China updatePublished by MAC on 2007-06-01
1th June 2007
China will become the world's largest gold producer by 2010, according to an industry “insider” at the Western China Mining Summit 2007, held last month.
A Chinese-backed company in Canada is planning to recruit a Chinese workforce - a move which won't go down well in northern America.
Some 400 million tonnes of iron ore is expected to be imported into China during the current year, according to a spokesperson for global iron ore leade, CVRD.
Part of Shougang Steel's plant in Beijing - the city's worst single polluter - has been closed down awaiting the plant's transfer away from the gaze and lungs of those participating in the forthcoming Olympic Games.
Our weekly round-up of Chinese ventures abroad includes news from India, Australia and Indonesia, while Eritrea joins the growing list of countries opening their doors to China's mining and minerals adventurers.
Much that glitters will come from the east
China will become the world's largest gold producer by 2010, according to an industry “insider” at the Western China Mining Summit 2007.
Chinese production of gold increased by 162.8 tons to 247.2 tons between 1997 and 2006, a trend that has also been mirrored in other developing countries like Peru, Russia and Indonesia, according to Morino G. Pieterse, editor of Goldletter International, a gold investment report.
Meanwhile, gold production from traditional gold producing countries such as the United States and South Africa has steadily declined in recent years from 362 tons and 527 tons in 1997, to 251.8 tons and 291.8 tons in 2006 respectively. Across the board, gold output from traditional gold producing countries has fallen from 54.3 percent of global production in 1997, to 36.1 percent in 2006.
"China's gold output surpassed Australia's last year, is due to surpass U.S. production this year, and will surpass South African production within two years," Pieterse said, while investment in gold mining in China has rapidly increased over the last few years, rising from $5.1 billion in 2005 to $7.1 billion in 2006. "China is now dictating global markets, not the West. At the same time though, it's in China's interest that the U.S. dollar does not fall by too much," he said.
Steve Ryan, general manager of Oxiana, a precious metals company listed on the Australian Stock Exchange, commented that although local governments are sometimes unwilling to grant foreign companies access to very profitable mines, they are also unwilling to invest significant sums in prospecting and development. "There is plenty of room for exploration expansion by foreign companies in western China," Ryan said.
At present, China only attracts approximately 3 percent of global exploration investment, and given the relative lack of investment in western China, this figure can be expected to greatly increase in the next 20 years, Ryan said. One of the main reasons behind low foreign investment is a lack of confidence in China's legal structure, with western companies uncertain that their investment will be secure, particularly as mine investment can run into hundreds of millions of dollars.
James Moore, president and CEO of InterCitic Minerals, noted that the main problem was in the wording of Chinese mining law. "At the moment, the law states that a foreign company has 'priority rights' to a mine, if that was changed to 'full rights', foreign investment would flood into China almost immediately. However, it is more likely that there will be no change in the law, and it will take several foreign company success stories to increase foreign investor confidence in Chinese mine exploration," he said.
[Summarised from an article published by Interfax China Metals (copyright) 1 June 2007]
Coal company wants to hire Chinese workers for B.C. mine
China-backed Dehua says Canada lacks a labour pool that is skilled underground
WENDY STUECK, Toronto Globe & Mail
28th May 2007
VANCOUVER -- A Chinese-backed company pursuing a coal project in northeastern British Columbia wants to have a mine up and running by 2009 - and proposes to bring as many as 400 workers from China to build it.
Canadian Dehua International Mines Group Inc., a Vancouver-based company whose shareholders include a Chinese steel manufacturer, has filed a project description with the B.C. government that says its proposed Gething project "will require approximately 400 employees with specific skills in underground coal mining."
Since there are few underground coal mines in Canada, the document states, "Dehua will likely source skilled labour from China to meet staffing requirements."
The notion of bringing that many foreign workers into northern B.C. raises concerns for labour groups and the Mining Association of British Columbia.
"If you bring in foreign workers and put them in a camp and they work in a mine - how is that developing resources for long-lasting impact at the local level?" said Jim Sinclair, president of the B.C. Federation of Labour.
"For workers, this is the ultimate sellout of our resources."
The mining association, like other industry groups, has been waving warning flags over a labour crunch hitting construction, mining and oil and gas operations in B.C.
But "the concept of importing an entire mine crew is something that we have not seen before," MABC chief executive officer Michael McPhie said. "And we would want to take a really serious look at the implications."
Dehua officials were not immediately available for comment. The company's website says its Gething project would produce two million tonnes of metallurgical coal a year and have a mine life of more than 30 years.
