MAC/20: Mines and Communities

China Update

Published by MAC on 2006-09-10


China Update

10th September 2006

A coalition of Canadian Tibet Rights groups has called on Canadian companies, specifically in mining, to repudiate investment in Chinese-occupied Tibet.

Following the shooting by police of six mineworkers at the Chinese-owned Chambisi mine in Zambia, the country's opposition leader has said he will reject all Chinese investment and recognise Taiwan, should he win the coming elections on September 28th.

Undertandably, this has not endeared Sata to the Chinese regime; Chinese firms have now suspended investment in Zambia, threatening to withdraw completely should Sata come to power.

Ironically, just last week, Fujan province said it was aiming to attracting increased Taiwanese investment in its metals processing industries, without attracting any adverse reaction from the government..

A new report reveals that the regime would need to pay almost as much as it has gained in economic growth, just to cope with the country's toxic pollution in the year 2004.

Officials are acknowledging the poisoning of more than 300 residents near a lead smelter in Gansu province - although the Hong-Kong based South China Morning Post puts the figure at no less than 2,000 victims.

A US scientific team has accused paint manufacturers of adding dangerous amounts of lead to their products, thus affecting millions of young people in China, India and Malaysia [see India update, this issue].

Onwards - and outwards

Closures of illegal mines continue .Beijing City government says it has shut down some 450 mines under its jurisdicition and will close almost as many more before 2010.

The National Development and Reform Commission (NDRC) claims the country's aluminium sector is "still over-expanding" with no less than fifty three projects in the sector currently under construction. The NDRC also says that more than half (456 out of 779) of China's bauxite mines are operating without a licence.

Meanwhile, yet more joint ventures and investments in foreign mines have been announced over the last fortnight.

Mimetals (which last year failed in its bid for Noranda) has entered a 50/50 joint venture with Codelco of Chile, the world's biggest copper producer, at a cost of US$2 billion. Last year China absorbed 20% of the world's global supply of copper, while Codelco delivered 10% of it.

Two other Chinese companies are buying into a vanadium and iron ore mine in Western Australia, while Xiamen Tungsten is to re-open its tungsten mine in New South Wales. Chinalco is also to construct an alumina refinery in Queensland with a huge projected 2.1 million tonnes a year ouput.

The private Huaxi group says it will be developing a copper mine in Mexico,. But most controversial of all recent foreign forays comes from the Jinchuan group. China's biggest nickel company has invested heavily in Kenya's Kwale titanium mine, operated by Canada's Tiomin. This project has been a target of militant opposition by local farmers, and leading Kenyan citizens, for several years.

Shady deals and the risks and rewards of investing overseas

A recent summary of Chinese views on the listing of their mining companies overseas (published by Interfax China Ltd) makes interesting reading. Its key points:

* Since the largest contributors to China's mining and metals output are state-owned, operating under conditions of secrecy where "shady deals" (sic) have become "commonplace", they have to confront more rigorous listing requirements on overseas markets; therefore few have so far ventured overseas - even with government blessing

* Nonetheless, the state companies are being pushed into more and more overseas transactions, not only in order to access international capital, but because permitting for new projects within China has become "painfully slow."

* So far, Chinese experience of overseas listing has been mixed: some companies claiming their stock value gets devalued in an IPO (public offer); others concluding that it's the only way to go in order to increase that value. In the long run China aims to improve its own reputation as an international finance centre, so that companies come to list there in the first instance.

Whatever happens, according to one anlayst (with Everbright Securities):

"The bottom line is the government always holds the controlling interests in the internationally listed state-owned companies".

So, at least we know who to blame when thebig Chinese outfits really take it in mind to capture foreign mining capital - turning the relative trickle of current joint ventures and debt financing into a veritable torrent.

[Additional information for this update comes from Interfax China Ltd, September 1 - September 9 2006]


Canadians Targeted for Controversial Tibet Investments

TSG-L

9th September 2006

Tibetan Rights Groups Oppose Canadian Mining Operations in Tibet

Vancouver – On the eve of a gathering of national and international corporate leaders in Vancouver, who will be addressed by His Holiness the Dalai Lama, Students for a Free Tibet and Canada Tibet Committee are calling on Canadian companies and their investors to steer clear of high risk business ventures in occupied Tibet or face increased public and political pressure. In particular, Tibetan rights activists are concerned about six junior Canadian mining companies engaged in exploratory drilling and mine operations in Tibet.[1]

"Vancouver-based Hunter Dickinson claims to pride itself on ethical business investments and yet continues to aggressively promote plans to exploit gold resources in occupied Tibet without first ensuring the basic rights of local communities are respected", said Kate Woznow, National Coordinator of Students for a Free Tibet Canada. "Under Chinese rule, Tibetans have no voice to determine the use of their own natural resources and face arrest and imprisonment for speaking out against government supported projects."

