MAC/20: Mines and Communities

China Update

Published by MAC on 2006-06-06


China Update

6th June 2006

As it launches its next five year plan, the Chinese regime seems to making an effort to balance consumer demand (not least for energy) with a reduction of pollution and cleaner production of power. The state already admits that some 90 percent of the country's cities and 75 percent of its lakes suffer some degree of water pollution, while in some regions discharges of major pollutants have surpassed the sustaining capacity of the environment.

Another Canadian company comes under fire for encroaching on Chinese-occupied Tibet.


Tibetans oppose GobiMin's Mining Project in Tibet

Phayul

3rd June 2006

Tibetan rights groups and supporters have slammed a major Canadian mining company for its interest in a zinc-copper property in Chinese-occupied Tibet. GobiMin Inc. of Canada acquired 30% equity interest in Tibet Dazi PuXiong Copper Company Limited which owns exploration license of the Malonglang Copper-Zinc project located in Dazi County.

Mining in Tibetan areas has intensified over the years as foreign companies are being encouraged by the Chinese authorities to exploit the rich untapped natural resources in Tibet. Gobimin, one of the latest players in the exploitation of Tibetan mines, is the sixth largest mining company in Canada and majority of the members on its board are Chinese-Canadians, reported the Voice of America (VOA) June 3 quoting Tenzin Dhargyal of the Canada Tibet Committee (CTC). The group has also written to Gobimin protesting the company's role in the Malonglang project and explaining concerns of the Tibetan people. "....there is a high risk that your activity will negatively impact the livelihood of Tibetan people, their culture and their environment", Mr. Dhargyal wrote.

The Tibetan youth group, Students for a Free Tibet (SFT) also voiced their concerns and said they would oppose any attempts to exploit the natural resources of Tibet. VOA quoted SFT's Tenzin Dorjee as saying that SFT views the exploitation of Tibet's resources and wealth by any foreign companies, Chinese or otherwise, as an act of theft. He also said the group was aware of the growing interests among foreign companies to enter the mining market in Tibet.


GobiMin Acquires Interest in a Zinc-Copper Property in Tibet

Marketwire

1st June 2006

Toronto (Canada) May 29, 2006 - GobiMin Inc. (the "Company" or "GobiMin") (TSX VENTURE: GMN) is pleased to announce that it has acquired through its 97%-owned Chinese subsidiary a 30% equity interest in Tibet Dazi PuXiong Copper Company Limited ("PuXiong") which owns the exploration license of the Malonglang copper-zinc project located in Dazi County, Tibet Autonomous Region of the People's Republic of China.

The aggregate consideration for the acquisition is RMB13,000,000 (approximately US$1,625,000) in cash, which was fully settled through the available resources of the Company.

The Malonglang project encompasses an area of 26.9 square kilometers. It is located 20 kilometers east of Lhasa, the capital city of Tibet and is easily accessible by paved roads. Previous exploration work by PuXiong comprised geological mapping, 1,260 cubic meters of trenching, and six levels of drifting. To date, eight lenses of copper-zinc mineralization have been outlined, ranging from 600 to 1,000 meters in length with an average width of 4.2 meters. Skarn-type mineralization is associated with sphalerite, chalcopyrite, galena and pyrite. Limited sampling data from the trenching and drifting indicate grades ranging from 3.1% to 11.7% zinc and 0.6% to 6.8% copper.

PuXiong just completed the construction of a 500 tonnes per day mill located approximately 8 kilometers from the project site. PuXiong is expected to apply for a mining license in September 2006 upon completion of an exploration report for the project. Their plan is to start mining operations after obtaining the mining license.

Felipe Tan, CEO of GobiMin, commented on this transaction: "We look forward to working together with Puxiong to unlock the economic potential of the Malonglang project, which shall provide us an opportunity to expand beyond our nickel-copper project in northwestern China. This acquisition is in line with the Company's objective of bringing value to its shareholders."

The data reported in the press release is historical in nature and has not been verified by the Company. Mr. John Guo, Senior Geologist of GobiMin, Qualified Person as defined per NI 43-101, has reviewed the content of this release.


China Vows to Synchronize Environmental Protection with Development

BEIJING, China, (ENS)

5th June 2006

China is about to change "from emphasizing economic growth but ignoring environmental protection to emphasizing both environmental protection and economic growth," the government said today in a policy paper covering the next five years.

Released by the Information Office of the State Council, China's central government, the paper says that government is "fully aware" that the situation of environmental protection in the country is "grave."

At a press conference releasing releasing the paper in Beijing today, Zhu Guangyao, deputy director of the State Environmental Protection Administration (SEPA), said the increased emphasis on environmental protection will affect the approval process for large construction projects.

