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CHINA, ZAMBIA, AND A CLASH IN A COAL MINE – by ALEXIS OKEOWO (New Yorker Magazine – October 10, 2013)

http://www.newyorker.com/

Alexis Okeowo received support for the reporting in this post from the Pulitzer Center on Crisis Reporting.

Twelve hundred Zambians gathered on a sunny morning in August of 2012 to protest at Collum Coal Mine, which is located in a rural southern province and, at the time, was owned by five Chinese brothers. They were angry about the working conditions in the mine: Collum had been cited several times by Zambia’s government for labor violations, and miners said that they felt unsafe working there. They were also upset about annual wage increases that they said amounted to only a single Zambian kwacha—the equivalent of twenty cents.

The miners learned that a Chinese foreman had brought outside workers to replace them during the protest, according to one of the protesting miners, twenty-eight-year-old Robert Mundike. Mundike and his co-workers confronted the foreman at one of the mine’s shafts and assaulted him. Then, according to Mundike, they beat up more Chinese workers, along with Zambian miners who were still working even though the protesters had told them not to.

The group—which included not only Collum miners but also their relatives and former workers who said they were owed wages—was becoming restless. They reached another mine shaft, near a cluster of houses where several Chinese supervisors lived. Five Chinese men ran from the settlement, past the coal-carrying conveyor belt and a rock crusher and into the mine, Danny Sikatari, who works as a mine foreman but who did not participate in the protest, told me.

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China’s changing growth profile and the commodities that stand to benefit – by Geoff Candy (Mineweb.com – October 11, 2013)

http://www.mineweb.com/

According to Standard Bank, while it is not going to be a linear progression, the nature of Chinese growth is likely to moderate over the next five years.

GRONINGEN (MINEWEB) – Like any good relationship, it is hard to imagine one’s life without the other person while things are going well. Which is why, any mention of slowing growth in China was met by many in the commodities market with loud cries of “I can’t hear you” and hands clasped firmly over ears.

A case in point, it could be argued, is the massive expansion in iron ore production by the likes of Rio Tinto and BHP Billiton in the face of slowing demand from China, which is expected to result in at least four years of expanding gluts, according to data compiled by Bloomberg.

That’s also not to say, and this is an important distinction, that growth in China has stopped, rather it is moderating. Overall growth is expected to slow over the course of the next few years but it is still going to be at a healthy rate. Indeed, it should also be noted that the base on which this, albeit slower, growth is now placed, and thus the quantum of commodities required in any given year, is vastly higher than it once was.

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Asean nations continue to develop mining industry – by Henry J. Schumacher (Business Mirror – October 9, 2013)

http://www.businessmirror.com.ph/index.php/en/ [Philippines]

ASSOCIATION of Southeast Asian Nations (Asean) member-states are mineral rich, and mining is playing an increasingly important role in the region’s economic growth (hopefully also in the Philippines). In Indonesia, Southeast Asia’s largest economy, mining accounts for 12 percent of gross domestic product.

Even as global demand has eased, Asia’s locomotive economies continue to drive Asean’s fast-developing mining sector, especially China, which consumes more than 40 percent of the world’s output of industrial ores.

The most rapid growth in both Indonesia and other Asean states has been seen in the extraction of industrial minerals—such as copper, nickel, tin and, more recently, gold. The region’s status as an area of world mineral importance, with immense, still to be exploited, deposits of an almost limitless range of ores, is a focus for the world’s biggest developers.

The Philippines is considered to be the fifth most mineralized country in the world, with its gold resources ranking as the third largest. The country also has the fourth-largest copper resources and fifth-largest nickel deposits. However, only a relatively small amount of territory has been mined.

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Myanmar’s resources star dims after mine reform delay – by Melanie Burton (Reuters India – October 4, 2013)

http://in.reuters.com/

SINGAPORE, Oct 4 (Reuters) – A year ago Myanmar was the hot new destination for resources investors looking to make a fast buck in a country opening up to the outside world, but a new mining law is still not passed, the hot-money crowd has filed out and reality has set in. Yet while funding options may have slimmed, opportunity is still knocking, industry participants at a conference in Singapore said this week.

“A year ago everyone was going to Myanmar. You couldn’t get on a flight there because every flight was booked,” said Edward Rochette, chief executive of Canadian explorer East Asia Minerals Corporation, which has applied for an exploration permit in the country.

