MAC: Mines and Communities

China Update

Published by MAC on 2008-01-18

China update

18th January 2008

As predicted barely a year ago, China seems poised to become the world's biggest source of mined gold. However, despite an unprecedented increase in the market price for gold last week, global gold production actually fell between 2000 and 2007.

Constant claims that the regime will cut back on its global greenhouse gas emissions seem belied by expansion of country's coal industry - with output of no less than two and a half billion tonnes in 2007.

It's distinctly moot as to whether planned "upgrading" of China's Environment ministry in March will reduce such negative impacts.

Other articles posted this week sum up recent mining-related ventures destined for Bolivia, Indonesia, the Philippines and Russia.

China tops global gold mining

By Javier Blas in London and Alec Russell in Johannesburg

Financial Times

17th January 2008

China has ended more than a century of South African dominance of the gold mining industry to become the world's biggest producer of the ore.

Chinese gold output jumped to a record high of 276 tonnes last year, a 12 per cent increase over 2006, while South Africa produced 272 tonnes, the London-based precious metal consultancy, GFMS, said on Thursday.

China is already the world's biggest producer of aluminium, zinc and lead; the second largest of tin; and among the top 10 in copper, nickel and silver.

Its dominance in gold follows a 70 per cent jump in output in the past decade and is the latest sign of Beijing's efforts to boost its local supply of commodities to rein in surging and costly raw materials imports.

Bullion prices this week hit an all-time high of $914 a troy ounce as investors sought refuge from a weakening US dollar.

But in spite of the soaring prices, global gold production is falling, notably in South Africa, where output has halved in the past decade amid higher production costs, tougher safety regulations and more depleted mines.

Mark Bristow, the South African chief executive of London-listed Randgold Resources, said: "China is not overtaking South Africa, South Africa is shrinking below China." South Africa has been the world's largest gold producer since 1905.

Philip Klapwijk, GFMS executive chairman, said the fall in output in South Africa and other traditional producers, such as the US and Australia, was the main reason why "global gold production is not raising in reaction to record gold prices".

Between 2000 and 2007, global mined gold fell by 6.7 per cent in spite of bullion prices moving from about $270 an ounce to more than $850 an ounce. South Africa's dominance of gold mining dates back to the discovery of the Witwatersrand reef in 1886, considered the "greatest goldfield in the world", on the edge of what is now Johannesburg.

The scale of the industry has been steadily diminishing since 1970 when it produced 1,000 tonnes a year, about three quarters of the world's supply at that time.

Industry leaders put a brave face on Thursday's news, saying the gold industry in South Africa still employed over 160,000.

"There is a lot of life in this old lady yet," said Roger Baxter, chief economist at Johannesburg's Chamber of Mines.Copyright The Financial Times Limited 2008

China '07 Coal Output Rises 5 Pct to 2.52 Bln Tonnes

PlanetArk CHINA

15th January 2008

BEIJING - China's coal output rose 5 percent in 2007 to 2.52 billion tonnes, the China Daily said, citing the head of the State Administration of Work Safety.

China's booming economy and a crackdown on small and unsafe mines turned the nation into a net importer in the first half of 2007 for the first time in history, raising world prices.

On average, more than 10 people a day died in coal mine accidents last year in China. The grim statistic was nonetheless an improvement on 2006, which had an average death rate of 13 a day. A total 11,155 small coal mines, or 45 percent of the mines in China, have been closed since the second half of 2005 when a campaign began to cut the death rate.

However, the rising price of coal has led some owners to defy orders and keep producing from illegal mines, while legal mines have pushed production past designed capacity, making them more vulnerable to collapses, floods and gas leaks.

(Reporting by Lucy Hornby; Editing by Nick Macfie)


China Eyes Energy, Environment Ministries in March

PlanetArk CHINA

15th January 1 2008

BEIJING - China will likely get an energy ministry in March and upgrade its environment watchdog to ministry status, sources said on Monday, as it aims to boost fuel security with oil at US$100 a barrel and cut back on pollution.

If the massive shift in China's unwieldy bureaucracy goes ahead, it would mark a sea-change in government priorities that will be welcomed by disparate groups ranging from oil industry executives to environmental campaigners.

At present energy policy-making and adminstration is scattered across several departments, which are understaffed and compete for power and influence.

The State Environmental Protection Administration (SEPA), while more unified, lacks the power or budget to consistently enforce anti-pollution rules and hold offenders to account.

The changes would likely be approved during the annual session of the country's largely rubber-stamp Parliament, the National People's Congress, held in Beijing from March 5.

"The energy ministry I think is highly likely... and I would say it is 99 percent (sure) that SEPA will become a ministry," said an energy industry source with ties to government officials.

A foreign analyst who works closely with the Chinese government but declined to be named because of Beijing's sensitivity about the reshuffle said he had also been told to expect an upgrade of the environmental administration.

The changes would be part of a drive to streamline the proliferation of ministries and other administrative bodies -- from an economic planner to regulators -- the cabinet oversees.

Plans for creating consolidated "super ministries" are nearing completion, with a report on the project expected to be submitted to the country's State Council, or cabinet, by the end of this week, the China Business News reported on Monday.


