MAC/20: Mines and Communities

China further opens up its minerals sector as protests escalate

Published by MAC on 2005-12-09


China further opens up its minerals sector as protests escalate

9th December 2005

Last week, yet another huge coal mine "disaster" took the lives of Chinese workers. And, at a coal-fired power plant in Donghzou village, Guangdong province, at least one man was killed and a dozen others seriously injured when police opened fire on citizens protesting against lost income and lack of compensation for deteriorating air and water quality.

The central government itself - while notorious for concealing information - has conceded that at least 3.6 million people took part in 76,000 so-called "mass incidents" last year alone, mainly in response to property loss and pollution. Surely no-one can now doubt that community action, supported by a growing number of Chinese environmental groups, cannot be countered by the regime's crass attempts at political control, or a continued flow of often-empty promises to improve livelihoods.

With China making a play, at this week's WTO meeting in Hong Kong, for greater access to minerals overseas and increased investment at home - mining companies are paying little heed to these social upheavals or the realities behind them. Their primary concern is to lower even further the barrier to securing rights to deposits, and attract Chinese capital to their own home ventures.

In Canada, meanwhile, some junior miners operating in colonised Tibet claim to be making headway in negotiating with Canada's Tibet Committee over beneficial mineral deals, though other Tibetans in exile seem far from convinced.


CHINA: Opening up the minerals sector to foreign investors

15th November 2005

Reuters

BEIJING - China will step up the opening of its minerals sector to foreign investment while trying to make its legal framework more transparent, officials said on Tuesday.

Relatively poor in base metals but boasting many of the world's reserves of rare metals, China has been trying to encourage foreign investment in the mining sector.

But while mining giants like Inco Ltd. and BHP Billiton are exploring in the country, investors have been generally cautious.

One area of concern has been the murky legal system, particularly on whether it ensures that a company that finds a quality deposit will be able to develop it.

"China will continue its policy of opening up to the outside world in the mineral resources sector," Sun Wencheng, Minister of Land and Resources, told a conference in Beijing.

"We shall promote the process of reform by opening up and improving the overall efficiency and capacity of mineral development, further create a stable, open and transparent legal and regulatory environment and protect the legal rights of foreign investors in mineral exploration and development activities in China."

Sun said China would encourage greater cooperation between domestic firms and their global counterparts in mineral exploration and development.

"The mining sector faces numerous challenges... such as overcoming low efficiency, battling environmental degradation and a limited number of internationally competitive producers," Australia's ambassador to China, Alan Thomas, said.

DEVELOPMENT RIGHTS

Some companies are wary that millions spent exploring will not necessarily pay off if they hit pay dirt.

"In China, there's an element in the law which says that the explorations would have 'priority rights' to obtain mining rights," Douglas Horswill, a Teck Cominco Ltd. senior vice president, told reporters.

"That term, 'priority rights', is suggestive of a second decision, and that worries us and a lot of other Western companies."

Teck Cominco plans to open a representative office in Beijing early next year to step up its search for exploration opportunities in China and for Chinese partners with whom to invest abroad, Horswill said.

China intends to create a level playing field and to focus on foreign companies coming in, as well as domestic companies investing overseas, said Ye Zhanghe, deputy director general of the department of foreign investment administration at the Ministry of Commerce.

Disclosure of geological data is one of the bottlenecks for development of mining sector, he acknowledged.

Earlier this year, Canadian miner TVI Pacific Co Ltd. had to revise down its planned investment in a gold project in central Hunan Province, after drilling showed reserves fell far short of those in the data provided by its Chinese partner.


Canadian miners in talks for support of Tibetan activists

The Globe and Mail, Canada

By GEOFFREY YORK

24th November 2005

BEIJING - Anxious to avoid a public relations disaster, Canadian mining companies are quietly engaged in talks with Tibetan activists to seek agreements that might prevent protests against their projects in China.

The mining companies are hoping to escape the fate of Bombardier Inc. and Nortel Networks Corp., which have been repeatedly targeted by protesters for their involvement in a high-altitude Chinese railway to Tibet.

For months now, Bombardier and Nortel have faced a wave of demonstrations, petitions, pickets, faxes, phone calls and questions at their annual meetings because of their role in the railway.

Activists say the railway will jeopardize Tibet's culture and environment by bringing in a flood of Chinese migrants, making it easier for Beijing to exercise repressive control of the region.

At least three Canadian companies are exploring for gold in Tibetan regions of China. They know the risk of controversy is high. An Australian company, Sino Gold Ltd., was the target of angry protests by Tibetan activists in 2003 when it attempted to develop a mine in a Tibetan region.

The Canada Tibet Committee, the leading Tibetan activist group in Canada with about 4,000 members, has quietly begun talks with the Canadian mining firms to try to reach deals that would provide jobs and other benefits for Tibetans.

One of the companies, Continental Minerals Corp. of Vancouver, confirmed that the talks are happening. "If you're not prepared to do this, you're going to have problems," company president Ronald Thiessen said. "Life would be difficult on many fronts."

Continental, which is exploring a gold and copper property about 240 kilometres southwest of Lhasa, the Tibetan capital, hopes the activists will refrain from public protests when they see the jobs and community benefits that the mine would provide for Tibetans.

"If we can get it right for the local community, then international organizations like the Canada Tibet Committee will see that we're doing it right, and I believe they'll be on side," Mr. Thiessen said.

"We're open to dialogue . . . their primary concern is the Tibetan people."

Inter-Citic Minerals Inc., a Toronto-based company that is spending $5.5-million to explore for gold in a Tibetan region of northwestern China, confirmed that it is in regular talks with the Canada Tibet Committee.

Company president James Moore criticized Bombardier for failing to listen to the activists. "You're far better off to engage the NGOs," he said. "If there are tangible benefits for Tibetans, they are open to seeing companies invest there. The dialogue right now is constructive."

Last January, the Tibetan government-in-exile said it was "deeply concerned" that the Continental and Inter-Citic mining projects could have "worrisome and threatening" effects on the Tibetan environment. It urged the companies to reconsider their activities. But more recently, the Canada Tibet Committee has decided to talk to the mining companies, rather than flatly oppose their activities.

"We're trying to be innovative," said Tenzin Dargyal, the committee's national co-ordinator. "We're really trying to think outside the box, to make a positive difference for Tibetans on the ground. The senior managers of these mining companies are much more accommodating than the senior management of Bombardier and Nortel. It's possible to walk away with a win-win situation."

Because of a lack of awareness, some of the mining companies have hired Han Chinese workers, rather than trying to recruit Tibetans, he said. "They walked into Tibet a bit blindly. They were so focused on gold that they didn't do a proper analysis of what it means to do business in Tibet. We're a watchdog of sorts."

Mr. Moore said his company finds it hard to hire Tibetans because the locals are nomadic herdsmen, but it has hired one family to provide security at the exploration site. Mr. Thiessen said Continental has hired about a dozen Tibetans for unskilled jobs at its site.

The third Canadian mining company in the Tibetan regions is Eldorado Gold Corp. of Vancouver. In June, it struck a deal with Afcan Mining Corp., which Eldorado later acquired, to buy the Tanjianshan gold project in northwestern China. It hopes to begin production at Tanjianshan by next October, which would make it the first North American company to develop a producing mine in China.

Eldorado's chief executive officer, Paul Wright, said he is aware that talks were being held between Afcan and Tibetan activists before Eldorado acquired the project. "I would welcome dialogue with any group," he said.

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