In the coming weeks, Tibetans and supporters will be increasing public pressure on the mining companies, similar to the actions taken against Canada's Bombardier, Power Corporation and Nortel for their involvement in the China-Tibet railway. Former Canadian Ambassador to China, Howard Balloch, has also come under fire for his investment in a $1000/night luxury train service which is scheduled to start operations along the China-Tibet line in 2007.[2]

"We have seen a national outcry against Bombardier's role in building China's Tibet railway, and now Canadians are appalled to learn that a former high level public servant stands to profit from this devastating project," said Ray Yee, Vice-President of Canada Tibet Committee Vancouver. "The current involvement of Canadian companies in occupied Tibet undermines Canada's commitment to corporate social responsibility and international human rights law."

Earlier this year, an international coalition of Tibet Support Groups circulated questionnaires to the Canadian mining companies to gauge how they would ensure local Tibetans had freely consented to a mine operation in their community. The responses have uniformly shown that the proposed resource extraction projects fail to meet the standard of free, prior and informed consent. Other junior mining companies, SinoGold and Orchid Capital, have previously unsuccessfully tried to establish mines in Tibet to their cost and that of their investors.

"We have given the companies an opportunity to demonstrate their commitment to ethical investment in Tibet and they have failed to do so," said Tsering Lama, Board member of Students for a Free Tibet. "Now it is time for action. Tibetans continue to be denied their internationally recognized right to determine the use of their own natural resources and we will not stand for Canadian companies profiting from our mineral wealth."

1] Canadian companies invested in Tibet are Hunter Dickinson's wholly owned subsidiary Continental Minterals (Vancouver), Inter-Citic Minerals Inc (Toronto), Eldorado Gold Corp (Vancouver), GobiMin Inc (Toronto), Dynasty Gold Corp (Vancouver) and TVI Pacific Inc (Alberta).

[2] Howard Balloch is a major investor in a joint venture between RailPartners Inc and the Chinese Ministry of Railways to operate the luxury train service. 53 designer rail cars are being built by Bombardier's joint venture in China for the project.

Contact: Kate Woznow, Students for a Free Tibet Canada (Vancouver) 778-322-3071

Tsering Lama, Students for a Free Tibet Canada (Vancouver) 604-341-4669
Ray Yee, Canada Tibet Committee (Vancouver) 604-736-5215 (office) 604-240-5215 (cell)

Luisa Durante, Canada Tibet Committee 514-487-0665 (office)


China 2004 Pollution Clean-Up Cost Put at US$136 Billion

PlanetArk CHINA

8th September 2006

BEIJING - It would cost China about US$136 billion, close to 7 percent of GDP, to clean up all the pollution pumped out in the country just in 2004, the national environmental protection watchdog said on Thursday.

A one-off, direct investment to clean up all the pollution for that year would cost 1.08 trillion yuan (US$135.9 billion), with most of that being put towards water pollution, according to the report on the State Environmental Protection Administration's Web site (www.zhb.gov.cn).

"These are figures that are extremely alarming, and show the environmental situation is very serious," Pan Yue, head of the environment watchdog, said in the report, adding that the real cost of pollution was likely higher. "The numbers show once again that the environmental crisis is an increasingly serious constraint on economic development," the report said.

"Although this type of high consumption, high pollution, high risk development style has had a certain historical use, our economy has now entered a bottleneck period for resources and energy," it said.

The report issued a stark warning that words to clean up China's filthy environment must be followed by action.

But it did not contain an estimate for 2005, nor did it provide any forward-looking predictions.

For years, China's ruling Communist Party has stressed economic expansion at almost any cost, but Chinese Premier Wen Jiabao has made green development a key theme of his administration, stressing sustainability over all-out growth.

In the latest incident of harm to the environment, more than 350 people -- many of them children -- in the poor, inland province of Gansu were suspected of being poisoned by a nearby lead smelter.

The government worries pollution could stoke social instability, and protests against polluting industries are common across China's countryside, where the environment has all too often been sacrificed in the pursuit of profit.

Thousand of villagers rioted in eastern Zhejiang province last April, forcing the closure of 13 polluting chemical plants. About 50 policemen were injured and four protesters were later jailed.