There will be stricter assessment of the environmental impacts of projects and and projects will be canceled if they either overdevelop land resources or may affect the surrounding environment negatively, he said.

Zhu said the government views its most important environmental task as water pollution control, with a focus on drinking water security.

Some 90 percent of China's cities and 75 percent of its lakes suffer from some degree of water pollution with already limited resources under immense strain, Deputy Minister of Construction Qiu Baoxing told an Asian Development Bank sponsored workshop on water in Bejing last September.

Qiu mentioned industry and the needs of a growing economy, unregulated factories dumping toxic pollutants into rivers and lakes and the issue of how to treat wastewater and sanitation as reasons for the contamination. He said arsenic contaminates the groundwater in some regions and there is an increased incidences of schistosomiasis carried by freshwater snails in rural areas.

With a population of 1.3 billion, the country is now at a stage of "accelerated industrialization and urbanization," says the paper entitled, "Environmental Protection in China (1996-2005)."

As a result, in some regions, "The discharge of major pollutants has surpassed the sustaining capacity of the environment. Water, land and soil pollution is serious, and pollution caused by solid wastes, motor vehicle emission and not easily degradable organic matter is increasing," the paper states.

Facing the mounting pressure on resources and the environment, the government says it will "change from mainly employing administrative measures in environmental protection to comprehensive use of legal, economic, technical and necessary administrative measures to solve environmental problems."

The government promised to "ensure the safety of the nuclear and radioactive environments." The government had previously announced that it plans to build 39 nuclear power plants over the next 20 years.

Energy consumption per unit of GDP in the 11th Five-Year Program for Economic and Social Development (2006-2010) will decline by 20 percent compared with the end of the Tenth Five-Year Plan, 2000-2005, the paper says.

Over the next five year, the government says the total amount of major pollutants discharged will be reduced by 10 percent, and forest coverage will be raised from 18.2 percent, about 175 million hectares, to 20 percent of the country's land area.

The policy paper says the government will make "greater efforts to control pollution of key drainage areas, rivers, cities and offshore sea areas."

Premier Wen Jiabao said in April at a national environmental protection conference that environmental protection will become part of the assessment system of economic and social development and the performance of officials.


China Inc: Social responsibilities and the new five-year plan

Tom Miller, Ethical Corporation

6th June 2006

Market-based pricing of electricity, water and refined oil products are not on the government's agenda, despite the potential impact of such plans on a greener China.

In March, the world's largest annual general meeting wrapped up for another year. With a beaming chairman by his side, the chief executive proudly announced near-record results to happy shareholders, who applauded the management on another fine year's work. Turning to the year ahead, the chief executive called on shareholders to approve a restructuring package to ensure the long-term health of the corporation.

The representatives at this year's meeting of the Chinese parliament were only too happy to oblige Chinese premier Wen Jiabao, chief executive of China Inc. The new Five Year Plan, ratified by the National People's Congress last month, outlines an economic model based on greater resource efficiency and "balanced" growth. Although the new plan envisages average annual growth of 7.5% until the end of 2010, it stresses that the blind pursuit of high GDP growth for its own sake must be abandoned.

New countryside

Two key policies are to build "a new socialist countryside" and "to promote economical and rational use of resources". Tackling the growing inequalities between China's booming cities and the impoverished countryside, Wen argued, would entail "encouraging consumption in rural areas" - important if China is to shift to more environmentally sustainable, consumption-led growth.

Does this mean we are about to witness a sudden shift away from investment-driven, resource-hungry growth, and an end to the fear that China will gobble up the world? The short answer is no. The surest way for the government to raise rural incomes is to continue pushing farmers into manufacturing and construction work in the cities. As China continues to urbanise, it will remain investment-driven - and dirty - for many years to come.

Nevertheless, the new plan does mark a welcome shift in priorities. Rural fury at illegal land seizures by rapacious officials and developers, together with mounting frustration at polluted rivers and drinking water, helped push the official number of violent protests to 87,000 last year, up from 74,000 in 2004 and 58,000 in 2003. The Communist Party-led government knows it must attend to social and environmental responsibilities to ensure its very survival.

Rural economy

China's farmers have been sucked dry by the state for centuries, and they continue to get a raw deal. Education, healthcare and social services in much of the countryside remain primitive at best, and sometimes non-existent. The average farmer earns just $405 a year, barely more than a dollar a day and less than a third of the average urban wage. According to the United Nations Development Programme, China's "urban-rural income inequality is perhaps the highest in the world".

Much of the resentment in the countryside is caused by cash-starved local governments charging ad hoc taxes to fill their own depleted coffers. The central government is responding by abolishing agricultural tax throughout the country (for the first time in 2,600 years) with the local shortfall being made up by transfers from the central government. Beijing will also continue to crack down on local officials charging "unlawful fees".

