MAC: Mines and Communities

China Update

Published by MAC on 2006-07-29

China Update

29th July 2006

Tibet railway opens the gates for mining

28th July 2006

Shanghai. July 28. INTERFAX-CHINA - With the opening of the new Qinghai-Tibet railway earlier this summer, an unhindered path has been carved to the lofty region that has long been wrapped in romantic ideas of isolation. And with the new access could come a rampage of exploitation by many Chinese companies chasing the expansive mineral resources hidden in the mountain province.

China's Tibetan Autonomous Region could be the largest mineral resource in the country, with a potential value of more than RMB 1 trillion (USD 125 bln).

Tibet has the largest chromium and copper deposits in the country, and prospecting has already discovered deposits of 101 other minerals and more than 2,000 more potential mining sites.

The potential of severe environmental impacts on the largely untouched region has even gotten the Dali Lama warning Western mining companies to stay out of the region.

Because of a lack of funds and transportation, few of Tibet's mineral deposits have so far been explored. In Tibet, less than 1% of discovered mines have been prospected, only 15% of mines under commercial operation have completed reconnoiter works, and only 10% of mining companies have passed resources assessment by local authority.

But this was all before the railroad came to town.

The newly opened Qinghai-Tibet railway will have a large impact on the development of the province's mineral resources, to say the least. Production output could surpass RMB 10 bln (USD 1.25 bln) and account for one-third of the province's GDP within five to 10 years, according to the Xinhua news agency.

During the past couple of years, prospectors and miners from Qinghai, Sichuan, Jiangsu, Zhejiang, Jiangxi, and Fujian have entered into Tibet. But now, the Qinghai-Tibet railway, opened this summer, can provide less expensive transportation, which will attract more miners.

The Tibetan government will focus on mineral deposits development in areas covering 100 to 200 km far from both sides of the railroad and areas nearby rivers. The Tibetan government plans to apply for RMB 1.5 bln (USD 187.5 mln) in financial support from the central government to use for prospecting for mineral resources in the next four years.

Mining companies in Tibet

Tibet Mining Co. Ltd. could be one of the mining pioneers in Tibet.

The company operates Luobusa ferrochromium mine in Qusong County Shannan Region, China's largest ferrochromium deposit contributing 80% to the country's total output.

The company owns interests at the Zhabuye Salt Lake in Tibet, which is planned to produce 3,000 tons of lithium carbonate this year and 5,000 tons next year.

Tibet Mining is now expediting construction and production of the Tingong Copper Mine located on a copper belt in the Yarlung Zangbo River region.

Ni La, an official with the company's project department, told Interfax the copper mine has started trial production with 1,000 tons of electrolytic copper annual capacity, although the mine is still being prospected.

She said the company's transportation costs have been reduced by 20% with the opening of the new railway.

"The company's development was restrained before the railway because of the high transportation costs," she said.

Another company, Tibet Yulong Copper Co. Ltd., officially entered Tibet in May 2005.

The company mainly develops copper mines in Yulong, which has proven reserves of 6.24 mln tons and prospecting reserves of 10 mln tons.

The first phase of the project is designed to produce 30,000 tons of copper, the second phase project will add a capacity of 100,000 tons.

But since the opening of the railway, new companies are lining up to get involved in the development of minerals in Tibet.

The Tibet Tianlu Transportation Co. Ltd (Tianlu), a road construction company, wants to set up a joint venture mining company for developing resources in the region.

"The company will benefit from the Qinghai-Tibet Railway and experience of infrastructure construction to pursue mining opportunities in Tibet. We are now talking with Tibet Geology Survey Bureau for prospecting rights," an anonymous Tianlu official said. The company participated in the construction of the railroad.

In addition, the Tibet Summit Industry Co. Ltd, another road construction company, announced at the end of June it has shifted its main business into mining sector. It aims to develop metal resources both in Qinghai and Tibet.

Environmental consequences

However, with more and more commercial mining projects coming on stream, Tibet is facing serious environmental consequences, in the region that was once mostly untouchable. But the government seems to at least have some understanding of the situation.

Lu Yan, the Chief Engineer of China's largest copper mine the Tibet Yulong Copper Mine, told Interfax that the mine had delayed opening operations because it failed to receive the environment approval from the central government.

Lu said that the central government has acknowledged the likely pollution to Tibet by increasing mining activities and is trying to protect it as much as possible from the very beginning.

Power is another problem.