“Investors were thinking: ‘It’s wide open, it’s the Wild West, we’ll just sign and be done’. Unfortunately, it’s going to take time,” he added.

Explorers have banged up against processing times for prospecting permits stretching out several years while commodity prices have fizzled and debt and equity funding markets have dried up. The country has to fight harder to attract capital.

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Tracing the Chinese gold rush – by Jan Skoyles (Mineweb.com – October 1, 2013)

http://www.mineweb.com/

According to Jan Skoyles, 2013 will be remembered by the gold market as the year of China, but the Asian giant’s domination, while quick hasn’t happened overnight.

LONDON (THE REAL ASSET COMPANY) – The year 2013 in the gold investment market will be remembered as the year of China, so we’ve produced a stunning infographic detailing China’s great golden rise to power.

In just a few months the world’s largest country will overtake India as the biggest consumer of gold and its gold market continues to break records.

A country that already mines over 400 tonnes of gold a year, China still demands more physical gold no matter the price. Between January and July this year the Shanghai Gold Exchange delivered more than 1,333 tonnes to gold investors.

In the last 100 years China’s gold mine productivity has climbed from just 4 tons of gold in 1949 to an expected 440 tons this year, none of which is exported. Hong Kong imports have been over 600 tonnes this year alone, but still more gold is demanded.

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Appetite for Destruction – by Damien Ma and William Adams (Foreign Policy Magazine – October 1, 2013)

http://www.foreignpolicy.com/

Why feeding China’s 1.3 billion people could leave the rest of the world hungry.

On Aug. 20, the Australian mining giant BHP Billiton announced that it will pump nearly $3 billion into developing a deposit of Canadian potash, a mineral used in the manufacture of fertilizer destined for farms fields across the world. And in late September, Chinese pork producer Shuanghui officially purchased Smithfield Foods in the largest Chinese acquisition ever made in the United States. The companies’ investments are both decisions that speak to a vote of confidence in global food consumption growth over the next decade — and nowhere will bellies be filling up faster than in China.

For three decades, resource-intensive manufacturing fueled China’s spectacular economic rise. By 2012, the country was consuming nearly half of the world’s coal and producing 46 percent of its steel, 43 percent of its aluminum, and about 60 percent of its cement. The Chinese economy has slowed in 2013 in part because of the government’s recognition that such a resource-intensive growth model has become unsustainable.

As a result, Beijing is trying to rebalance away from exports and investments and toward domestic consumption. Companies like BHP Billiton are betting that China’s rebalancing will spur rapid growth in demand for food and the inputs needed to produce it.

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Wanted by the taxman: Indonesia’s $5 billion of lost coal – by Fergus Jensen (Reuters U.S. – October 1, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Indonesia may be the world’s top exporter of thermal coal, but that masks an embarrassing fact for a government scrambling to raise revenue – more than $5 billion worth of the fuel is mined illegally and goes untaxed each year.

Export and consumption data shows Indonesia produces around 12-15 percent more coal annually than the ministry of energy and mineral resources reports. That’s enough to supply Taiwan, the world’s fifth-largest coal importer, for a year.

The $460 million of lost tax revenue that industry officials estimate this represents would provide Jakarta, which is considering roughly doubling royalties paid by coal producers, with some of the funds it needs to redress its budget deficit.

The gap between recorded and actual output has also attracted the attention of Indonesia’s top anti-graft agency the Corruption Eradication Commission (KPK).

A combination of export data from the Bureau of Statistics, using customs information, and consumption data from state electricity utility Perusahaan Listrik Negara PLNEG.UL, shows Indonesia’s total coal output at 451.9 million tons in 2012.

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What China’s massive urbanization drive means for Canada’s economy – by John Shmuel (National Post – October 2, 2013)

The National Post is Canada’s second largest national paper.

China’s premier, Li Keqiang, announced earlier this year upon taking office that he
wants to modernize China’s economy. Part of that will involve facilitating the movement
of 400 million rural Chinese to the country’s cities over the next decade. A lot of
expectation is pinned on this mass urbanization. (John Shmuel – National Post)

There’s an ambitious plan underway in China , one that will represent one of the largest migrations of humans in history. China’s premier, Li Keqiang, announced earlier this year upon taking office that he wants to modernize China’s economy. Part of that will involve facilitating the movement of 400 million rural Chinese to the country’s cities over the next decade.

