MAC: Mines and Communities

China Update

Published by MAC on 2007-02-02

China update

2nd Feburary 2007

Once more the huge discrepancy between good intentions and actual practices is dramatised by last month's China Modernisation Report which confirms that the country has made no progess in protecting the environment during the previous three years.

Supporting fears expressed by pro-independence activists last year, Tibet looks like yielding up massive new mineral resources for the Chinese state, along the regions's new railway line.

As yet more lucrative forays are made by Chinese companies into Africa, so big global mining companies claim they are finding it hard to compete.

In response, during the recent World Environment Forum in Davos, some corporate leaders urged that more funding be supplied them by the World Bank/IFC. There was even a suggestion that NGO's like Oxfam should be asked to lobby African governments in demanding better health. social and environmental safeguards from China in order, presumably, to give North-based companies the edge in negotiating new African mineral deals.

China Fails to Make Progess on Environment - Report

PlanetArk CHINA

30th January 2007

BEIJING - China has failed to make any progress in protecting the environment in the past three years, state media on Monday cited an official report as saying, despite government pledges to put the issue at the top of its agenda.

China ranked 100 out of 118 countries in terms of environmental protection in the China Modernisation Report 2007 -- the same level as in 2004, the China Daily newspaper said.

"Compared with its social and economic modernisation, China's ecological modernisation lags far behind," the paper quoted He Chuanqi, head of the research group that put together the report, as saying.

It was assembled by experts and academics from the Chinese Academy of Science, Ministry of Science and Technology and some of the country's top universities, the China Daily said.

Large swathes of China are affected by chronic air pollution from factories, vehicles and coal-burning power plants. Water and land pollution has poisoned many other parts of the country.

The "ecological modernisation" category measured indicators such as carbon emissions, sewage treatment and drinking water availability, the newspaper said.

"The government needs to ensure that economic development will not result in further environmental deterioration in the next 50 years," He said.

But the report said that by 2015, China's social and economic indicators should be on par with developed countries in the 1960s, by which stage China will have completed its transition from an agrarian economy to an industrial one.

China had done well at raising life expectancy, adult literacy and access to higher education, though work remained in other sectors, such as adjusting the proportion of the population living in the countryside. It did not elaborate.

To better address China's development problems, the report recommended the government set up three new bodies -- environmental and energy ministries and a regional development agency.

After years of promoting economic growth at almost any cost, Beijing is now struggling to change official attitudes, despite a raft of new policies including tying civil servants' career prospects to their energy-saving achievements.


China's Railway to Plunder Tibet


31st January 2007

[London] China's official news agency, Xinhua, has recently announced(1) that vast deposits of copper, iron, lead and zinc have been found by Chinese government geologists(2) along the route of the newly-opened Qinghai-Tibet Railway. One copper deposit in Qulong in Tibet has a proven reserve of 7.89 million tons, making it the second largest copper find in China and Tibet. The news confirms what many Tibetans have long suspected: that China intends to use the railway to plunder Tibet's enormous natural mineral wealth.

Previous official Chinese statements have claimed the railway is intended to attract prosperity and development in to Tibet. The proximity of the railway to mineral reserves, however, confirms that the railway will have the opposite effect. China's mining companies will be able to transport Tibet's vast mineral wealth out of Tibet, denying Tibetans any opportunity to profit from the soaring commodity prices commanded by their resources which will instead be utilized by the booming industries of eastern China. Businesses there are displaying a voracious appetite for Tibetan iron ore and copper(3).

"China's mining activities in occupied Tibet amount to daylight robbery", said Matt Whitticase of Free Tibet Campaign. "The routing of the railway through areas where mineral deposits are located provides clear proof that the railway was never intended by China to benefit Tibetans, but rather to plunder Tibet's natural resources and to lessen China's dependence on mineral imports from overseas. Tibetans have not given their free, prior and informed consent to China's mining activities on the Tibetan Plateau.

Until Tibetans are free to determine how their economic resources are utilized, western mining corporations should stay well away from forming partnerships with Chinese companies involved in the ransacking of Tibet." Tibetans inside and outside Tibet have long opposed the railway for a variety of reasons in addition to the plundering of their economic resources. The railway will allow ever increasing numbers of Han Chinese to migrate to Tibet, further marginalizing Tibetans in their homeland. It will also hasten China's militarization of the Tibetan plateau. The railway will provide a constant supply of troops, supplies and hardware to key military installations along the railroad, enabling China to upgrade significantly the size and effectiveness of its garrison on the Tibetan Plateau(4).


(1) Xinhua announced the finding of mineral deposits on Thursday, January 25, 2007.
(2) Xinhua quoted China's top geological official Meng Xianlai, director of the China Geological Survey, which comes under the Ministry of Land and Resources. It was reported that total reserves could amount to more than 20 milliion tons of copper and 10 million tons lead and zinc. Copper deposits include the Yulong copper find in the Tibetan Autonomous Region (TAR) which has a proven reserve of 7.89 million tons, making it second in size to the largest copper mine in China and Tibet operated by Jianqxi Copper.
(3) Copper is an essential component in the generation and transmission of electricity. Demand in China is high and soars in the hot summer months due to increased demand for air-conditioning. Iron ore is an essential resource for China's booming steel mills.
(4) Shortly after the railway was opened, Xinhua announced in July 2006 a quadrupling of medicine supplies to combat altitude sickness to the military stationed in Tibet.