After two decades of breakneck economic growth, China has 20 of the world's 30 most polluted cities, the World Bank says. An estimated 300 million nationwide have no access to clean water.

China calls its promotion of sustainable development "Green GDP", taking into account damage caused by industrial development.

"This marks only the beginning of our efforts to calculate Green GDP," the official Xinhua news agency quoted Pan as saying of the report. "Our formula is still not complete and we have to keep working hard to improve it." (US$1=7.946 Yuan)

Story by Ben Blanchard

REUTERS NEWS SERVICE


China Lead Smelter Poisons 2,000 - Paper

Planet Ark CHINA

7th September 2006

HONG KONG - Two thousand Chinese villagers are being treated in hospital for lead poisoning which they say was caused by a local smelting plant, the South China Morning Post said on Wednesday.

The villagers, including 300 children, had travelled from their northwestern province of Gansu to a hospital in Xi'an in neighbouring Shaanxi because hospitals near their three villages had insisted they were fine, the newspaper said, quoting the local Huashang Daily.

Protests against polluting industries are common across China's countryside, where the environment has all too often been sacrificed in the pursuit of profits.

"We don't trust local hospitals because they said our lead concentration levels were normal, so we travelled to somewhere further away," Liu Jiangtao, from surrounding Hui county, was quoted as saying. "Everyone from our village has gone there."

County government officials told Reuters only two villages were close to the lead smelter and the county was still investigating how many people had been poisoned.

Another county official said only two villagers had been found to be sick and the smelter was shut down last month. Doctors at the Xi Jing Hospital in Xi'an, where the villagers were treated, declined to comment.

Authorities closed a factory and detained a manager and seven others following a chemical spill in the northeastern province of Jilin last month.

REUTERS NEWS SERVICE


China puts Zambia mine investment on hold over Taiwan

By Shapi Shacinda, LUSAKA (Reuters)

5th September 2006

Chinese firms have suspended investments in Zambia's copper mines and will cut diplomatic ties with the African country if main opposition leader Michael Sata wins the September 28 presidential elections, state media reported on Tuesday.

Sata has sparked a diplomatic row between Zambia and China by saying during his campaign meetings that he will expel Chinese investors, and over his stance towards Taiwan.

Zambian state media quoted Li Baodong, Chinese ambassador to Zambia, as saying that Chinese firms had suspended further investments in mining, construction and tourism sectors due to threats posed by Sata to China's relations with Zambia.

Sata, the leader of the Patriotic Front (PF) and President Levy Mwanawasa's strongest challenger, also claimed during campaign meetings that Chinese investors and managers were exploiting Zambian workers.

"Chinese investors in mining, construction and tourism have put on hold further investments in Zambia until the uncertainty surrounding our bilateral relationship with Zambia is cleared," the state-owned Zambia Daily Mail quoted Li as saying.

Last week state media said Mwanawasa had written to apologise to China over Sata's remarks concerning the Chinese. There was no immediate comment from the government.

Li said China also had proof that Sata had signed an agreement with Taiwan to recognise it as an independent state if he wins the September 28 presidential elections.

"How can we continue supporting Zambia's development projects, when our bilateral relationship with this country has been threatened?" Li said, but he gave no further details.

Sata said he was not bothered by China's protests and reiterated his claims of poor treatment, saying in an interview on privately-owned Radio Phoenix that he would go ahead with plans to scrutinise Chinese investments in Zambia.

"They ill-treat our people (and) that is unacceptable. We are not going to condone exploiting investors because this country belongs to Zambians," Sata said in the radio interview.

Chinese investors have in the last few months also come under attack from leaders of Zambia workers' unions who accuse them of exploiting workers.

Data from the Chinese embassy indicated that Chinese firms have invested more than $300 million in copper mines and other industries.

In July, six miners were shot and wounded at Chambishi copper mine after mineworkers rioted over delayed wages.

China Nonferrous Metal Mining (Group) Co. Ltd. has mined copper from the Zambian mine since 2003. Currently, it produces 25,000 to 30,000 tonnes of copper in ore a year.


Workers shot during Zambia copper mine riots

By Shapi Shacinda

LUSAKA, July 26 (Reuters)

Zambia's Chinese-run Chambishi copper mine has stopped production after riots in which six workers were shot following a dispute over delayed wages which unions say are the lowest in the industry.

Police spokesman Chrispin Kapela told Reuters on Wednesday that the miners were shot on Tuesday by Chambishi mine "personnel", but he declined to say if the personnel he was referring to were the Chinese managers at the plant.