A lot of expectation is pinned on this mass urbanization. Officials in the country hope it will transform China’s economy, the world’s second largest, into one that resembles those of the developed world, instead of the credit-focused, export-driven economy that China is today.

It’s also a transformation that, if successful, will hugely benefit Canada’s economy and companies.

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China’s Xi to give first speech by foreign leader to Indonesia parliament – by Kanupriya Kapoor and Yayat Supriatna (Reuters India – October 2, 2013)

http://in.reuters.com/

JAKARTA – Oct 2 (Reuters) – Chinese President Xi Jinping will on Thursday become the first foreign leader to address Indonesia’s parliament, signalling a push by the Asian economic powerhouses to expand relations that were for decades frozen in hostility.

Xi arrived in Jakarta on a state visit on Wednesday, his first official visit to Southeast Asia’s biggest economy and the world’s third most populous country. He will oversee the signing of a range of contracts, several of them focused on tapping the huge Indonesian resource sector to help feed the voracious Chinese economy.

A day before his arrival, China agreed a currency swap deal for the equivalent of $15 billion, to help Indonesia if its ailing currency comes under any more attacks. It has fallen more than 16 percent this year.

The urge to improve ties is in sharp contrast with the mid-1960s when Indonesia broke off relations with China, accusing it of backing an abortive coup it blamed on Indonesia’s communist party, then the third largest in the world.

So bitter was the split, that until 1990 when the two resumed diplomatic ties, Indonesia effectively banned anything from China, and its nationals from going to China.

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The Dragons Enter: Chinese Mining Companies Shake the World of Sustainability – by Joseph Kirschke (Engineering and Mining Journal – September 16, 2013)

http://www.e-mj.com/

Six years ago, an advance team preparing for then-Chinese President Hu Jintao’s state visit to Zambia, Africa’s leading copper producer, made an unpleasant discovery: Mass protests awaited his groundbreaking event at the Cambeshi copper mine where Hu would announce the commissioning of a $200-million smelter.

Despite China Non-Ferrous Metals Corp.’s (CNMC) $130 million contribution to its rehabilitation, one of Zambia’s largest mines was also among its most controversial: Six workers, officials learned, were gunned down by Chinese managers there the year before and 50 workers died in a plant explosion in 2005; it had since ballooned into a nationwide political scandal. Pledges of $800 million in new investment aside, the damage was done: Hu’s movements were restricted to the capital, Lusaka.

When it comes to Chinese outward mining investment, such scenarios are emblematic of a worldwide trend. Chinese miners have been scouring the planet for decades. But with ramped-up industrialization beginning in 2000, unbridled access to state capital, few shareholder pressures and little CSR to speak of, moreover, they often leave many more responsible, transparent Western companies behind in the global commodities race.

Chinese miners do have their work cut out for them: with 10 cities with populations topping 10 million, the Chinese mainland is facing shortfalls in nearly all essential mineral commodities needed to fuel its spastic economic growth rate—especially copper, iron ore, bauxite, aluminum, uranium and magnesium.

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China’s potash deal with Russia threatens Canadian profits – by Carrie Tait (Globe and Mail – September 25, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — China has bought a chunk of one of the world’s largest potash producers, giving the Asian country more control over what price it should pay for the fertilizer – a move that could drag down prices for the mineral and eat into profits for Canada’s potash companies.

China Investment Corp., Beijing’s sovereign wealth fund, agreed to acquired a 12.5-per-cent stake in Russia’s OAO Uralkali. The deal – a debt-for-equity exchange between CIC and a company owned by three Russian oligarchs – comes after Uralkali said it intends to break from Belarus Potash Co., the cartel it had with state-owned Belaruskali.

Companies controlled by Beijing have invested billions of dollars as part of an overall strategy to secure energy supplies as well as basic manufacturing and building materials. In Canada, Chinese oil and gas companies, along with CIC, are significant energy players. CIC’s deal with Uralkali fits the recent Chinese model: Invest in resources in order to secure supply and exert some control over prices.

China is the world’s most populous country and largest potash consumer, and its stake in Uralkali could hurt Canada’s fertilizer producers because they could further lose pricing power.