That makes it comparable to open-pit mines like Western Canadian Coal Corp.'s nearby Wolverine Mine, which produced about two million tonnes of coal last year.
Dehua's project description says immigration of up to 400 employees into small communities will have "cultural and social ramifications," but that the company would work with local governments and community representatives to "alleviate potential impacts."
The Gething site is northwest of Chetwynd, which has a population of about 2,500 people. The West Moberly and Saulteau Indian bands have reserves in the area and the McLeod Lake Indian Band also has traditional ties to the area.
Aboriginals are underrepresented in the mining and oil and gas sectors and represent a key potential labour pool, says the Petroleum Human Resources Council of Canada.
Dehua does not say in its project description what wages or other benefits it would provide mine employees. Foreign workers are covered by Canadian laws but there is a concern that foreign workers may be willing to work for lower wages.
Wages vary from mine to mine, but the highest-paid trade workers in B.C.'s coal mines can expect to earn more than $30 an hour, while labourers can earn $20 an hour or more.
B.C. is not the first coal-producing region to look at importing workers to ease a labour crunch.
When Kentucky's coal sector was facing a severe labour crunch about three years ago, one major operator suggested bringing in workers from Mexico, said Bill Caylor, president of the Kentucky Coal Association.
"And the poop hit the fan," Mr. Caylor said. "We're going to get to that point, maybe in 15 or 20 years, when we are a more bilingual state. But we aren't ready for it right now. And there was a lot of public outcry and opposition."
The idea died - in part, Mr. Caylor said - because of a state requirement that certified miners must be able to speak and read English.
Since then the state's mining labour crunch has eased, he added, as a result of state and federal training programs, aggressive recruitment campaigns by mining companies and, more recently, a decline in coal prices.
Other coal-producing states have experienced similar labour shortages, Mr. Caylor said, and the cyclical nature of the coal business means such shortages could occur again. But he does not expect foreign workers to make many inroads into U.S. coal mines, at least not in the next 10 years.
"All the states have had the worker crunch. But I guarantee you, common sense means you would have the same knee-jerk reaction to foreign workers. I know if this came up in West Virginia, [the reaction] would be worse than in Kentucky."
China's coal mining sector is notoriously deadly, with more than 5,000 deaths last year.
Foreign workers can come to Canada under the Temporary Foreign Worker Program when no Canadian citizens or permanent residents are available to fill positions.
The program was amended in February, allowing workers to stay in Canada for 24 months - up from 12 months - without seeking an extension.
The number of temporary workers in B.C. has been rising gradually, says the B.C. Federation of Labour - 14,000 in 2000 to 44,000 by mid-2006.
CVRD: Chinese iron ore imports at 400Mt/y - Brazil
31st May 2007
China has been importing iron ore at a rate of 400Mt/y in 2007 to date, Brazilian mining and metals group CVRD CFO Fábio Barbosa told analysts and investors in a presentation Thursday.
Purchases from abroad reached some 134Mt of the steelmaking raw material in January-April, up 23.5% from same-period 2006, Barbosa said in São Paulo during an event promoted by finance industry trade group Apimec.
"There are no signs of a slowdown in May," the executive said.
In terms of the Asian country's internal production, CVRD had forecast Chinese steel output at 470Mt/y in late 2006, taking into account it churned out 417Mt steel last year. "But we see this production nearing 500Mt," Barbosa said.
CVRD itself plans to produce 300Mt of iron ore in 2007.
"We are always aware of takeover opportunities, but our focus at the moment is on organic growth projects," Barbosa said, without responding to rumors about plans to acquire US iron ore and pellet producer Cleveland-Cliffs.
Latest speculations also included a possible CVRD move to snap up Anglo-Australian miner Rio Tinto. "I have no comments to make on market rumors," the CVRD CFO said. "If we decide to do something, we will communicate it in a proper manner to the market."
In late April, CVRD increased its 2007 investment budget to US$7.35bn from the US$6.33bn announced in January, partially reflecting an increase in demand for its products, such as iron ore and nickel.
Rio de Janeiro-based CVRD is the world's largest iron ore producer.
By Roberta Pregnaca
Business News Americas
Beijing to Shut Down Heavy Polluters During Games
1st June 2007
BEIJING - Beijing will shut down smoke-belching factories and ban thousands of cars from city streets to improve air quality during next year's Olympic Games, a senior city official said on Thursday.
Vice mayor Ji Lin said other special measures would include a ban on dust-causing earthworks at construction sites. Ji said 120 billion yuan (US$15.69 billion) had already been invested in environmental improvements over the past decade and at least another 25 billion yuan would be spent over the next year to clean the city's air.
