MAC: Mines and Communities

China Update

Published by MAC on 2006-06-16

China Update

16th June 2006

It is no surprise that London's big three miners (Rio Tinto, Anglo American & BHP Billiton) are advising China on changes to their minerals resources law, while the Toronto Stock Exchange is trying to syphon away new mining investment opportunities. Meanwhile Chinese companies have invested in coal mining and power generation in Zimbabwe, while at home further scandals occur as a result of disasters in the coal mining industry.

China to revise mineral law, expand foreign access to mining - report

AFX News Limited

13th June 2006

BEIJING (AFX) - China is planning to amend its mineral resources law by 2008, potentially improving multinationals' access to mining in the country, the China Daily reported.

The official newspaper cited a source as saying that the Ministry of Land and Resources is consulting an industry association including Rio Tinto Group, Anglo American and BHP Billiton on the planned changes, which could 'create a more fair and reasonable investment environment for the foreign companies.'

Under the current mineral resources law, which was last amended in 1996, foreign companies must undergo a long and complicated approval process to gain mining licenses for commodities like gold and copper, the report said.

The amendment aims to make the mining policy in China more market oriented, the report said, adding that the government wants to see the law revised by 2008.

A senior expert from the Ministry of Land and Resources was quoted as saying that the ministry wants to improve the law and added that China welcomes foreign investment in mining activities across the country, the report said.

TSX Group delegation returning to China to seek new listings

15th June 2006

CBS News online

TORONTO (CP) - TSX Group (TSX:X) is dispatching another delegation to China, seeking to raise the profile of Canada's capital markets and lure new listings to the Toronto Stock Exchange and the TSX Venture Exchange.

The TSX Group's last trip to China was in November, attending the China Mining Show.

The latest trip, to Beijing, Shenyang and Dalian, "will showcase the strengths of Canada's capital markets among Chinese companies and will meet with Chinese advisers and intermediaries who help service Chinese companies seeking access to Canadian capital markets," TSX Group said Thursday in a release.

Kevan Cowan, senior vice-president of business development with the Toronto Stock Exchange, said Canada provides a better platform than the United States for Chinese companies, offering a senior exchange strong in sectors like mining and other resources, as well as an established junior for companies raising smaller financings.

TSX Group plans to return to China later this year to advance its business development strategy.

Zimbabwe signs mining and power deals with China

15th June 2006

Dumisani Muleya, Business Day

STATE-owned Zimbabwean businesses signed a raft of energy, mining and farming deals worth billions of dollars with Chinese companies, Zimbabwean Vice-President Joyce Mujuru announced this week.

The agreements highlight Zimbabwe's dogged campaign to lure Chinese investors under its Look East investment policy, to replace western capital which has been withdrawn or reduced due to the political and economic crisis.

The largest deal announced was with China Machine-Building International Corporation. The company signed a $1,3bn agreement to mine coal and build thermal-power generators in Zimbabwe.

Designed to reduce Zimbabwe's electricity shortage, the deal was signed by representatives of Ele Resources, a local mining company.

A memorandum of understanding signed by the parties aims to set up a joint-venture coal mine in Dande in the Zambezi Valley and two power plants in the area.

The Chinese firm has built thermal-power stations in Nigeria and Sudan, and has been involved in mining projects in Gabon.

Xie Biao, president of the Chinese corporation, said his firm would help Zimbabwe to recover from its energy crunch.

"We believe we can play a great role in the power sector in Zimbabwe," he said.

Mujuru, who was in China last week on a working visit with government ministers, said that power shortages were hurting the country's economy.

A further deal between the Zimbabwe Mining Development and China's Star Communications will see the groups forming a joint venture to mine chrome, with funding from the China Development Bank.

The country will also import road-building, irrigation and farming equipment from the China National Construction and Agricultural Machinery Import and Export Corporation and China Poly Group.

Zimbabwe relies on China for imports of telecommunications equipment, military hardware and many other critical items it can no longer import from the west.

Wankie Colliery, the JSE-listed company located near Hwange, also signed an agreement with the Chinese company to establish a coal mine and a power station in Zimbabwe.

During her official tour, Mujuru visited China National Aerotechnology Import and Export Corporation headquarters for talks with senior executives of the group.

The company has been supplying Zimbabwe with passenger and military planes, scanning machines and electricity transmission equipment.

Several delegations of Chinese officials and businessmen have made forays to Harare to set up ties. Zimbabwe's police have a dedicated "China desk" to protect Chinese interests in the country.

Mujuru said Harare would continue to use its mineral resources to attract investors from China, as well as from other parts of the world.

The crisis-ridden country has of late been mortgaging its minerals for credit from foreign banks to pay for critical imports.

Zimbabwe has a wide variety of precious minerals including platinum, gold, coal, nickel and diamonds. It also has unverified quantities of uranium.

Two weeks ago, the country signed a revolving $50m deal with a French bank to import fuel. Bindura Nickel Corporation used its mineral resources as a guarantee.

Nyasha Makuvise, the CEO of Zimbabwe's Absa-controlled Jewel Bank, said coal mining and power projects were needed urgently to deal with the continuing power outages.

Two government officials resign in mine scandal

China Labour Bulletin

6th June 2006

Two government leaders in Shanxi, where a coal mine flooding has left 56 miners trapped and presumed dead after more than two weeks, have resigned, the local legislature said on 3 June.

The Standing Committee of the Zuoyun County People's Congress in Shanxi approved the resignations filed by Zhang Mingsheng, former head of the county government, and his deputy Shi Lu, who was in charge of local coal production, according to Xinhua News Agency.

Zhang has been removed from the post of deputy secretary of the Zuoyun County Communist Party Committee, and Shi was deprived of the membership in the county party committee. The disciplinary punishments came after mine managers attempted to cover up the extent of the fatal accident by reporting only five miners were trapped.

Reports said the mine management had rented taxis to transfer family members of the trapped miners to nearby Inner Mongolia Autonomous Region to prevent them from speaking to the press.

Three officials of Zhangjiachang Town, where the mine is located, including Party Secretary Chang Rui and township head Liu Yongxin, have also been suspended from their posts. Wang Jinxing, a key figure responsible for the flooding tragedy who had fled, was captured on 3 June.

Police caught 35-year-old Wang in his home province of Henan in central China, wrapping up the manhunt for all the 11 key figures suspected of being responsible for the accident. Wang was labour contractor of a working team in the Xinjing Coal Mine. Initial investigation found that his workers drilled through a sealed area underground, and triggered the flooding. All the 22 miners of his team escaped from the shaft.

Another two officers of a neighboring mine, suspected of selling the geological maps to the owner of Xinjing, have also been detained by police.

The flooding occurred on 18 May when 266 miners were working underground and 210 of them managed to escape. Rescuers are still trying to find the 56 miners trapped underground. About 200,000 cubic meters of water have flooded the pit and more than half has been pumped out. The accident is the worst of its kind in China so far this year.

Sources: Xinhua News Agency (5 June 2006), Shanghai Daily (5 June 2006)

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