Disclaimer: I'm a geophysicist and I've worked in mining. I've even been underground in the tanco mine (it's a very cool tour -- or at least it was 15 years ago).
The lake is small. This isn't the same as Easterville where a community was displaced to create a reservoir. I think the MMF objections are largely grandstanding, in this instance.
Politically, I am not a fan of Chinese ownership of these resources. I would personally attempt to raise roadblocks only because it's a strategically valuable resource, and not because of the lake itself.