MAC: Mines and Communities

Cambodia: Lack of Information on Chinese-Funded Railway

Published by MAC on 2013-03-11
Source: Cambodia Daily, statement (2013-03-11)

Report Shows Lack of Information on Chinese-Funded Railway

By Simon Lewis and Neou Vannarin

Cambodia Daily

7 March 2013

ROVIENG DISTRICT, Preah Vihear province - With locals demanding dialogue with the Chinese firms behind a proposed multibillion dollar rail line to Preah Vihear prov­ince, an NGO report re­leased yesterday highlights the dearth of information that has been made available on the project.

Chinese company Cambodia Iron and Steel Mining Industry Group (CISMIG) has said it will build a 404-km railway connecting a new steel mill in Preah Vihear province and a new port in Koh Kong province, in a project estimated to be worth a total of $11.2 billion that is supposed to get under way in July.

CISMIG holds a license to ex­plore for, though not yet extract, iron ore on a massive 130,000 hectares of land located in Preah Vihear's Rovieng district.

Locals in Rovieng say they have not been told anything about the project, which would presumably require huge quarries to be dug, an iron ore smelting plant constructed and a railway built through the rural district.

Kheang Sochea, a Rovieng local and a Kuy ethnic minority community representative, said the community held a meeting with local NGO Development and Partnership in Action last month to raise their concerns about the project and its likely impact on their lives.

"We hear a lot about what the government is doing in other sectors, but we are not told anything about this," he said. "What the community wants is a discussion with the company, so that we can try to avoid the negative effects mining has had in other countries. They [local people] want some benefit when [companies] find things."

CISMIG's compound in the district town was quiet last week, the gates unguarded and adorned with Chinese New Year decorations. Not far from CISMIG's Rovieng compound stands a new, but small, CPP district office, which was built with $200,000 do­nated by CISMIG, according to the district governor.

In the briefing paper published on Tuesday, NGOs Equitable Cambodia and Focus on the Global South highlight the lack of publicly available information on the project.

According to the NGOs, the port component of the project is contracted to a subsidiary of China's state-owned SINOMACH, and the railway part is contracted to a subsidiary of China Railway Group, which signed a memorandum of understanding with CISMIG in December.

"In a 2009 Chinese language article, CISMIG's chairman stated that during exploration for iron ore, ex­tensive coal deposits were also discovered, which will be used to fuel an onsite power plant, and to use in the steel plant's furnaces," the report states, quoting Phnom Penh-based Chinese newspaper Sin Chew Daily. The article also es­timates that the concession in Rovieng could produce 3 million tons of iron ore a year for 55 years.

"Little is known about the true extent of reserves, or their quality, which has led to some speculation in Cambodia about the likelihood of the project going forward," the report adds. "Although this is the biggest infrastructure project in Cambodia's history, only limited information is currently publicly available."

While government officials claim to know little of the port, railway and iron ore project, the report cites another Chinese-language news report, which reportedly quotes a company representative as saying the project has the backing of Prime Minister Hun Sen.

The report also notes that Cambodia has no experience with large-scale extractive projects or the revenues involved, and that such enterprises come with risks.

"Examples from around the world show that in a climate of weak governance this revenue often fails to benefit the poor, can worsen corruption and lead to conflict," the report states.


China's 11 billion dollar North-South Railway Project in Cambodia

5 March 2013

Cambodia's valuable iron-ore deposits in the northern district of Rovieng appear to be slated for a massive $11 billion construction deal by two Chinese companies - the largest development plan in Cambodia's history. The companies involved in this project are Cambodia Iron & Steel Mining Industry Group and China Major Bridge Engineering, itself a subsidiary of the Chinese state-owned China Railway Group.

The companies will work to develop iron mines, build the country's first steel plant in Preah Vihear province, and create a purpose-built seaport on Cambodia's southern coast in Koh Kong province, all linked by 400 kilometres of railway connecting the steel plant to shipping facilities.

