- Country supplied more than 40% of China's imports last year
- Suspension starts Jan. 15 as government seeks to tighten rules
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.”
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.