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COLUMN-Commodity markets sceptical of China PMI boost – by Clyde Russell (Reuters India – September 24, 2013)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Sept 24 (Reuters) – What does China’s factory sector growing at its strongest pace in six months have in common with the U.S. Federal Reserve’s decision to keep buying bonds? Both failed to boost commodity prices much.

The flash HSBC Purchasing Managers’ Index (PMI) rose to 51.2 in September from August’s 50.1, the highest level since March and strengthening the view that economic growth in the world’s largest commodity consumer is regaining momentum.

The PMI improvement came days after the Fed surprised market watchers by keeping its bond purchases at $85 billion a month, judging that it is still too early to taper monetary stimulus, given the nascent economic recovery in the United States.

Both developments should be positives for commodity prices, as both point to the likelihood of stronger growth in the next few months in the world’s two largest economies.

While the Fed decision did give a small boost to some commodity prices, it didn’t last, with London benchmark copper CMCU3 having given up more than half of the 2.1 percent rally on Sept. 19, the day after the Fed announcement.

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Iran to invest over 8 billion euros in aluminium sector – by Emma Farge (Reuters India – September 20, 2013)

http://in.reuters.com/

GENEVA – (Reuters) – Iran plans to invest around 8.5 billion euros ($11.4 billion) in its aluminium industry as part of plans to nearly quadruple production by 2025, an official at mining group Imidro said on Thursday.

Iran is the 20th largest producer of aluminium in the world, according to the Iranian Mines and Mining Industries Development and Renovation Organisation (Imidro), and needs the extra supplies to meet demand which is growing by 10 percent a year.

Aluminium is a lightweight metal used widely in transport, packaging and construction. It can also be used to make tubes for uranium enrichment gas centrifuges.

Iran’s economy has been hobbled by western sanctions aimed at pressuring Tehran to stop efforts to enrich uranium to levels that could be used in weapons.

Iran produced 338,000 tonnes of aluminium last year and is aiming for 770,000 tonnes in 2016 and 1.5 million tonnes by 2025, Panthea Geramishoar, senior expert in Imidro’s non-ferrous department said at a Metal Bulletin conference in Geneva.

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Afghanistan’s plan to jumpstart economy with Chinese mining investment under threat – by Lynne O’Donnell (South China Morning Post – September 20, 2013)

http://www.scmp.com/news/asia

Plan to base country’s future growth on mining may have struck a dead-end as China moves to renegotiate multi billion-dollar deal

Kabul – Afghanistan’s dream of using profits from its vast mineral resources to fund post-war development is fading after China signalled its intention to undo a multi billion-dollar agreement that had been underpinning Kabul’s plans for creating a mining industry.

Fifteen months before the international presence in Afghanistan is reduced, Kabul may have to scale back plans for attracting mining companies to exploit its mineral reserves, including copper, gold, iron ore and rare earths, worth US$1 trillion.

A combination of related factors are working against Afghanistan. As the commodities cycle turns, prices drop, mining firms scale back on new projects, and China’s economy slows, experts said that Afghanistan appears to have missed out on the resources boom for now.

And the country has yet to pass its new Mining Law, which some say could be delayed further by concerns about such issues as community compensation and environment protection, industry sources said. Ministry officials, however, are confident it will pass within weeks.

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UPDATE 1-Koba Tin to seek arbitration if Indonesia scraps mining permit – by Niluksi Koswanage (Reuters India – September 19, 2013)

http://in.reuters.com/

KUALA LUMPUR, Sept 19 (Reuters) – PT Koba Tin, a subsidiary of the world’s second-biggest tin producer, will seek international arbitration if Indonesia’s government refuses to extend its permit to operate a mine, the chief executive of the Malaysian parent company said.

It is the latest corporate wrangle to raise questions over Indonesia’s openness to foreign investment. Southeast Asia’s biggest economy had pushed for more control over its natural resources, ranging from coal to gold, in the past few years but is rethinking the policy after a recent slide in its currency.

The dispute has been brewing since last year when Indonesian government officials said Koba Tin’s permit would not be renewed and that state-run PT Timah should take over the concession in the Bangka-Belitung islands off the east coast of Sumatra island. PT Timah is a minority shareholder in Koba Tin.

The government has since softened its stance, launching a review of the concession, which is eight times the size of New York’s Manhattan island. It was due to announce a decision this week.

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