MAC/20: Mines and Communities

China Update

Published by MAC on 2007-04-20


China update

20th April 2007

A new report estimates that 135 million tonnes of standard coal could be saved each year, were existing buildings in China renovated or new ones designed to meet a 50-percent energy savings target.

The Zijin Mining corporation is rapidly rivaling the China Nonferrous Metals Group Co. Ltd. (CNMC) as the most controversial domestic mining company investing overseas.

Zijin has now taken control of Monterrico Metals (the much-criticised UK outfit active in Peru); is participating in a nickel project in Burma; and has purchased a 30% stake in another British miner, active in South Africa.

Now, Hunan Nonferrous, plans to add a tungsten project to its current nonferrous metals' exploits in Australian and Pakistan. And yet again, its intended partner is based in the UK.

Recent data shows that, in a bare eight years, British companies increased the amount of waste (including toxic metallic e-wastes) dumped in China, from just 12,000 tonnes in 1997 to nearly 2 million tonnes in 2005.


Buildings Are China's Energy "Black Holes"

Jianqiang Liu, China Watch

19th April 2007

Buildings account for nearly 30 percent of China’s energy use and are responsible for about a quarter of the nation’s greenhouse gas emissions, according to the latest assessment on China’s energy development. The report, the 2007 China Energy Blue Book, concludes that inefficient buildings and homes waste a tremendous amount of energy each year.

The report notes that nearly 95 percent of existing buildings in China are energy intensive, while more than 80 percent of new buildings built each year—covering some 2 billion square meters in area—fail to meet efficiency rules. China typically spends two or three times as much energy per unit of building area as most industrialized countries.

In 2005, energy required for heating, cooling, ventilating, and lighting China’s 40 billion square meters of buildings accounted for nearly a third of the nation’s total energy consumption, up from roughly 10 percent in the 1970s. Heating and cooling systems alone use nearly 55 percent of this total. As much as 30 percent of the heat generated from conventional heating systems is lost directly, while another 7 percent leaks out through windows opened by residents who are unable to control room temperatures themselves.

Most Chinese buildings are also water inefficient, with sanitary facilities requiring 30 percent more water than those in industrialized countries. Each year, some 20 percent of the water carried via municipal supply networks is lost to leaks, representing almost 10 billion cubic meters of wasted tap water each year, or more than is currently targeted for delivery under China’s massive new south-to-north water transfer project.

Office buildings in China use 10 times as much energy as most residential buildings. Government buildings, in particular, waste significant amounts of energy in the absence of consistent government standards on energy use, the report says. Electricity consumed by Chinese government departments and agencies accounts for 5 percent of the nation’s total use.

The report suggests that some 135 million tons of standard coal could be saved each year if all existing and new buildings in China were renovated or designed to meet 50-percent energy savings standards.

[Jianqiang Liu is a senior investigative journalist with China Southern Weekend and a visiting scholar at Peking University. Outside contributions to China Watch reflect the views of the author and are not necessarily the views of the Worldwatch Institute.]


Zijin Mining Expands Overseas Mines

By David Harman

17th April 2007

SHANGHAI (Interfax-China) -- Zijin Mining Corp, one of China's largest gold miners, has been developing overseas projects rather than domestic projects in the past two years and intends to further develop overseas mines in the next few years, the company's vice president Lan Fusheng, said in the 2007 Asia Nonferrous Metals Investment Dialogue held in Shanghai yesterday.

Zijin Mining is currently involved with three overseas mining projects, including the Rio Blanco copper mine in Peru, a laterite nickel project in Burma and the Blue Ridge Platinum Mine and Sheba's Ridge polymetallic mine in South Africa.

In order to obtain Monterrrico's Rio Blanco copper project, a consortium, co-established by Zijin Mining, Tongling Nonferrous and Xiamen Construction and Development Inc., will offer GBP 94.6 million ($12.25 million) to acquire a 54.19% stake in Monterrico, a London-listed copper miner. The purchase will complete by next Friday.

The Rio Blanco copper mine is located in the Northern Peru province of Piura, close to the Ecuador border and contains deposits of 1.257 billion tonnes of 0.57% copper and 228 ppm molybdenum. The mine might produce 200,000 tonnes of copper concentrate and 2,900 tonnes of molybdenum concentrate per year once the mining project comes into stream, Lan said.

Zijin Mining purchased a 29.9% stake in London-listed Ridge Mining last September for RMB 123 million ($15.93 million), through an additional share and warrant issuance, enabling Zijin Mining to take part in the development of Blue Ridge and Sheba's Ridge.

Blue Ridge mine contains proven mineral reserves of 51.1 million tonnes, among which 166 tonnes are platinum, palladium, gold and silver reserves. Sheba's Ridge mine contains nickel reserve of 1.40 million tonnes, platinum related reserves of 596.75 tonnes, and copper reserves of 540,000 tonnes.