Zambia's restive Copperbelt region has been the scene of labour violence in the past. A senior official said the mine planned to resume work on Thursday.

"We suspended production after the riots and we hope to resume tomorrow (Thursday)," Michael Hao, head of administration at the mine, told Reuters.

There were conflicting reports on the shooting of the miners. A union official separately said six workers had been shot and wounded, five by a Chinese manager and one by police.

Hao said only police had fired their weapons.

"None of our managers opened fire, it's not true that we were involved in the shooting. It is the police who shot the rioters," he said.

Kapela told Reuters: "Our (preliminary) investigations have shown that the miners were shot by mine personnel who were trying to protect company property."

"We have continued with the investigations and the outcome will determine what course of caction police must take."

Hao said the riots had been sparked by a wage dispute.

"There are six (miners) in the Sino-Zam hospital right now. Our Chinese doctors are treating them," Hao told Reuters.

WAGES PAID

Chambishi mine company secretary Xu Ruiyong said workers had been paid their wages.

National Union of Mining and Allied Workers (NUMAW) general secretary Albert Mando insisted that investigations by the union officials had shown that only one of the miners was shot by the police, the remainder by the Chinese management.

"The police shot only one miner while the rest were shot by the Chinese," Mando said.

"This is a very unfortunate incident because management is the one that abrogated the agreement after agreeing to the (pay) terms. The six miners are in hospital right now," Mando added.

Mando said workers at Chambishi were the lowest paid in the entire mining sector.

"The workers get as little as 350,000 kwacha ($100) per month and this makes them the lowest paid," Mando said. The lowest paid workers at Zambia's leading copper producer, Konkola Copper Mines (KCM), get $424 per month.

Xu agreed that some conditions of service were "not good."

"We are favourable in certain conditions and yes some areas are unfavourable, but this is a matter for the management and the union to streamline," Xu told Reuters.

Xu said he did not expect a backlash against the Chinese.

"I met the workers and they were friendly to me. I don't think there can be a backlash," he said.

China Nonferrous Metal Mining (Group) Co. Ltd. has mined copper from the Zambian mine since 2003. Currently, it produces 25,000 to 30,000 tonnes of copper in ore a year.

China Nonferrous said on Tuesday that it had started producing refined copper from the Chambishi mine and would soon start building a smelter.

China is becoming increasingly active in Africa with an eye to the commodities it needs to feed its ravenous economy.


African workers now resent Chinese influx

By Shapi Shacinda, Reuters

13th August 2006

Chambishi, Zambia - When Chinese investors bought struggling copper producer Chambishi Mining, miners in the Zambian town of the same name gave them a heroes' welcome for averting the mine's closure and for creating more jobs.

Three years on, resentment is rising openly against the new owners, NFC Africa, as workers complain about pay and conditions.

Last month miners destroyed property at the mine in a violent protest during which Chinese managers opened fire, wounding five workers, according to miners and the police. Management denies this, blaming the police for the shooting.

The Chambishi unrest is the most serious demonstration of the mounting anger over how Chinese firms do business as they spread their wings across the world's poorest continent, which is hungry for foreign investment and the jobs African nations are desperate to create.

Complaints over cheap Chinese products swamping the continent, forcing local industries to close with catastrophic job losses, are common across Africa. Tensions over labour practices are relatively new, but they are spreading.

From Angola to Nigeria to Algeria, resentment is overshadowing the euphoria that originally greeted Chinese investors, who are drawn by Africa's minerals to help fuel China's frenetic growth.

In countries like Angola, which is drawing on its huge oil wealth in order to rebuild infrastructure and social services after nearly three decades of war, Chinese investment covers everything from oil concessions to construction of roads, railways and houses.

China's Roads and Bridges Corporation is rehabilitating thousands of kilometres of road over the next two to three years, using an oil-backed multi-billion dollar Chinese credit.

Together with the money, China is also pouring in thousands of its own blue collar workers.

"There is a lot of resentment," said Joao Banga, the head of the ministry of the environment in Huambo in central Angola, where Chinese companies are rehabilitating the local railways.

"Any project associated with Chinese money is only obliged to contract 30 percent of it to domestic companies - in a country with some 80 percent unemployment."

The fact that Chinese workers are kept in dormitory-style housing on the outskirts of town with little contact with the local people only adds to suspicion and prejudice.