Tibet Yulong Copper plans to use power from a proposed hydropower plant at the Zhaquhe River. However, if the proposal becomes practical, it needs to build 110kv power transmitting wires from the mine to the plant. The wire will go through a forest and the old trees need to be cut down.

Although the Tibet Forestry Bureau has approved the plan, Lu admitted that it would impact the local environment.

And as part of the preparation for mining, Tibet Yulong Copper has flattened the land for future mining and smelter construction.

Ni admitted the company's mining activities have caused pollution to local environment.

"Anyway, our mines are open pits and they have less impact on environment," she said.

She said the Tibetan government had higher environmental protection requirements for mining projects than other regions in the country.

"The Tibetan government prefers large mining companies to be involved in the exploration of Tibet because they are more aware of environmental protection and have more funds to afford pollution controls."

Environmental protection cost in Tibet accounts for more than 30% of total cost in mining projects, which is higher than mining in other regions of China.

The company has adopted scrap ore recovery systems to prevent the pollution of surrounding environment.

However, she claimed any mining project does hurt environment even if it takes control measures.

Foreign companies mining Tibet

Western companies have also begun exploration work and have acquired rights to mineral sites throughout Tibet, sparking protests from western activists.

The annual general meeting of Continental Minerals Corporation, a Canadian firm developing a copper-gold property southwest of Lhasa, was met with protests from 'Free Tibet' activists in June of this year.

And the Dali Lama has also gotten involved.

The Dali Lama urged western mining companies to reconsider their activities in Tibet in a 2003 letter.

"I appeal to all foreign mining companies, and their shareholders, who are thinking about working in Tibet to consider carefully about the ethical values when embarking on such a venture," said the Dali Lama.

Activists have reason to be concerned. In 1996, the head of a monastery was sentenced to six years in prison for protesting increased mining activity near the monastery.

China's coal catastrophe

The Independent (UK) Report by Clifford Coonan

29th July 2006

China produces more coal than anywhere else in the world, fuelling the country's economic boom. But it comes at a terrible price: the mines are the world's deadliest, and their environmental impact is catastrophic. Safer - and cleaner - technology exists. But is there the political will to make it happen?

The trucks rattling away from the collieries in China's Shanxi province are on a tight schedule. There are lumps of coal lying on the grass verges beside the roads. Pollution from the coking plants chokes the air while in some places the whole landscape looks like it's been coated with fine coal dust. Datong is one of these places.

The city is one of the three most polluted in China - the other two, Linfen and Yangquan, are in Shanxi province as well - and when you tell people in China you are going to Datong, it often provokes a strange reaction. They point at the sky and say "hei yu", or "black rain". Some of Shanxi looks like the surface of the moon. A gaudy, patriotic poster promoting Communist ideals will sometimes break the grey, northern monotone, but what little colour there is tends to come from a miner's red helmet, or flashes of neon from a restaurant sign in a town where mining families live. The colliers' work clothes are grey or gunmetal blue.

China mines more coal than anywhere else, around one third of the world's total, and Shanxi is the biggest producer in China, accounting for a quarter of the country's output - around 600 million tons last year. Also, about half of the coke supply in the world market is from the province.

Coal is a matter of life and death in China, heating homes and powering the factories that produce the goods driving China's economic boom. More than half of all finished industrial goods are now made in China, and they could not have been manufactured without power from coal. The economic boom has lifted hundreds of millions of people off the poverty line, but the downside is immense. China's coal mines are also the world's deadliest, by a big margin, accounting for 80 per cent of mining deaths globally. Put it this way - every million tons of coal produced in the country costs the lives of around five Chinese people. Output is increasing by 15 per cent a year and the number of coal mining deaths is expected to rise too, despite government efforts to close the worst offending mines. Last year, 6,000 workers (* -see note) were killed by floods, fires and explosions caused by lax safety rules and inadequate safety equipment, sacrifices to the country's massive hunger for coal as the economy simmers.

In February last year, an explosion ripped through a colliery in Liaoning province killing 214 workers in what was China's deadliest mine disaster since 1949. Just a fortnight ago, 53 miners were killed in an explosion in the Linjiazhuang colliery of Lingshi county, near Jinzhong City.

Safety standards are regularly ignored in the interest of ramping up production; a Chinese miner is 100 times more likely to die in a workplace accident than his American counterpart. China's economic boom has mostly benefited the cities of the eastern seaboard and the southern provinces, and left many rural areas still struggling.