Ridge Mining stock closed at GBP 1.17 ($2.33) per share on the London Stock Exchange's AIM market last week. Zijin Mining purchased the 16 million shares at GBP 0.45 ($0.90) per share last September.

Zijin Mining is currently cooperating with China North Industries Group (North Industries) to explore a laterite nickel mine in the Union of Myanmar. Zijin Mining and North Industries both hold a 50% stake in the joint venture called Jinbao Mining Industry Co.

The laterite nickel project is currently undergoing a feasibility study and contains proven nickel reserves in excess of 10 million tonnes at an average grade of 1.5%.

According to Lan, Zijin Mining is also involved in other mining projects overseas, including gold, lead and zinc mines in Russia, a gold mine in Mongolia and mines in Vietnam.

Other Chinese nonferrous metals producers who own overseas mining projects include the Aluminum Corporation of China (Chalco) and Hunan Nonferrous Metals Group.

"We are encouraging the majority of domestic nonferrous metal producers to focus on domestic mines rather than overseas mines for the time being, as there are still mines to be developed in Western China as well as under-developed mines in central and Eastern China. Moreover, overseas mine development is inherently difficult and risky," a senior official at the Industry Development Research Institute of National Development and Reform, named Hu Chunli, said upon questioning.

Commentary

Authorities have been calling for greater foreign participation in local mine development citing under utilized reserves. All well and good for future prospects.

However, it stands to reason that industry is in need of raw materials now and must secure resources that are already at the production stage.


CNMC signs $150 mln worth of copper contracts in Africa

The China Nonferrous Metals Group Co. Ltd. (CNMC) recently landed copper trading contracts in Africa worth $150 million in total, according to a statement released by the group.

The contracts were signed during a recent visit by a Chinese economic and trade delegation to Namibia and South Africa between April 1 and April 5.

The South African copper trading contracts, involving CNMC and various enterprises, are worth $135 million in total, while the copper supply contracts involving Namibia are valued at more than $20 million.

CNMC did not provide any further details regarding the agreements.

Out of all of China's nonferrous metal operators, CNMC has the largest holdings of overseas nonferrous metal resources. The group's trading value in Africa has witnessed dramatic growth in recent years.

Also, the group currently operates Zambia's Chambishi Copper Mine, which has the capacity to produce 50,000 tons of copper concentrate per annum. The project is CNMC's only direct investment in Africa so far.

CNMC aims to double the Chambishi mine's concentrate capacity to 100,000 tons a year by the end of 2008. In cooperation with the Yunnan Copper Group, the company is currently constructing a 150,000 ton-capacity crude copper smelting plant nearby the mine. The project is scheduled to be completed by the end of 2008.


Hunan Nonferrous to expand mineral resource development - president

Hong Kong-listed Hunan Nonferrous Metals Co. Ltd. will expand its mineral resource developments both in China and overseas in order to increase its profitability, He Renchun, the company's president, told Interfax on April 16 in Shanghai.

...Hunan Nonferrous is currently in discussions with Australia's King Island Sheelite Co. Ltd. over a joint tungsten mine development project on King Island, located off the coast of the Australian state of New South Wales.

At the same time, the company is seeking to cooperate with Thor Mining Plc. to develop tungsten and molybdenum mines in Australia's Northern Territory, He said.

The company is also planning to set up a joint venture to develop Australian Compass Resources Ltd.'s nonferrous metal resources, including copper, tungsten, lead and zinc, in the Northern Territory. Hunan Nonferrous currently owns roughly 10 percent of Australian Compass Resources, making it the company's second largest shareholder.

At present, the company also owns a 49 percent stake in Pakistan's Duddar Lead & Zinc Mine project. China's Metallurgical Construction Corporation controls the remaining 51 percent stake.

The project aims to produce 100,400 tons of zinc concentrate (54 percent grade zinc) and 32,600 tons of lead concentrate (64 percent grade lead) per annum.

[Interfax China Metals, 20 April 2007]


Imported Pollution Adds to China’s Environmental Woes

by Jiaquan Wang, China Watch

27th March 2007

Seemingly a winner in the global balance of trade, China is in fact struggling against an undercurrent of imported waste. The country, already laden with domestic pollution, is rapidly becoming the planet’s largest garbage dump, facing a huge influx of foreign garbage.

Official statistics on the quantity of waste are not available since smuggling is rampant—even though the country’s top environmental, commerce, and customs agencies claim to maintain tight control over waste imports. But an informal estimate, cited in an official environmental research report, claims that of the 80 percent of the world’s e-waste that pours into Asia every year, 90 percent is dumped in China.

Most of this waste, which contains more than 300 kinds of hazardous materials, ends up in small “recycling” workshops, where inadequate disassembling technology leads to the release of toxins into the environment, contaminating rivers, polluting the air and soil, and threatening human health. This environmental deficit has clearly compromised any economic gains China has made, greatly offsetting the country’s brawny trade surplus of US$177.4 billion in 2006.