Some of the more common complaints against Chinese firms include poor pay; lack of safety clothing or boots for workers in textiles, copper and coal mining; and the use of short-term contracts as opposed to long-term employment.

In 2004 the Zambian government asked Chinese managers at Zambia-China Mulungushi Textiles, in northern Kabwe, to stop locking in workers at the factory at night.

In June authorities shut down Collum Coal Mining Industries in southern Zambia, saying that colliery miners had been forced to work underground without safety clothing and boots.

The government said the mine would be allowed to reopen only once it was satisfied that conditions had improved.

"The Chinese have annoyed us because they don't treat us as important partners in their business," said a Chambishi mine worker, who declined to be named.

"All they are interested in are higher profits and not the workers who earn them these profits," added the miner, who was involved in the violent protest in July.

Union officials said miners at Chambishi were the lowest-paid in the entire mining sector, the lowest salary being $100 (R680) a month. By comparison the lowest-paid miner at Konkola Copper Mines, Zambia's largest copper producer, earned $424 monthly, they said.

Chambishi Mining's company secretary Xu Ruiyong acknowledged that some conditions of service were "not good".

"We are favourable in certain conditions and, yes, some areas are unfavourable, but this is a matter for the management and the union to streamline," Xu said.

Weak regulatory regimes in Africa are easy to exploit.

Lesotho's department of trade says Chinese operators are licensed to run only big retail shops or supermarkets, but in reality this has meant that locally owned grocery stores have virtually disappeared.

"I had to close down my small shop because I'm now in competition with the big Chinese supermarket at the corner," former store owner Thabo Seutloali said.

He said local people had rented their shops to the Chinese because "they get a better profit from rent than from running the shops themselves".

Chinese business operators approached for comment said they could not speak English.

In Algeria, rebuilding after years of political violence and the resultant reduction in labour skills, China has been quick to fill the skills gap with trained engineers, electricians, plumbers, carpenters and masons.

Some Algerians resent them taking jobs but admit that the Chinese worker will be a feature of the labour market until Algeria can catch up.


Levy is Part of the Crooks That Sold Mines - Sata

The Post (Lusaka)

23rd February 2006
Bivan Saluseki
Lusaka

PRESIDENT Levy Mwanawasa is part of the crooks that sold the mines, Patriotic Front leader Michael Sata has said.

Reacting to President Mwanawasa's statement in Kasama and Nakonde that people should not vote for crooks and plunderers who had sold mines and aircrafts because if allowed they would sell rivers and lakes, Sata said the President had no issues to address the people of Northern Province.

Sata said when the mines were sold, President Mwanawasa was still Republican vice-president.

"All these things, he was part of government. We had already completed the liquidation of Zambian Airways by the time he left. What can he tell us?" he asked.

Sata said President Mwanawasa as vice-president and leader of government business in the House (Parliament) introduced the bills to privatise the mines. Sata said as vice-president, President Mwanawasa defended the sale of the mines and made sure the bills passed through.

"He should not cheat people. He is part of the crooks because he was in government," he said.

Sata asked President Mwanawasa to prove to Zambians how many crooks he had managed to convict since assuming power in 2001. He said it was now clear that President Mwanawasa was panicking. "Why has he not brought back Zambia Airways?

Can he tell us what he has done for the people of Northern Province? Can he point at one toilet, which he has built for the people of Northern Province? What is there for him to tell the people, for him to go there in a panicky way?" he asked. Sata said to date, people from Northern Province had to pass through Lusaka to go to Eastern Province because there was no road connecting the two provinces.

He said the radio reception in the area was poor.

"He should tell us how many people he has appointed from Northern Province in the foreign mission," he said.

Sata said President Mwanawasa should stop panicking and avoid self-praise but address issues affecting people.

And Party for Unity, Democracy and Development president Chitalu Sampa described President Mwanawasa's statement that plunderers had re-grouped and would even sell rivers and lakes as hopeless. "That's hopeless. That's a desperate campaign," Sampa said.

He said President Mwanawasa was afraid of all the offences he had committed while in government and was just making wild statements to remain in power.

He said President Mwanawasa could go ahead talking but other opposition leaders would go and explain to the people what happened. "If Mwanawasa does not understand that people can think and see what MMD did under Chiluba, it's unfortunate," said Sampa.

In Nakonde, President Mwanawasa urged voters to be careful in this year's elections as some political parties had leaders who were party to the selling of Zambian companies, which resulted in job losses and thereby increasing poverty. At the moment, President Mwanawasa's government is in the process of privatising the Zambia National Commercial Bank.

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