As currently planned, the project will be the biggest in Cambodia's history. Because of its size and geographical coverage-north to the southwest and passing through some of the most sensitive regions of the country-the project is expected to have wide-raging impacts which need to be adequately assessed, understood and, if the project goes forward, addressed and mitigated.

However, little information is currently available to the public regarding many aspects of the project, including the exact route of the railroad. The absence of adequate information limits the ability of the public, civil society, and other concerned observers, to engage in discussion on the potential benefits and risks of this project.

In an attempt to foster discussion among the government and the public-especially communities likely to be affected by the project-Equitable Cambodia and Focus on the Global South have prepared a briefing paper to provide an overview of the project. The paper presents public information compiled from available media reports, company websites, and other sources.

The paper also highlights areas where information is still lacking. Given the scale and potentially far-reaching impacts of the project, it is hoped that the Royal Government of Cambodia and the companies involved will make further information available in the near future, especially:

"We call on the Royal Government of Cambodia to disclose detailed information of the project and make sure that all affected people are meaningfully consulted," said Eang Vuthy, Director of Equitable Cambodia. "All domestic and international regulations must be implemented to avoid the social and environmental impacts associated with the project."

According to Shalmali Guttal from Focus on the Global South, "Given the massive scale and complexity of the project, we hope the Cambodian authorities will proceed with extreme caution, allowing for full, proper assessment of project costs and impacts, and safeguarding local livelihoods and environments."

Download the briefing paper in Khmer: http://www.equitablecambodia.org/reports/docs/Cambodia-China%20Railway%20Development%20BRIEF_Khmer.pdf

Download the briefing paper in English - http://www.equitablecambodia.org/reports/docs/Cambodia-China%20Railway%20Development%20BRIEF_English.pdf

For more information, contact:

Equitable Cambodia: +85512791700
Focus on the Global South: +66813756409


Chinese Firms Foresee Industrial Hub in Preah Vihear

By Simon Lewis and Neou Vannarin

Cambodia Daily

11 March 2013

ROVIENG DISTRICT, Preah Vihear province - The residents of this sleepy district, on the edge of the Boeng Per Wildlife Sanctuary, grow rice, cassava and cashew nuts. But in a few short years, Chinese investors envisage that Rovieng will be rapidly transformed into an industrial town.

The key to this proposed burst of development lies beneath the locals' feet, and is hinted at by clues from an ancient past.

"Before, we just saw the heavy rocks, heavy and dark," said Kheang Sochea, a representative of the local Kuy ethnic minority that has sporadically made money from artisanal mining for gold in recent years.

"When we did small-scale mining for gold, we would see the rocks, but we just used them to guide us to where the gold was."

Those dark rocks, rich in iron ore, are where the real treasure lies now.

Recent discoveries of pre-Angkorian smelters in the province point to a long forgotten hub of iron production. And the Kuy, who live alongside the Khmer population in Rovieng, are believed to have historically specialized in iron works. It is well known that there is iron in the ground in Preah Vihear, but getting at it has proved difficult. This landlocked province lacks major road and river links to transport minerals, leading some prospectors to conclude that the iron in the ground will remain a trapped resource.

Not easily discouraged, however, the Chinese appear to have the solution: a 404-kilometer railway connecting a yet-to-be-built smelter in Rovieng district with a brand-new seaport in Koh Kong province.

The mega project, with a combined $11.2 billion price tag, was announced in December.

The plans are still vague and officials say they know little about the project. What is known is that the company behind the proposal, Cambodia Iron and Steel Mining Industry Group, or CISMIG, has a government license to explore a large chunk, about 130,000 hectares, of Rovieng for iron ore. CISMIG has already signed agreements with two state-owned Chinese companies to construct the rail and port elements of the ambitious project. And the company's chairman has told Chinese media that Rovieng will soon become a "steel town," in which some 50,000 people will be employed in mining and processing iron ore.

CISMIG has a compound full of trucks and excavators in the district town, and has donated hundreds of thousands of dollars toward a new office for Prime Minister Hun Sen's ruling Cambodian People's Party in the district, which gleams in stark contrast to the run-down district administration office across the street.