Rural education rising

Over the next five years, central expenditure on rural education will rise by more than $25 billion, guaranteeing nine years of free education to every rural child in China's poor western provinces. Cash for rural infrastructure projects, such as road building, and direct subsidies to China's impoverished grain farmers will also come out of the central budget.

But the government still needs to dig deeper. Although rural spending this year should hit $42 billion, a 14.2% increase on 2005 and well over the official 9.7% budgeted increase in total central government expenditure, analysts expect real total spending in 2006 to grow by 15% or more. "It is most unlikely that rural or social expenditure growth will be allowed to run ahead of overall expenditure growth," says Arthur Kroeber, managing editor of the China Economic Quarterly.

The state is investing just $2.5 billion in renovating hospitals and upgrading equipment over the next five years - significantly less than the cost of building the high-speed Maglev rail line between Shanghai and Hangzhou, two of the nation's richest cities. And farmers participating in trials of a rural co-operative health system, to be extended to 40% of all counties this year, will be allocated an allowance of just $5 per head.

One policy change that would both help to raise rural incomes and give farmers greater power to protect their land from illegal seizure would be to create a genuine land market in the countryside. Currently, farmers hold their land on 30-year leases from the local village collective and have no right to sell or sub-let; if they leave the farm, the land returns to the collective.

Transferring property rights to individual farmers would allow them to sell their land at its commercial value, and head off to the cities with cash in their pockets. During his annual press conference at the NPC, Wen declared: "We must enforce land protection and farmers' right to farm, and give due compensation for seized land." But he refused to countenance individual land rights. In the new socialist countryside, giving farmers financial control over their lives remains an ideological leap too far.

Environment

One of only two key numeric targets in the new Five Year Plan is to reduce energy consumption per unit of GDP by about 20% by the end of 2010. Last year, China consumed the equivalent of 2.2 billion tonnes of coal, using well over one tonne of coal to produce every $1,000 of GDP. This year, the government hopes to push energy consumption per unit of GDP down by 4%.

Premier Wen Jiabao told NPC delegates that a mixture of industrial upgrading, technological innovation and stricter enforcement of environmental regulations would help to control pollution and increase energy efficiency. But Jiang Weixi, vice-chairman of the state planning commission, admitted to journalists that the 20% efficiency target would be "difficult to realise".

There are already a number of efficiency standards in place on the big three users of energy and natural resources - the power, building and automotive industries - that do have some bite. Further taxes have been placed on big, fuel-guzzling vehicles, while taxes on small cars have been reduced. A new 5% levee on disposable wooden chopsticks is intended to persuade diners to buy the reusable, plastic variety, and thus slow logging in south-east Asia.

Failings not addressed

Although well intentioned, such government policies do not address the major institutional failing that prevents environmental regulations from being enforced. As long as government officials are judged solely on the rate of GDP growth in their localities, environmental targets will not be met. State planners are working on a "green GDP" measure to incorporate into the evaluative criteria used for promoting officials, which should at last provide them with an incentive for closing polluting factories. But no firm mention of the plan was made at this year's meeting.

Another problem in the fight against pollution and resource inefficiency has long been the weakness of the State Environment and Protection Authority (Sepa), which is both seriously understaffed and underfunded. Here some progress has been made. Last year, Sepa inspected more than 43,000 enterprises, sanctioning nearly 30,000 for environmental infringements and shutting down 2,609.

Zhou Shengxian, the agency's new boss, said the concept of "scientific development" - the government's new pet phrase for describing socially and environmentally responsible development - was a "powerful weapon" in Sepa's fight to change China's irresponsibly gung-ho growth model. "Prosperity at the expense of the environment is superficial," Zhou said. "It merely delays disorder."

Yet, if the government was genuinely determined to move beyond a resource-intensive investment model, one simple policy change would do more to persuade consumers of the need to save resources than rafts of new environmental regulations: market-based pricing of electricity, water and refined oil products. Ministers are fond of talking about the need for pricing reform, but remain too scared of social unrest to do anything about it. Deregulation of energy prices, which remain capped at artificially low prices, will be the true test of China Inc's commitment to a greener model of economic growth.

Key facts:

- Ten provinces are already trying to measure and report on "green GDP", which is at the heart of China's latest five-year plan
- China uses three times as much energy per unit of GDP as the US and nine times as much as Japan
- Beijing wants to cut energy intensity by 20 per cent over five years

Suggestions for change:

1) China should "consider implementing the requirements of Kyoto. By doing this, China would acknowledge its responsibility as the world's second-biggest carbon dioxide polluter".

2) China's leaders could create an internal emissions trading scheme, run according to its own rules. Piloted in the Pearl River Delta and Hong Kong, it could become the world's biggest within a decade.

