MAC: Mines and Communities

China update

Published by MAC on 2007-03-30

China update

30th March 2007

Chinese particulates ("black carbon") are reaching as far as the western United States, as the regime issues (yet another) plan to cut down carbon emissions, and the country's largest coal producing province says it's launching a "sustainable mining" fund.

The iron/steel company, Shougang, has invested further in Australia, while China's biggest aluminium enterprise, Chalco, has finally secured the huge Aurukun bauxite lode (on Aboriginal territory) - in the face of competition from BHPBilliton, Rio Tinto, Alcan, Alcoa and Xstrata.

Chinese Air Pollution Crosses Pacific, Reaches Western United States

Alana Herro, "Eye on Earth", Worldwatch

26th March 2007

Air pollution from China is traveling east to the United States.

Climate-altering pollution from China is traveling across the Pacific Ocean and ending up on the West Coast of the United States, according to a new study published in the Journal of Geophysical Research.

The particulate pollution, known as black carbon, absorbs sunlight and heats the upper atmosphere, possibly contributing to warmer spring temperatures along the U.S. coast. It arrives mostly in the form of soot and originates from automobile exhaust, agricultural burning, and other sources.

The black carbon traveling from Asia accounts for 77 percent of the black carbon emitted into North America’s lower atmosphere during the spring season, the study finds. Although the transported soot is only a small component of near-surface air pollution, it has a significant heating effect on the atmosphere two kilometers above the surface, especially in the Pacific region, which drives much of the Earth’s climate.

“That’s the primary concern we have with these aerosols,” explained the study’s co-leader, Odelle Hadley with the Scripps Institution of Oceanography in San Diego, California. “They can really affect global climate.”

Previous studies along the U.S. West Coast have detected Asian pollution that contained dust from drought and deforestation as well as sulfur, soot, and trace metals from the burning of fossil fuels.

On average, a new coal-fired power plant is built every week in China.

Between 1954 and 2001 the amount of sunlight reaching the ground in China fell dramatically despite a decrease in regional cloud cover, a trend scientists attribute to worsening haze. Some experts predict that China may eventually generate one third of California’s air pollution.

China to Unveil Climate Plan Next Month

PlanetArk CHINA

30th March 2007

BEIJING - China will unveil its national plan to tackle global warming next month, including concrete measures to cut carbon dioxide emissions, a top climate change official said on Thursday.

Gao Guangsheng, head of the Office of the National Coordination Committee for Climate Change, said the plan, to be announced on April 24, would include policies for cutting back greenhouse gases but declined to comment on whether it would give an overall national target.

"We will make clear what policies and (in) what areas we plan to reduce greenhouse gas emissions," Gao told the Renewable Energy Finance Forum in Beijing.

China could become the world's top emitter of greenhouse gasses as early as this year, analyst estimates based on the country's latest energy data suggest.

Gao declined to comment on that forecast, or an International Energy Agency one that it will overtake the United States before 2010, because he said the country does not have an accurate idea of its own emissions.

An inventory is now under way but results could take up to three years to come through, he added.

Beijing has resisted calls for caps on its rapidly rising emissions, saying rising global temperatures are largely the result of fossil fuel use by industrialised nations and it has the right to chase the same level of prosperity they enjoy.

But 35 developed nations that have agreed to cut emissions under the Kyoto Protocol want others -- especially China and the United States -- to do more.

Gao also ruled out any possibility of an emissions trading exchange in the next two to three years, although he had been present at the launch of a UN scheme which officials had said would include carbon trading.

"No Chinese official said there would be an exchange," Gao told Reuters on the sidelines of the forum.

His office had earlier posted a notice denying reports of the exchange plans, but UN officials had said they were still working with Chinese counterparts on some kind of blueprint.


China’s Largest Coal Province Launches Sustainable Mining Fund

Ling Li , China Watch

29th March 2007

Northern China’s Shanxi Province, the country’s leading coal producer, has launched a pioneering fund to support more sustainable mining practices in the region. The money will be spent on tackling the environment degradation caused by local coal mining, on developing alternative industries in mining communities, and on improving mine safety, Xinhua News reported. Funds will be derived from variable fees levied on all companies and individuals that mine in the province and will be collected by local taxation authorities.

The fee charged to mining companies will vary annually within a predetermined range, depending on the type and amount of coal produced. For 2007, the per-ton amount has been set at 14 yuan (US$1.80) for steam coal, 18 yuan (US$2.30) for hard coal, and 20 yuan (US$2.60) for coke coal. The Local Taxation Bureau of Shanxi predicts annual revenues of up to 15 billion yuan (US$1.9 billion) from the fund, based on the roughly 600 billion tons of coal produced in the province last year.

The aim of the fund is to account for the “real” costs of mining by including the costs of coal use, worker safety, environmental pollution, and transitioning from mining to other industries. “The fund will help raise the threshold for investing in coal mines, as well as hinder smaller mines from making huge profits,” a researcher with Shanxi Academy of Social Sciences told Xinhua News.

