixed in as usual with common sodium salt, potassium and magnesium salts. It had concentrations of lithium recorded at 330 ppm, half the level of Drangyer Tsaka, but extraordinary by any other comparison.

In the 1980s, the salts of Tibet started appearing in the central government’s five-year plans, but actual use was limited to scooping huge quantities of salt from briny lake beds to use in the manufacture of polyvinyl chloride and urea fertiliser. These processes ignored not only lithium, but also the potentially valuable potassium and magnesium salts.

By the 1990s, as the productivity of Chinese farm soils depleted, attention shifted to potassium salts, used to make potash, essential to a mix of chemical fertilisers that could restore balance and fertility to overworked farmland soils. At first, China had to import potash from Canada to meet this demand, yet the salt lakes of the Tsaidam Basin, rich in potash, were industrially undeveloped. Finally, China invested in domestic potash production, which is now one of the major industries of Qinghai province, along with petrochemicals.

Around the turn of this century, China began to separate the mixed salts of Tsaidam Basin lake beds on a large-scale. Separating naturally crystallised sodium, potassium, magnesium and lithium salts requires heavy-duty toxic solvents (such as isobutanol and chloroform), known to cause cancer. Since the Qinghai authorities were keen to industrialise their province – known for its poverty, remoteness and cold climate – land-use controls and environmental regulations were not a priority. From the provincial capital Xining, spreading out to the famous Kumbum Monastery, industrial plants took up land, pouring effluents into nearby streams. Potash and magnesium plants were built and expanded in Gormo, Xining and along the connecting railway line.

But the process of extraction has paid little attention to the impact of mining. In mid 2011, people from Kumbum protested and petitioned local authorities, saying: “High-polluting and wanton extractive business practices have brought bitterness and disaster for the local people. Local villagers have obstructed the mining on many occasions, demanding that the sacred mountain [known as Lhamo mountain] not be mined and requesting Kumbum Monastery to act as an official protector.” Previous appeals to authorities to address pollution concerns had been ignored.  

“As of this year, the situation has become more serious, especially during the months of May to July, when eight villages had serious contamination in their water pipes with the water becoming muddy and foul smelling,” the petition went on. “Monks and local people became nauseous, their bodies became listless and they felt dazed and some even had to be hospitalised from drinking the water.” The pollution in Kumbum is far from a unique case. Many recent protests in western China have been in response to the impacts of uncontrolled mining, including lithium extraction.

Lithium enters rivers and drinking water from many industrial sources. Its toxicity has been scientifically studied in fish, other aquatic creatures and mammals. A team of Canadian and Finnish scientists have found that lithium is “potentially detrimental to the juvenile rainbow trout.” Lithium fed experimentally to rats caused developmental deformities, according to a 2004 scientific report.

Until very recently, lithium remained an industrial byproduct, a waste in the liquor remaining after everything valuable had been extracted. But now demand for lithium is growing, as mobile phones and laptop computers, all powered by lithium-ion (li-ion) batteries have swept the world. And China has become the li-ion battery factory of the world, an industry growing at 33% a year.

But the real game changer that has made yesterday’s industrial waste liquor tomorrow’s hot investment stock, is the electric car. The amount of lithium in the li-ion batteries driving electric cars is measured in kilograms, rather than grams. And this growing demand will be satisfied by extracting lithium from the accessible Tsaidam Basin and even the inaccessible Drangyer Tsaka.

China’s battery manufacturers saw the possibility of making the leap, from makers of no-name brands hidden inside your iPad or smartphone, to big-brand car manufacturers. The quickest to capitalise and upscale was a Shenzhen battery-maker called BYD – short for Build Your Dreams – which transformed itself overnight into a car manufacturer.

BYD has ambitiously seized the lead in the race to capture the predicted electric car boom, by announcing a new model, the C6, due to hit the roads in 2011, which would revolutionise motoring, reduce pollution and establish China as a brand leader in green technologies, along with wind and solar power manufacturing.

Undeterred by global financial crises and wildly fluctuating commodity prices for raw materials, BYD pressed ahead, with one bold announcement after another. One coup was its announcement in 2010 that it had not only taken an equity stake in the Drangyer Tsaka lithium salt deposit, but had exclusive contractual rights to its lithium salts for the coming 20 years.

This captured the attention of two of the world’s richest men, Warren Buffett and Bill Gates, who flew to Shenzhen, to be draped with golden Tibetan silk scarves at the launch of BYD’s M6 electric car prototype. Back in 2008, Buffett bought a 10% equity stake in BYD, signaling to the global market that the company was the next big thing.

