Guest piece: Beijing sets sustainability bar for miners
We first brought China's new mining sustainability guidelines to your attention in October and are currently preparing an interview on the topic with Global Witness' Senior Adviser on China as a follow up. In the meantime, we reproduce this guest piece on the new guidelines from the Engineering & Mining Journal with the permission of author Joseph Kirschke, News Editor-Mining.
Written by Joe Kirschke
In central Burma, where minerals, community upheaval and foreign investment have collided since political reforms four years ago, the Letpadaung copper mine epitomizes anti-Chinese feelings. A 2012 crackdown over the project, owned by a Beijing arms manufacturer, culminated in phosphorous use and a rare official apology; neither helped opposition leader and Nobel laureate Aung San Suu Kyi—after arriving to defuse tensions, she fled for her life.
By Q3 2014, still fuming over the destruction of a sacred Buddhist temple, pollution and inadequate land compensation, villagers abducted two Chinese contractors amid more rioting. After their release, anger resurfaced over the trial of a prominent student activist accused of using social media to facilitate the kidnapping.
Despite new standards for labor rights, environmental safeguards and community relations issued by its Chamber of Commerce for Minerals, Metals and Chemicals, China’s troubled mining companies have a long way to go—by anyone’s admission. “We are determined to accomplish what we have set forth, but can’t forcibly require people to follow guidelines,” said Director Guo Hongjun, according to The New York Times.
Developed alongside nongovernmental organization (NGO) Global Witness and the Organization for Economic Co-operation and Development (OECD) and based partly on U.N. frameworks, the memorandum seeks to prevent mining-related human rights abuses in high-risk areas. The mandate will include training sessions and company outreach.
The behavior of Chinese-owned mining companies, serving a country representing 10% of the world’s economy, has global implications: With 20 cities to surpass 5 million inhabitants by 2025, the mainland is threatened by shortfalls in nearly every key mineral commodity—especially copper, iron ore, bauxite, aluminum, uranium and magnesium. With 1.3 billion people, China also consumes more energy, in part, through power station coal than any other nation.
In 2013, accordingly, overseas resource investments soared to $53.3 billion from $8.2 billion in 2005, according to a new study by the American Enterprise Institute, a Washington think tank. Abetted by unbridled state capital and minimal shareholder oversight, Chinese miners have since surpassed more responsible Western companies in the global commodities race. In the past decade, for instance, Citibank reported 217 Chinese mergers and acquisitions valued at $50 billion.
Although this appears to have slowed, one in seven foreign investment dollars flows into mining, while Beijing continues lavishing billions on “stadium diplomacy”—encompassing cultural initiatives, free-trade zones and infrastructure. In all, according to the chamber of commerce, Chinese firms have invested in nearly 200 foreign countries; frequently, they bring whole communities with them, along with housing, restaurants—and sometimes locally published newspapers, exclusively in Mandarin.
Yet on-the-ground corporate social responsibility (CSR) remains negligible. Consequently, other Buddhist shrines in remote places are endangered—including those of Mes Aynak, Afghanistan. There, after decades of war, archaeologists are now racing to unearth a major discovery of ancient historical significance—pending scheduled Q4 2014 construction of a $3 billion China Metallurgical Group Corp. copper project, the biggest such mine in Afghan history.
Few doubt that the 30-year contract, targeting ore worth up to $40 billion, will revitalize Afghanistan’s moribund economy. Many, however, despair that thousand-year-old monasteries, a Zoroastrian temple, Buddhist monuments, some made of copper, along with 1,000 statues, will disappear forever; one way or the other, reported Al Jazeera, 1,750 police are guarding the site in one of Afghanistan’s most volatile regions southeast of Kabul.
In Africa, CSR dilemmas involving workers, communities and more advanced Chinese assets have been more deadly. In Q3 2012, Zambian miners murdered a Chinese supervisor over wages at the Collum coal mine, 325 km south of Lusaka, the capital. That year, police arrested two Chinese managers at the same operation for shooting 13 miners in another pay dispute.
In Africa’s No. 1 producer of copper, which constitutes 60% of exports, this was no isolated incident. Five years before, then-President Hu Jintao’s advance team discovered this the hard way with mass protests awaiting his inauguration of a $200 million smelter at one of Zambia’s largest red metal mines. The year before, six employees were slain by Chinese bosses at the same site, owned by China Non-Ferrous Metals Corp.; 50 others perished in a 2005 explosion.
Despite $800 million in promised copper investment, exceeded by $1 billion since, the damage was done: Hu kept to Lusaka. Subsequent pledges, however, were encompassed by $20 billion in Chinese pan-African loans by 2015—doubling those in 2009.
Such moves provide no level playing field for Western miners, despite their greater localized transparency—and sustainability. As an emerging market with no colonial legacy, many foreign leaders also say China better understands their needs. “They appreciate non-interference in local issues,” reported the Transatlantic Academy, a Washington public policy organization.
China, which consumes nearly all of Chile’s copper and Brazil’s iron ore, has a multibillion-dollar loan grant, and construction commitments across Latin America with close government ties to match. Naturally, this hasn’t stifled clashes across the Southern Hemisphere: In Peru, the Zijin Mining Group recently reached an undisclosed out-of-court settlement with 33 protestors tortured by security forces near its copper-molybdenum mine; four years earlier, two guards were slain by 20 gunmen who stormed the $1.4 billion project.
“Chinese companies take advantage of weaknesses—they are ruthless and have no self-regulation,” said Nancy Menges, a co-editor of Americas Report, a current affairs publication. “This is true of companies in their own country that have massive relocation, environmental degradation and poor labor practices.”
But others like Liu Kaiming, founder of the Institute of Contemporary Observation (ICO), a Shenzhen civil society organization, have a more benign view. “The leaders of companies lack the knowledge of communication with stakeholders, and don't have awareness of international human rights or environmental standards,” he said.
Impunity at home, meanwhile, often translates into abuses abroad. “Chinese companies overseas face critics—from NGOs or trade unions and independent media,” Kaiming said. “In China, nobody can monitor them;” a cross-sector World Trade Organization (WTO) Tribune survey of CSR reporting in China found mining coming in last at 4.9%—behind utilities at 5.9% and supply chain indicators at 37.7%.
This was underscored by Cao Desheng, a spokesman for Myanmar Wanbao, the joint venture with the Rangoon government operating the Letpadaung mine back in Burma. “We are very puzzled,” over the violence, he said. “We have been engaging the communities—we don’t know why they took this action.”
Zhang Jianping, a director at China’s Foreign Economic Research Institute, has one idea. “There will be a gap between their understanding of Western standards, and ways of doing things and true international standards,” he said.
For now, voices of indigenous Burmese like Thwe Thwe Win will likely continue carrying the day. “The Chinese don’t know our culture,” said Win. “How would they feel if their respected buildings were destroyed?”