Shanxi Province produces nearly a quarter of the coal used by China, a country that derives 66 percent of its energy supply from coal. But the widespread use of inefficient and highly polluting mining technologies has caused severe air pollution as well as health problems in the province. Shanxi is home to the three Chinese cities with the worst air quality and reports the nation’s highest rate of congenital birth defects. Each year, the loss of natural resources, environmental pollution, ecological degradation, and ground subsidence linked to coal mining costs the province an estimated 30 billion yuan (US$3.9 billion).

Whether the increased costs of mining associated with the new fund will raise coal prices remains a big concern to stakeholders—particularly the roughly 3,200 coal producers that have committed to the new measure. Some local officials believe the price effect may only be minor, as the fund essentially replaces a 27-year-old “energy fund” fee of 20 yuan (US$2.60) per ton that Shanxi stopped collecting from local companies last year. This previous charge applied only to local or private companies, however, and exempted large state-owned companies.

The current overproduction in China’s coal industry may also help buffer the fund’s effect on coal prices in the short term. The National Development and Reform Commission, China’s top economic body, warned of a coal surplus last year and has strongly promoted mergers and acquisitions to reduce the number of mines.

China Watch is a joint initiative of the Worldwatch Institute and Beijing-based Global Environmental Institute (GEI) and is supported by the blue moon fund.

China cash goes after untapped Pilbara ore

Perth ABC News

22nd March 2007

China has underlined its desperate hunt for future supplies to feed its insatiable steel industry, pledging financial clout to develop two of the Pilbara’s biggest untapped deposits of steelmaking materials.

Yesterday China’s Shougang Steel and its Hong Kong offshoot, APAC Resources, already key backers of Mt Gibson Iron, agreed to pump almost $100 million into Perth junior Australasian Resources and finance its $US2.1 billion ($2.6 billion) Balmoral South magnetite project at Cape Preston.

At the same time, Perth junior Aurox Resources revealed that a “major diversified resources company” was eyeing a “strategic position” in the company and its big Balla Balla iron/vanadium project near Whim Creek.

Aurox refused to identify the party, but it is understood to be a major Chinese corporation — most likely Beijing giant Sinosteel — keen on taking a controlling stake in a $500 million magnetite and vanadium development at Balla Balla.

The news comes amid an unprecedented wave of foreign investment in WA’s booming resources sector as Chinese groups vie for a slice of the State’s vast mineral reserves.

Australasian’s deal with Shougang comes just two months after the junior company acquired the Balmoral South resource from Queensland mining baron Clive Palmer, now its biggest shareholder with 76 per cent.

The resource is part of a multi-billion tonne magnetite deposit controlled by Mr Palmer and is already being developed by China-backed Citic Pacific. Citic last year paid Mr Palmer $290 million for the right to mine one billion tonnes of magnetite at the site and is now building a $2 billion mine, pellet plant and port.

Australasian managing director Darren Hedley said yesterday’s deal highlighted the importance of the Balmoral South project to Chinese steelmakers. “China has done years of work on this project and this is the second time now that Chinese companies have put substantial money into this asset,” he said.

Shougang and APAC will jointly pay $56 million at $1 a share for an initial 12.8 per cent stake in Australasian. They will also receive 28 million $1.50 options that will raise a further $42 million when exercised over the next three years. Australasian will use the money to complete its $15 million bankable feasibility study into a magnetite operation producing five million tonnes of magnetite concentrate, five million tonnes of magnetite pellets and 1.5 million tonnes of hot briquetted iron annually from 2010. Shougang will acquire a 50 per cent stake in the venture by providing an interest-free loan to fund construction, repayable from operating profits, and will buy all output for 25 years.

Aurox managing director Charles Schauss said he was confident the partner would invest in Balla Balla after a “detailed five-week review”.

Already the world’s biggest vanadium resource, it is also rich in titanium and iron from which Aurox initially aims to produce three million tonnes of magnetite concentrate a year.

The news sent Aurox shares surging 13.5¢ to 95.5¢. Australasian shares have been suspended since December.

Chalco officially signs Australian Aurukun project agreement

The Aluminum Corp. of China Ltd. (Chalco) has won the bid for Australia's Aurukun bauxite project and signed a final agreement with the Queensland government on Friday, according to a statement released by the Queensland government.

The agreement was signed by Chalco's president Xiao Yaqing and Queensland acting-Premier Anna Bligh and witnessed by China's vice-Premier Zeng Peiyan.

The project has a construction cost of AUD 3 billion ($2.41 billion) and is designed to extract 7.5 million tons of bauxite and refine 2.1 million tons alumina per annum.

The mine is located in the remote Cape York area of Queensland and contains estimated bauxite reserves ranging from 500 million tons to 650 million tons.

Chalco joined the bidding campaign for the Aurukun project in September 2005 and edged out competitors BHP Billiton, Xstrata, Comalco Aluminium, and Alcoa and Alcan. Chalco won the mining rights in March last year.

[source: Interfax China Metals, 30 March 2007]

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