Ben Davis, who has worked in Rovieng for the Adventist Development and Relief Agency since 2002, said the presence of Chinese mining firms in the area was not new.

"The Chinese started coming here about 2004 to do initial surveying. It has been a long time, with a lot of false starts."

He said Chinese firms were also exploring in neighboring districts and throughout Preah Vihear, and would probably need a number of iron ore mines to justify the massive multi-billion-dollar railway and port project.

"I can't imagine there is enough in Rovieng alone to justify [the investment]," Mr. Davis said.

In total, 20 companies hold mining licenses in the province, but only five are currently active, according to Kong Makara, director of the provincial mines and energy department. Five of the granted exploration licenses are located in Rovieng, including the two extraction licenses, he said.

One of the extraction licenses is held by Malaysian-Chinese gold miner Delcom. In 2010, the company, with support of local authorities, forcibly evicted more than 800 mostly Kuy villagers who had flocked to a mountain in Romony commune after gold was discovered.

Mr. Sochea, the local Kuy representative, said that Delcom still operates under the protection of local armed forces, and villagers are prevented access to forests long considered part of their community land. An application to gain a community land title for the Kuy in the area is currently awaiting government approval, he said.

The other extraction license belongs to the China's Guangxi Nonferrous Metals Group, which has a $22 million plan, approved in March 2011 by the Council for the Development of Cambodia, to build a steel mill in the area.

Nhien Lom, 59, a resident of Ruosroan commune, near the company's operation, said last week that mining activity had been going on each dry season in the area since 2006.

"Sometimes we hear explosions from TNT, and rocks fall from the sky," he said.

In September, according to Mr. Lom, four local families tried to build houses on land that the community considers its own farmland.

"The company and district governor destroyed them," he told reporters on a visit last week, pointing to piles of debris inside the firm's makeshift boundary fence. Sai Deth, district police chief, denied that the authorities were involved.

The provincial mining director, Mr. Makara said that work had slowed almost to a standstill at the Guangxi Nonferrous Metals Group compound, but that he was not sure why.

"I asked the local staff they said one [reason] is money and the other one is the company tried to change...their working plan," Mr. Makara said, adding that the company's extraction license covering 1,600 hectares, was granted in 2011.

Mr. Makara also said that a shortage of electricity in the district, which at present is supplied from neighboring Laos, meant he had doubts about the feasibility of having two smelters-the Guangxi Nonferrous Metals Group's under construction plant and the one in CISMIG's plans.

"There are only some resources, like electricity, water, it's difficult in Cambodia, that's why I don't think they can build two plants," he said, concluding that the two Chinese companies would probably find some way of working together.

Inside the compound of the Guangxi Nonferrous Metals' site, just beyond the remains of the destroyed homes and a compound of white, prefabricated buildings, trucks and excavators, there is a clearing cut out of the rock. In that clearing the foundations have been laid for a smelting plant. But last week only buffaloes wallowed in the muddy water of the foundation craters. All activity appeared to be stalled, and stockpiles of iron ore have built up.

Mr. Makara said that although negotiations on the railway project were conducted at a higher level of government authority, he believed Rovieng would be "a steel town by 2014, 2015."

The Kuy community representative, Mr. Sochea, said he is concerned that locals will not benefit from the changes. So far, locals have been kept in the dark about the proposed railway and mining plans for their area. And past experience leads Mr. Sochea to believe that locals will see minimal benefit in the future.

On a nearby economic land concession held by local firm Try Pheap, where the clearing of thousands of hectares of forest to set up a rubber plantation is underway, the employees were brought from elsewhere in the country. A whole new town is being constructed just over the border in Kompong Thom province to house the migrant workers for the plantation, many of whom are originally from southern provinces, Mr. Sochea said.

And the foreign mining firms have also brought in their own workers, particularly experts from China, he said.

"When companies first come, they declare they will hire a few thousand people, but no one from around here gets hired," he said.

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