The mounting imported trash, plus China’s own domestic e-waste, will only worsen the country’s environmental pressures, says Wu Yuping, a researcher with the State Environmental Protection Administration (SEPA) and a co-writer of the official research report. She notes that China’s domestic e-waste dumping is expected to peak in 10 to 15 years as both population and consumption increase. Given the country’s rapid economic growth, China is expected to remain a major global waste absorber through at least 2020, according to the report.

“We hope the government can pay enough attention to the problem, though the figures offered by non-governmental organizations are unnecessarily authoritative,” says Wu, adding that the official report has been submitted to policymakers. The study, which discusses the external influences on China’s environment (and indirectly, its economy), was published in late 2006 but entered the limelight in January after Britain’s Sky TV exposed a garbage dumping scandal in China.

The TV investigation disclosed the transfer of large amounts of plastic waste from the United Kingdom to the village of Lianjiao in southern China’s Guangdong Province, where workers melt the plastic without protective measures and pour waste directly into rivers. The UK dumped some 1.9 million tons of rubbish into China in 2005, up from only 12,000 tons in 1997, according to the investigation.

International environmental organizations, such as Greenpeace, argue that industrialized countries should be held morally responsible for the unchecked waste outflows, as exporters are violating the Basel Convention that bans the trade of hazardous waste. They note that even though the environmental pressure can be shifted from one country to another, the consequences will ultimately affect the planet as a whole. Critics, on the other hand, argue that China should take responsible for its own problems if it wants to cast off the notorious title of “global rubbish dump,” quoting the Chinese saying “flies go for cracked eggs.”

Lianjiao Village and Guangdong province are not the only dumping sites for large amounts of foreign trash. Since China reported its first exotic garbage dumping case in the early 1990s, foreign waste has found its way from coastal areas to inland provinces such as Jiangxi and Hunan, and even the capital Beijing.

Fueling the flood of foreign rubbish is an unhealthy chain of market supply and demand. As the world’s largest developing country, China is thirsting for resources to fuel its robust economic growth and views waste recycling as an alternative source of supply. This demand for materials appears to match the desire of industrialized countries to shift the burden of waste treatment (which is often more costly than shipment) to other countries.

Experts calculate that the import of every 10,000 tons of waste material provides 1,000 jobs in China, saves 1.2 million tons of raw materials and 10 million watts of electricity, and creates 100 million yuan (US$12.8 million) worth of production. As a result, some recycling experts maintain that it is necessary for the country to build a global recycling mechanism to offset its own resource consumption. Even environmentalists do not object to the fact that waste can, and should, be turned into wealth. But they uphold one prerequisite: The process must meet environmental demands. They say it is unwise to encourage waste imports without effective supervision and control, no matter how valuable the material might be.

The story of Lianjiao reflects a wider challenge in Chinese environmental protection efforts: polluting companies are under the protection of local governments, since waste recycling has become a major source of revenue for many localities. That means that highly polluting recycling workshops can remain active for years in defiance of environmental supervision. Despite the central government’s repeated warnings against seeking economic growth at the cost of the environment, the waste recycling industry remains the backbone of the local economy in some areas.

Legal experts and environmentalists are calling on the government to mend loopholes in the country’s legal system that allow for the influx of foreign waste. Zhou Ke, an environmental law professor with Beijing-based Renmin University of China, says the lack of an unassailable ban on waste imports and corresponding severe punishment may be the root cause of the problem.

While Chinese legislation formally bans the import of foreign solid waste, a vague exception permits the entry of recyclable waste material. This creates a loophole that, once opened, is not easily stemmed, says Professor Zhou. And the loophole could be widened further as importers buy hazardous wastes in the name of recycling, rendering the waste ban impotent. Zhou suggests that the law instead list specific categories of waste that are permitted to enter the country.

Chinese criminal law is also obscure with regard to punishments for waste smuggling. It distinguishes the illegal import of wastes from other smuggling violations, resulting in lighter penalties for the offense, according to Zhou. He adds that it is time to renew the nation’s laws when China is confronted with rising environmental challenges from both home and abroad.

At the latest annual session of the National People’s Congress (NPC), China’s top legislative body, several lawmakers called for a strict ban on the import of e-waste. They also tabled a motion to develop a specific law on e-waste recycling, which will be studied by the NPC environmental protection committee.

Four months before Sky TV disclosed the Lianjiao plastic waste scandal, Chinese Customs and the State Environmental Protection Administration launched a campaign to check illegal imports of foreign waste. The campaign is expected to last until the end of June. Customs authorities also aim to work more closely with their foreign counterparts, asking officials elsewhere to help check possible waste smuggling. Meanwhile, SEPA has begun negotiating with European Union environment agencies on the crackdown of illegal transboundary waste flows.

Jiaquan Wang is a senior journalist with Xinhua News Agency in Beijing. This article was coordinated by the Beijing-based Global Environmental Institute. Outside contributions to China Watch reflect the views of the author and are not necessarily the views of the Worldwatch Institute.

 

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