But the glamour of the launch (available to watch online here) conceals darker truths. Obtaining lithium, magnesium and potassium from salt lakes remains a dirty business. Environmental regulations are ignored, particularly in western china, where mineral extraction pollutes the air, soil and water. The sexy green electric car of the future may not be as green as people hope. Not only does li-ion battery manufacture consume a lot of energy, but given the solvent extraction methods used, there is a major risk that lithium will leak into water supplies.

BYD has missed its own promised deadlines for putting an actual electric car on the market, and Beijing shows signs of scaling back its hopes and subsidies. In 2011, BYD’s share price plummeted. The company’s net profits fell by 85.5% in the first nine months of 2011 because of fewer car sales and lower margins at its battery business. According to Chinese media organisation Caixin, the company “invested too much in its expansion” and cannot earn enough “to sustain the investment projects”.  Lack of money and falling shares have fed “an undercurrent of doubt about the company and its premise that new energy is the wave of the future. Some say the wave BYD wants to ride is now curling toward a crash,” Caixin reported.

China’s state-sponsored push to turn BYD into a national champion of electric car manufacturing may be faltering, but plans to increase lithium extraction are powering ahead, despite environmental concerns. The central government has ambitious targets to increase lithium production, first from the Tsaidam Basin lakes in Qinghai province, and then from Drangyer Tsaka in the far west of Tibet Autonomous Region.

China is currently the world’s third largest miner of lithium, after Chile and Australia, and nearly 90% of its output comes from salt lakes in Qinghai province. Qinghai produced 6,000 tonnes of lithium last year and plans to raise this to 30,000 tonnes over the next five years, the director of Qinghai’s Land and Resources Department, Liu Shanqing, was quoted as saying in China Daily.

“The original plan was to have a capacity of 60,000 tonnes by 2015 but, since extraction technologies are not that mature, we have scaled it down to 30,000 tonnes,” he said. This still represents a fivefold increase in the production of lithium in Qinghai province. Qinghai Salt Lake Industry Group’s 10,000 tonnes per year brine-based lithium carbonate and chloride project in Qinghai is scheduled be in full production in 2012, and to triple its output by 2015.

The speed of lithium extraction has been slowed down by technical problems with the use of volatile toxic solvents, including isobutanol, pentanol, tetrahydrofuran, cresol and chloroform. Unless the solvents work perfectly, the purity of the lithium is contaminated and fails to reach battery-grade suited for use in computers and electric cars. These solvents, which give off fumes even at ordinary temperatures, require careful storage in stainless steel pressure vessels, operated by a trained and alert workforce.

But the environmental impacts of mineral extraction will intensify in the Tibetan Plateau, in arid areas where pollutants accumulate in basins with no external drainage. Both the Tsaidam Basin and Drangyer Tsaka lithium salt lakes cannot naturally dispose of toxins generated by solvent extraction, and so waste products stay where they are dumped, or evaporate into the thin air and intense heat of a Tibetan summer. No longer will lithium extraction be confined to Gansu, as in the past.

The first large-scale lithium extraction factory in the Tsaidam basin is due to begin operation soon according to Metal Bulletin, and even Drangyer Tsaka is now scheduled to produce thousands of tonnes of lithium annually. It may not be long before your latest handheld passport to mobile connectivity is powered by Tibetan lithium.

In April 2011, Tibet Mineral Development Corporation raised 1.21 billion yuan (US$187.22 million) through a non-public offering of shares to eight investors to recapitalise its subsidiaries. One of those subsidiaries, Tibet Zabuye Lithium Technologies Company, will receive US$15.5 million to intensify lithium extraction in Drangyer Tsaka, Interfax’s China Mining & Metals Weekly reported in July 2011. How will such industrialisation work at Drangyer Tsaka, in the alpine desert of upper Tibet? Drangyer Tsaka is close to 2,000 kilometres from the nearest Chinese industrial city, and almost entirely lacking in roads, towns, power supply and communications. If the world is to watch for environmental impacts, it will have to be from afar.

The far north, far west and now far east of the Tibetan Plateau are all designated lithium-extraction zones, far from the gaze of regulatory authorities. Lives have been lost in protests against mining. Can we assume that the “green” technology of the future will be powered by ethnically obtained lithium?

Gabriel Lafitte is an environmental policy consultant who has worked with Tibetans for over 30 years.