3) China must leap into the hybrid age and then the hydrogen era for car engines.

Source: Global Institute for Tomorrow, a pan-Asian think-tank www.globalinstitutefortomorrow.org

Useful links:
www.theceq.info
www.chinacsr.com
http://uk.oneworld.net


FEATURE - Targeting Air Pollution, Poor Nations Aid Climate

PlanetArk, GERMANY

8th June 2006

BONN, Germany - China's car efficiency standards are tougher than those of many industrial states -- a somewhat surprising fact that reveals how efforts by developing nations to limit pollution may also help brake gobal warming.

Many poorer nations argue that, for them, development must take precedence over saving the planet. But they also want to tackle pollution that is choking their densely populated cities, and are keen to curb energy waste as oil prices soar. The measures developing countries are taking to cut down fossil fuel use may limit a surge in emissions of heat-trapping gases from power plants, factories and cars.
"Automobile efficiency standards are more stringent in China than in many industrialised countries," said Richard Kinley, officer-in-charge of the United Nations Climate Secretariat in Bonn.

"That is one example of action by developing countries, driven by national development reasons, which also has climate benefits," he told Reuters.

Most scientists say greenhouse gases could cause huge climate changes like floods, heatwaves, droughts and a rise in sea levels that could swamp low-lying Pacific islands by 2100. The main greenhouse gas is non-toxic carbon dioxide, produced naturally by plants and animals.

How to enlist nations such as China or India in the fight against climate change is a big question hampering UN efforts to extend the Kyoto Protocol, which binds almost 40 industrial nations to cut emissions of heat-trapping gases until 2012.

Poor countries say they cannot accept Kyoto-style caps on emissions of greenhouse gases, mainly from burning fossil fuels, in any extension of the pact from 2013. They say they need to burn more energy to drive economic growth.

The United States, the world's top emitter of greenhouse gases, also rejects Kyoto.

"Removal of poverty is the greater immediate imperative" said Prodipto Ghosh, secretary of India's Environment Ministry.

AIR QUALITY

But the need to save money and improve standards of living in choked cities has forced developing nations to take action.

China, the world's most populous nation with 1.3 billion people and a fast-growing economy, faces pressure to curb air pollution as it builds more power plants, adding 500 megawatts of capacity per week, mostly using high-polluting coal.

"Improved air quality is the main reason for investments in technologies to cut energy waste" in China, India and Brazil, said Mark Radka, head of the Paris-based energy branch of the UN Environment Programme (UNEP).

"Reducing greenhouse gas emissions is a bonus but not a strong motivation," he said.

Last month, the World Bank said pollution was growing rapidly in India and China because of inefficient investment in energy.

Brazil generates almost all its electricity from hydropower and is building 40 new hydropower stations. Banks in India are seeking ways to lend to businesses to encourage them to cut energy waste.

A recent UN study showed that countries from Nicaragua to Mongolia had greater than expected potential for windmills. China says its use of renewable energy in 2000 amounted to the equivalent of burning 33 million tonnes of coal.

As part of Kyoto, rich nations can invest in energy projects in developing countries -- such as a scheme to generate power from rotting trash in Brazil or a wind power project in Morocco -- and claim credits to help meet the Kyoto goals back home. So far, about 200 projects have been approved with another 760 in the pipeline under the Clean Development Mechanism (CDM). Some estimates say the scheme could channel US$100 billion in investments to developing nations.

WIN-WIN

"Win-win market mechanisms like CDM should be further explored," China wrote in a report to the UN climate talks in Bonn last month. Kyoto obliges industrial states to cut emissions by at least 5.2 percent below 1990 levels by 2008-12. Countries began preliminary talks on how to extend the deal beyond 2012 in Bonn.

Developing nations say rich states have to take the lead in making cuts because of their unfettered use of fossil fuels since the Industrial Revolution in the 18th century.

But nations bound by Kyoto -- mainly the European Union, Japan and Canada -- account for only about a third of world emissions of greenhouse gases and say other countries must join in if the UN-led scheme is to make a difference.

President George W. Bush pulled the United States out of Kyoto in 2001, arguing that it wrongly excluded poor nations and that emissions caps would harm the US economy.

The United States is the world's biggest emitter of greenhouse gases, at 24.4 percent of the world's total and an average 20.1 tonnes for each citizen. Washington prefers big investments in new technology to Kyoto's caps.

China is second with 12.1 percent of the world total. Per capita emissions are just 2.7 tonnes, but growing fast. India's 1.1 billion population accounts for 4.7 percent of the world total and 1.2 tonnes per capita.

Story by Alister Doyle, Environment Correspondent

REUTERS NEWS SERVICE

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