"Beijing attaches high importance to environmental protection and much investment and progress has been made," he told a news conference.
"But problems still exist and there is a long way to go to meet the higher standards needed for the Olympic Games. We are confident we will achieve our goals."
Improving air quality is one of the biggest issues facing Beijing. Despite improvements in the past few years, the city is still regularly blanketed in smog.
Some polluting factories have been given time limits to reduce emissions and others will have restricted operations from Aug. 8 to 24 next year.
"During the Games we will have stricter measures," Ji said. "Some companies will adjust their production time, some will have to reduce production and some will be suspended."
Just how many of the city's three million cars will be kept off the streets had yet to be decided, Ji said.
"We also have to consider what impact these measures will have on people's lives," he said.
Tens of thousands of coal-fired boilers, ovens and furnaces have been converted to use natural gas, while 50,000 old taxis and 10,000 buses will be taken off the roads by next August.
Action has been taken to ensure that the city's many construction sites do not add to the choking dust in the air, while cement factories and brickyards have also been shut down.
The Beijing Coking and Chemical Works has been permanently closed and the city's worst polluter, the Shougang steel works, has closed a blast furnace and a coke oven as it begins its relocation to a new site outside the city.
Ji said there would be no need for Olympic delegations to bring their own experts and equipment to measure air quality in Beijing during the Games.
"At Olympic venues and villages, we will set up mobile air quality stations and the information from those will be provided to anyone who wants it," he said.
Story by Nick Mulvenney
REUTERS NEWS SERVICE
Updates on Chinese ventures abroad: India, Australia, Indonesia, Eritrea
India: Sichuan Aostar Aluminum Co. Ltd. has decided to transfer its 50 percent stake in a 1 million-ton alumina project in India to Ningxia Qingtongxia Aluminum Co. Ltd. The project is a 50-50 joint venture with Ashapura Minechem, India's leading miner, processor and bauxite exporter.
Australia: Chiping Xinfa Huayu Alumina Co Ltd., China's largest private alumina producer, has increased its stake in the Cape Alumina joint venture in Queensland, Australia, a Metallica Minerals Ltd. official told Interfax on May 30.
Xinfa's acquisition of an additional 7.5 percent stake from Anegada Metals Corporation Ltd. brings the company's total holdings in Cape Alumina to 17.5 percent. Cape Alumina is the joint venture company overseeing the Weipa Bauxite Project.
Yunnan Tin Group and an Australian prospecting company established an additional joint venture in March 2004. The Australian company changed its name to YTC Resources Ltd. in January this year to reflect the strategic alliance with Yunnan Tin Group, which acquired a 33 percent stake for AUD $2.67 million ($2.21 million) in March. YTC Resources, based in Australia's New South Wales, listed on the Australian Securities Exchange (ASX) on May 8.
Yunnan Tin Group is Asia's largest tin producer and also owns China's largest precious metals research and development center. In addition to YTC Resources, Yunnan Tin Group also holds controlling shares in Shenzhen-listed Yunnan Tin Co. Ltd. and Shanghai-listed Sino-Platinum Metals Co. Ltd.
The joint venture was previously co-funded by Metallica Minerals, Anegada Metals of the British Virgin lslands and Cyprus' Bondlines. Metallica Minerals previously held a 50 percent stake, with the remaining 2 companies holding a 25 percent stake.
Yunnan Tin Group, the world's largest tin producer, has also purchased a 5 percent stake in Metallica Minerals Ltd. in order to gain access to its nickel projects in Queensland, Australia, according to a Metallica announcement on June 1.
Tangshan Iron and Steel Group Co. Ltd. (Tanggang), China's second largest steelmaker, has entered into a long-term off-take agreement with Australian-based Fortescue Metals Group Ltd (FMG). Tanggang will purchase up to 20 million tons of iron ore from FMG per annum over a 10-year period commencing next year.
Baosteel, China's largest steel maker, entered into a similar agreement with FMG in March this year, and agreed to purchase up to 20 million tons of iron ore per annum over the next 10 years, as previously reported by Interfax.
FMG, an Australian Stock Exchange-listed company and the third largest iron ore supplier in Australia, owns proven iron ore reserves of 2.4 billion tons in a 3.8-square kilometer area in the Pilbara region of Western Australia. FMG has been developing the mining area since mid-2003 and plans to commence shipping iron ore in mid-May next year.