Most of the miners are farmers who are on the wrong side of the growing rural-urban wealth divide. Increasingly desperate, they head for provinces such as Shanxi and take work down the pits of small, dangerous, mostly private coal mines. Last year, 468 Shanxi miners died in accidents out of a nationwide casualty toll of 5,986.

The private collieries are where most of the accidents take place. Operators ignore safety standards to maximise output, and squeeze as much coal as they can out of the ground. Illegal mines, when shut down, routinely reopen once inspectors leave, lured by buoyant coal prices. Many of the deaths at the illegal coal mines go unreported. Operators try to get rid of bodies of dead miners to cover up accidents. Others threaten to withhold compensation, usually around £2,000, unless family members of the dead agree not to publicise the accidents.

As one unscrupulous mine owner comments in Li Yang's powerful 2003 film about the Shanxi mining industry, Blind Shaft: "There's a shortage of everything except people in China."

The side-effects are numerous. Over-mining has hollowed out one-seventh of land in Shanxi and many people live in constant fear that the earth under their feet may suddenly subside, swallowing them and their houses, burying them alive. Most villagers in Xindao, in the suburbs of the provincial capital Taiyuan, have abandoned their ramshackle houses as the village has sunk by at least three metres over the past few years.

Shanxi is a province of extremes and it's hard to imagine that Datong is in the same region as the magnificent 600-year-old walled city of Pingyao, the revered Buddhist temples in the Wutai mountains, and the grand compounds, owned by rich Shanxi bankers and landowners before the Communists swept to power in 1949.

Tourists come in their droves. A mere 16 kilometres from Datong lie the 1,500-year-old Cloud Ridge Caves, a spectacular complex of Buddhist sculptures carved into sandstone grottoes. Pollution is slowly but surely eating away the faces and features of the statues.

For many years after 1949, reporting on mine disasters was illegal, but the government has relaxed the rule in recent times as it figures that bad publicity will make it harder for corrupt local officials to operate. It's a regular fixture on China's evening television news - the sight of grimy-faced emergency workers rushing out of pit mouths with injured and dead coal miners on stretchers, weeping relatives looking on. The images have been broadcast country-wide and touched a nerve.

Dealing with the deadly industry is a tricky balancing act for the government, which must look after the country's energy needs while maintaining stability.

The government is mindful of the potentially destabilising effect of constant reports of mining disasters and has waged campaign after campaign to try to regulate the industry and boost safety, but has been unable to stop the rising number of deaths.

China also has the highest number of coal miners with chest problems - most notably, black lung disease. The name comes from the distinctive blue-black marbling of the lung from the coal dust accumulation.

There are sound political reasons for encouraging safer mines and healthier miners. The last thing the Communist Party wants is civic unrest because unscrupulous mine- owners are making a fast buck at the expense of safety. The government has promised to shut down the smaller, illegal mines country-wide as part of a campaign to make the industry safer and more efficient.

An editorial on the state-run Xinhua news agency pointed the finger at corrupt local officials. "One of the reasons for the frequency of these mining disasters is abuse of authority by officials," it said. "They accept bribes and abuse their power to protect companies doing illegal acts. They are blinded by lust for gain, and negligent of workers' lives."

The coal industry represents a dilemma for the ruling Communist Party - how do you keep people working and provide enough energy for the factories while steering the country away from the old, dangerous, polluting industries? Shanxi's provincial governor, Yu Youjun, has promised to stop expanding the industry in Shanxi, and focus instead on upgrading existing facilities. "We cannot continue the rough way of development any more," Yu says, "and must limit coal production strictly with the guidance of the scientific concept of development."

Shanxi is closing collieries with annual output of below 90,000 tons, considered more prone to accidents and wastage, and is pushing the large remaining ones to use more advanced, eco-friendly technology. As part of Yu's campaign, 4,800 illegal mines have already been shut and 1,200 people, including some 60 officials who were found to have invested in coal mines, have been punished.

And efforts to improve the lives of those who work below the ground have taken on a high profile. Premier Wen Jiabao, who is proud of his man-of-the-people image, has himself donned a miner's hat and gone 1,300 metres underground, where he shook hands with miners and ate a lunch of dumplings. A former mining engineer, he has also visited grieving families after mining disasters, and tearfully told officials to leave no stone unturned in "learning lessons drawn in blood".

(*) As pointed out in our China coverage last week, a spokesperson for the Chinese regime has admitted to China Labour Bulletin that the true figure is closer to 20,000 dead [see:]

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