Contact: Matt Whitticase: +44 (0)20 7324 4605 (o)
+44 (0)7904 063746 (m)

Miners ask UN to stop China excluding them from Africa

David Robertson: The Times, Davos

29th January 2007

Companies query safety standards Chinese sweeten deals with dams

The world’s largest mining companies are turning to the UN and the World Bank in an attempt to prevent China freezing them out of Africa, The Times has learnt.

The heads of more than a dozen mining companies representing assets of more than $700 billion (£357 billion) met in secret at the World Economic Forum at Davos last week.

The group, dubbed the “governors”, met at the Hotel Fluela on Thursday in a six-hour session covering all major issues facing the mining industry.

Among those present were Paul Skinner, the chairman of Rio Tinto, Tony Trahar, chief executive of Anglo American, Jonathan Oppenheimer, chairman of De Beers, Alexei Mordashov, chairman of SeverStal, and Wayne Murdy, chairman and chief executive of Newmont Mining.

One of the most pressing issues facing the industry is competition from state-owned Chinese companies, which are signing deals in Africa and freezing out Western miners.

Africa has vast mineral resources that are largely untapped and, with metal prices at record highs, companies are rushing to grab the best assets.

China is particularly keen to sign deals with African nations because its booming economy needs access to raw materials such as copper, nickel and zinc.

Western mining companies are struggling to compete when negotiating deals because the Chinese can offer huge incentives to African nations. Chinese engineers are building dams, telecoms equipment, football stadiums, roads, railways and power stations across the continent. In return for these deeply discounted or gifted projects, they are winning rights to explore and exploit vast areas.

The World Bank estimates that China last year spent more than $10 billion on infrastructure projects in Africa, including motorways in Nigeria, a telephone network in Ghana and an aluminium smelter in Egypt.

China is also putting significant efforts into its diplomatic relations in Africa. Hu Jintao, China’s President, is to start a ten-country tour tomorrow. Last year, 48 African leaders, including Robert Mugabe, President of Zimbabwe, went to Beijing to discuss business partnerships and received $5 billion in development loans.

The most ambitious plan of the mining “governors”, and perhaps the most fanciful, is to ask the UN to mandate that countries must sign deals that require participants to meet high environmental and safety standards. Chinese miners have a poor reputation in these areas and one chief executive who was at the governors’ meeting said that Africa was being “raped and pillaged” by China.

This charge has been levelled at Western mining companies for years. However, environmental legislation and lawsuits have forced Western companies to raise their game and now they want China to play by the same rules.

Another strategy developed by the governors was to contact the World Bank’s International Finance Corporation (IFC), which invests in projects in developing nations. Partnering the IFC would let Western miners offer the same sort of incentive-laden deals as China.

The governors also want to work with environmental groups and organisations such as Oxfam to encourage African leaders to demand more guarantees from China.

Not all the governors agree about the effectiveness of these strategies. One big miner is seeking joint ventures with the Chinese, swapping its know-how for access to the Chinese market. It also wants to partner Chinese companies in Africa.

Hu Jintao's Africa tour will help secure mining projects for Chinese companies

Chinese president Hu Jintao began his eight-nation tour of Africa , analysts say that the tour is expected to help Chinese companies secure deals in mineral resources development on the continent.

Li Yusheng, a nonferrous metals expert with Beijing Antaike Information Co. Ltd, said Hu's tour would help accelerate several mineral resource development contracts signed between state-owned companies and African countries at the summit on China-Africa cooperation in Beijing last November.

Sinosteel, one of China's largest steel and raw material traders, signed a contract to mine and smelt ferrochrome in South Africa with Samancor. worth $230 million during the summit. Another example of a Sino-African mineral related joint venture is China Nonferrous Mining Group Co.(CNMC) which has started construction of a 150,000 ton crude copper smelter in the vicinity of Zambia's Chambishi copper mine last December. CNMC invested a total of $200million in the project making it the controlling shareholder. The Company also owns 85 percent of the copper mine with the remaining 15 percent belonging to the state-owned Zambia Consolidated Copper Mine company.

"Volatile political situations are of utmost concern to Chinese companies which wish to invest in Africa, they need the central government's efforts to secure their projects," Li said.

Li said Chinese government showed great support to the CNMC's Chambishi mine project, as the Chinese Central Government provided finance of $ 80 million when CNMC bought into the copper mine in 1998, furthermore, the Central Government has been actively involved in providing aid to alleviate poverty in Zambia.

China faces great pressure from the shortage of raw materials such as copper, nickel, iron ore and cobalt. Major state-owned companies are eying Africa's rich metals resources as a part of their business development strategy to obtain more of these minerals for the China market.

However, the surging cost of raw materials has also spurred an increase in the cost of investing Africa, which is a major concern for Chinese companies who need to keep operating costs down in-order to remain profitable.

Wang Haizhou, vice president of Jinchuan Group, China's largest nickel producer suggested that the Chinese government should provide grants to local companies embarking on risky overseas exploration projects, as well as lower tax tariffs for the imports of the produce from these projects.

"The Central Government has not set up any specific regulation or policy encouraging local companies to invest overseas in exploration and mining projects", said Antaike's Li.

Jinchuan also has plans to invest in the Munali nickel mine in Zambia, jointly with Australia's Albidon, and is simultaneously sourcing for a nickel & cobalt mine in the Democratic Republic of Congo.

[Interfax China, 2 February 2007]


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