Indonesia: Shenzhen-listed Yunnan Tin Co. Ltd., China's top tin producer and exporter, announced on May 29 plans to develop base metals resources and construct a tin smelter in Indonesia in order to further secure overseas raw materials. The JV will be with KJP Investment Pte. Ltd., PT Karya Abadi Selars and PT Bangun Prima International. The company intends to purchase a 51 percent stake in the joint venture by investing $1.02 million to become the controlling shareholder.
The joint venture mining company will focus on the exploration of tin, copper, lead and nickel reserves in Indonesia.
Yunnan Tin also plans to jointly construct a tin smelter on Bangka Island, Indonesia, with a designed capacity of 10,000 tons of crude tin per annum. Yunnan Tin will invest $8.67 million in the joint venture (Nomico), with KJP Investment Pte. Ltd. and Pt Bangka Global Mandiri International to also become the largest shareholder with a 51 percent stake.
Eritrea: Shandong Guoda Gold Co. Ltd. recently entered into a framework agreement with the Eritrean government to develop mineral resources in the northeastern African country, a Guoda Gold official told Interfax on May 28.
The framework agreement stipulates that Guoda Gold will develop mineral resources, mainly gold, silver, copper, lead and zinc, while the Eritrean government will provide prospecting and mining information.
Mineral concentrates from any future Guoda Gold-Eritrea joint projects will supply raw materials to Guoda Gold's smelters, under an off-take agreement.
Zambia: Australia and London-listed Albidon Ltd. is continuing negotiations with Gansu Jinchuan Nickel Group, China's largest nickel smelter, regarding a joint nickel mining project in Zambia, an Albidon official told Interfax at the Nickel China 2007 forum, held in Shanghai on May 30.
"Albidon is currently negotiating with Jinchuan for the construction of a nickel smelting plant for the Munali project. We hope the negotiations will be successful and welcome Jinchuan to construct a smelting facility in Zambia," Ministry of Mines and Minerals Department of Zambia official, K. A. Liyungu, said.
[Source for the above information is Interfax China Metals (copyright) 1 June 2007]
From Dickson Hall of Hunter Dickson, to Editor, MAC (31 May 2007):
"I am writing to correct the following factual errors that appear in your article, “Continental Minerals to develop Xiangcun copper-gold mine in Tibet”, which is posted on your website http://www.minesandcommunities.org/Action/press1505.htm.
1. “Continental Minerals to develop Xiangcun copper-gold mine in Tibet”, There has not yet been a production decision. A feasibility study is currently underway. Please note the that the correct spelling of the project in Chinese pinyin is Xiongcun.
2. “…proven reserves of 220 million tons of porphyry copper-gold…”
The project is at the feasibility study stage and does not have any mineral reserves, proven or otherwise. What we have released are mineral resources which are outlined in our news release, “2006 Drilling Expands Xietongmen Copper-Gold Resource by 50%” and can be found at http://www.hdgold.com/kmk/NewsReleases.asp?ReportID=167641&_Type=News-Releases&_Title=2006-Drilling-Expands-Xietongmen-Copper-Gold-Resource-By-50.
Although the two terms appear similar, they are very different entities and have strict definitions:
Mineral reserve – the economically mineable part of a Measured Resource supported by at least a pre-feasibility study. The study must include information on mining, processing, metallurgical, economic, and other factors that demonstrate economic extraction is justified.
Mineral resource – the estimated amount of material in a mineral deposit of a form and quantity and of such a grade or quality that has reasonable prospects for economic extraction. A mineral resource is typically based on limited drill information, and it cannot move to a mineral reserve unless it is supported by at least a pre-feasibility study.”
3. The Xiangcun copper project has a total investment of $450 million. This is a projected figure. The actual amount will be determined by the feasibility study.
4. “…expansion of the mine site from an initial 12 square kilometers to a current 120 square kilometers.”
The 120 km refers to the expanded size of the exploration property following the merger of Continental with its former partner, Great China Mining. The actual mine site, if the deposit is developed, would be much smaller, in the order of 35 hectares or 4 square kilometer.
5. Newtongmen, was discovered 3 kilometers from the Xietongmen site and contains similar amounts of porphyry copper reserves.
Newtongmen is in the early drilling stage with only a few holes (5) as opposed to the 200 drilled on Xietongmen. It has no resources or reserves.
6. Guo commented that the Xietongmen site has excellent metallurgy, with copper continuity in excess of 90 percent, and does not require cyanide for copper recovery.
…copper recoveries are in excess of 90 percent, and no cyanide is required to recover the gold.
As a responsible organization, I expect that you value accuracy which is why I have provided these facts so that you can amend your article. If you require further information, do not hesitate to contact me.
Director, Corporate Development Asia
The Continental Minerals Corporation