Energy has shot up the government's agenda in recent years in part because of worries about energy security as China's dependence on imported crude edges towards 50 percent and global oil prices rally to over US$100 a barrel.

Air pollution, climate change and a string of accidents in the world's deadliest mining industry have also pushed Beijing to boost management of a key sector that has struggled for a voice since a previous energy ministry was dismantled in 1993.

Energy firms hope a well-staffed ministry could speed up vetting of new projects and improve policy coordination, both currently spread between several different departments with just a few dozen officials between them.

"I have had to go down to the National Development and Reform Commission myself, and sort through the papers on one official's desk to find an urgent project and get them to approve it," a senior executive of one state-owned firm told Reuters recenty.

"Their workload is just too large," the executive added. However it is still not clear whether the planned ministry will be able to prise control of energy pricing away from the National Development and Reform Commission (NDRC), the economic planning super-ministry which runs policy with its energy bureau.

Beijing keeps a tight cap on power, oil and gas prices, and a ministry might struggle to push efficiency and some reforms if the NDRC was still holding onto this key policy lever. The effectiveness of the upgrade of the environment ministry will also depend in large part on whether it will be able to control and fund provincial outposts, which are currently reliant on the local officials they are meant to

Story by Emma Graham-Harrison


Chinese company to join in Bolivian mining project

The Jiangxi provincial Bureau of Exploration and Development of Geology and Mineral Resources has teamed up with the Bolivian Geological Technical Mining Service (Sergeotecmin) to carry out geological surveys and mineral resources development in Bolivia.

According to a report by local Bolivian media El Diario, if a formal agreement is reached between the two sides, China will invest at least $60 million to geologically survey Bolivia's mineral resource development potential.

Jiangxi Geology, established in 1958, principally engages in mineral resource prospecting and development both in China and overseas.

The company is currently involved in various overseas projects, including a lead and silver project in Namibia and a gold project in Iran. It has also approached Mozambique, Bolivia, Madagascar, Sierra Leone and the DPRK to discuss possible projects. The Bolivian government has also invited China to take part in the development of the El Mutun project, China's Ministry of Commerce announced Tuesday (See below).

[Interfax China Mining and Metals , 18 January 2008]

Bolivia talking with China for El Mutun development

NEW DELHI: As Naveen Jindal-promoted JSPL prepares for developing El Mutun iron ore mines in Bolivia, the Latin American nation has initiated talks with China for the development of the other half of the said field.

"Bolivia and China have held preliminary talks about the possibility of a Chinese company developing 50 per cent of El Mutun iron ore deposits in the German Busch province of Bolivia's Santa Cruz department," the Metal Bulletin reported.

Jindal Steel Bolivia, a subsidiary of Jindal Steel and Power Limited (JSPL), is yet to begin work on developing its part of the mines, for which the Bolivian Congress ratified a concession contract recently.

Bolivian mining and metallurgy minister Albert Echazu held talks during a visit to China and Korea last month. But there was no formal proposal from either side.

JSPL signed a contract in July last year paving the way for $2.1-billion project that will exploit 50 per cent of El Mutun deposits for 40 years. Jindal will install a 1.5 million tonne direct reduced iron plant which will feed 1.4 million tonne per year flat products steelworks.

The company will invest $1.5 billion in the first phase, followed by $600 million over the next three years.

[Asia Pulse, 7 January 2008}

Aricom and Chinalco to invest $300 mln in titanium sponge project

Aricom plc, an Anglo-Russian mineral resources developer established by London’s Peter Hambro Mining and Aluminum Corp. of China (Chinalco) will invest $300 million over three years in the construction of titanium sponge plant in northern China, sourcing feedstock exclusively at Aricom's Kuranakh ilmenite mine in Russia’s Amur region.

[Interfax China Mining and Metals, 11 January 2008]

Sichuan stainless steelmaker to develop nickel deposits in Philippines

China’s Sichuan Jinguang Group (Jinguang Group), a privately-owned stainless producer has agreed with Philippines-based HPT Industry Co. Ltd. (HPT) to jointly develop three nickel deposits on the Philippine island of Palawan covering an area of 12,000 hectares Jinguang Group has a current annual production capacity of 600,000 tons of stainless steel and 250,000 tons of ferrous alloy and “owns” a chrome deposit containing 5,000 tons of proven chrome reserves in Zimbabwe.

[Interfax China Mining and Metals, 11 January 2008]

Nanjing to Indonesia – possibly via Australia

In October 2007, the Indonesian government announced that Nanjing Steel will construct a 1.5 million-ton steel mill in the Indonesian province of South Kalimantan this year, with a total investment of roughly $500 million. Teaming with Indonesia’s Gunung Garuda Group, both coal and iron or, will be predominantly sourced in Kalimantan, but with further iron ore coming from Australia if needed.

[Interfax China Mining and Metals, 11 January 2008]

Five killed in illegal iron ore mining accident in Yunnan

An accident on December 22 at an iron ore mine in Jinning county, in the Yunnan provincial capital of Kunming, left five workers dead and one injured, when a mine shaft collapsed on six miners, trapping them 100 meters below the surface. The miners were said to be working illegally.

[Xinhua, 30 December 2007]


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