MAC/20: Mines and Communities

China update

Published by MAC on 2007-05-10


China update

10th May 2007

According to Mineweb (May 10) within the next decade China could become the world's biggest single producer of gold, and possibly its largest consumer.

An Australian company says its planning to show the Chinese regime that its own gold mining practices could be a standard-setter for "better social and environmental practices", although it has virtually no track record in doing so.


Australian Gold Diggers Move a Mountain in China

PlanetArk CHINA

10th May 2007

ZHENFENG COUNTY, CHINA - Deep in the mountains of southwest China, an Australian mining company is digging out a steep hillside to create what is expected to be the second largest gold mine in China.

Sino Gold Ltd. hopes to prove to Beijing that it is in China's interests to open up mining to foreign companies willing to introduce stringent safety standards as well as better social and environmental practices.

But the grey-and-white striped ore sought by Sino Gold lies beneath a region that is poor even by the standards of rural China. Average annual income is 1,200 yuan (US$155.50), child mortality is high and hepatitis and tuberculosis are common.

In this corner of Guizhou, most of the hopes for the local economy are pinned on Sino Gold's Jinfeng mine, raising expectations that the company will provide jobs and a range of social services that Zhenfeng county lacks.

"Right now, they think we are the government," said Stuart Gula, who manages the project.

Sino Gold is one of two foreign miners with gold mines in China, the world's fourth largest producer.

The other, Canadian rival Eldorado Gold Corp., began commercial production at a gold mine in the remote western province of Qinghai earlier this year.

Beijing wants foreign capital for remote mines, while keeping the most valuable deposits for Chinese firms.

Most of China's gold mines are small affairs that pump poisonous arsenic into the air or leak cyanide into the water, killing fish and animals.

But Sino Gold says its processes to reuse water, reclaim land and neutralise cyanide in waste will set a new standard for China's unsafe and polluting mining industry. It is using sulphur-munching bacteria that require a careful equilibration of temperature and oxygen to help isolate the gold.

LESSONS LEARNED

In developing Jinfeng, Sino Gold is drawing on experience operating a gold mine in Shaanxi, which it sold last year once reserves were depleted.

The US$130 million Jinfeng project will produce 180,000 ounces of gold a year once it reaches full operations, and could be further expanded, the company says.

The operation is now running at minimal level while it extends the lining of its tailings dam to comply with stricter requirements after a dam breach at a nearby Chinese mine released cyanide-tainted waste.

Sino Gold is also developing a new project in northeast China, and exploring elsewhere.

The company abandoned exploration rights in an ethnically Tibetan region following a letter-writing campaign by Australian-based Tibet activists in 2003.

LOCAL COMMUNITY

In Zhenfeng county, about 85 percent of the people belong to the Buyi ethnic group. Many are illiterate and can't speak or understand Mandarin Chinese.

Impoverished stone villages perch on steep mountains. Thick forests have been cleared for miniscule farm plots and tiny terraces squeezed between limestone turrets. Every inch of flat land is planted.

The open pit and tailings dam at Jinfeng have destroyed some of that precious farmland, forcing about 55 households to relocate.

But the company says it plans to level waste ore and cover it with soil for re-distribution to farmers, creating a rarity in Guizhou - flat land.

The mine's reclaimed land will have to support more local farmers once a provincial hydropower project to serve the faraway, wealthy city of Guangzhou floods fertile farmland along a nearby river.

At the Shaanxi project, farmers protested because they never received land payments made through government channels.

To avoid the same problem at Jinfeng, Sino Gold organised a payment ceremony to give legal restitution directly to landholders. Each farmer received a bank book and the choice of taking the payment as a deposit or in cash.

To the Australians' disappointment, nearly every farmer chose cash. Many bought motorbikes, to help ferry sugar cane to market and children to school over the steep mountain paths.

Seeking to use locals in its workforce, Sino Gold designed aptitude tests to identify and train local adults to work, and to identify promising children in the schools.

"You can't just have the locals in the most menial jobs - that is sure to create problems. You have to move them into managerial positions, and early on," Gula said.

Although hampered by local illiteracy, Sino Gold says about a quarter of its workers are from the county.

But many of the experienced workers at Jinfeng have followed Sino Gold from its Shaanxi mine, where skilled jobs dried up once the Australians left.

Their presence points to a challenge that the Jinfeng management will face in the future -- how to prepare the community for the day, many years hence, when the mine will close.

Story by Lucy Hornby

REUTERS NEWS SERVICE


China Seen Raising its Wind Power Capacity Target

PlanetArk ITALY

9th May 2007

MILAN - China is likely to raise its wind power generating capacity target after a boom in the sector, an industry conference was told on Tuesday.

China is set to overshoot a 5 gigawatt target set for wind generation installed capacity in 2010 after it hit 2.6 GW at the end of 2006, experts from the Global Wind Energy Council (GWEC) and their Chinese colleagues said.

"I think that probably in the next year they will reach the 5 gigawatts and they will increase a lot, to somewhere between 10 and 12 (GW)," GWEC Chairman Arthouros Zervos said on the sidelines of the conference.

Officials from the Chinese wind energy bodies CREIA and CWEA told the international wind power conference in Milan the 5 GW target will be met ahead of schedule and more ambitious targets could be achieved.

Other experts estimated that China will hit the 5 GW target in 2008-2009.

About 1.3 GW of new wind turbines went up last year alone and China plans to reach 30 GW in 2020. Zervos said it was too early to say if China will overshoot the 2020 target too.

The industry operators told the conference it would make sense to switch targets to electricity output from installed capacity, which may differ from real operating capacity.

China should launch a nation-wide payment system to boost wind energy and encourage investment as well technology development, GWEC, CREIA and CWEA said in a joint statement.

They suggested the introduction of a feed-in tariff -- which obliges a grid to buy wind energy from generators at high price -- as a way to boost the sector.

Wind energy in China would get an additional boost from Clean Development Mechanism (CDM) deals -- which allow rich countries earn carbon credits by investing in green energy projects in developing countries under the Kyoto Protocol.

Experts also said China should boost the power transmission network and ensure access to the grid for new wind projects, as well as encourage foreign technological expertise in wind turbine manufacturing.

REUTERS NEWS SERVICE

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