The much anticipated showdown between the Chinese state’s copper giants bidding for Glencore Xstrata’s Las Bambas site in Peru won’t be happening after all. Or the competition did take place, but in the form of lobbying within state structures. Unnamed sources quoted by Reuters say Chinalco, one of the two top contenders, will not bid for the project, leaving Minmetals as the front runner, presumably with the blessing of the National Development and Reform Commission. Jiangxi Copper, written about in this blog mostly because of their pioneering activities in Greenland, were at some point also said to be bidding for the Peruvian mine, but now it looks like competition between state-owned companies will be prevented. Talk has emerged today of a possible non-Chinese bid, by a group including Newmont and Canada’s Teck Resources. The asset is being sold at all in order for Chinese regulators to approve the takeover of Xstrata by Glencore.
Norway’s state-owned Petoro will take up a 25% stake in an E&P license offshore Iceland, applied for by CNOOC and its local partner, one-year-old Eykon Energy. The blocks are located in the Dreki area, the Icelandic sector of the waters south of the Norwegian island of Jan Mayen. The Norwegians are entitled to a stake in any hydrocarbon exploration projects in the Icelandic sector, a right conferred them by a binational treaty that settled a territorial dispute in 1981. Petoro already has a share of the two Dreki licenses awarded earlier this year.
Participating in the first four-year exploration phase will cost Norway just over $4m, the oil ministry has informed the Storting, that must yet approve the decision to take part in the license.
Oil-drilling activities in the Norwegian Jan Mayen area have been put on hold by the new Conservative government as a concession to minority parties, a decision that could “shatter Iceland’s oil dream”: exploration in the Norwegian sector would have helped ascertain the prospects in the whole Jan Mayen region. While recent estimates have put recoverable reserves at above half a billion BOE (for the Norwegian part), much of the area is covered by a thick layer of basaltic lava, which makes those figures uncertain and adds to the exploration costs. Should one discovery be made, the estimates would rise significantly, with potential consequences for geologically similar areas offshore East Greenland. That could attract some of the oil majors, which so far have shown little interest in the area. The Icelanders would surely welcome an oil boom; the president has even talked about setting up a wealth fund like the Norwegians. CNOOC, rather new to offshore drilling, could find themselves as the largest company with an interest in Jan Mayen.
Also present in the Dreki area are Ithaca Energy and Faroe Petroleum. Korean major KCNA owns 23% of the latter through Dana Petroleum, an asset they had been rumoured to want to get rid of, but which now they seem quite happy to keep.
More about Chinese interest in Icelandic oil in my article on the topic.
Chinese state-owned oil giant CNPC has been awarded a second exploitation license for the Agadem field in Niger, not a month after announcing they plan to invest $200m in road infrastructure linking Niger and Chad (Jeune Afrique, Le Blog Finance), perhaps as a response to a more assertive attitude towards foreign investors in Niger (investment in roads has been demanded from Areva, whose license to mine for uranium in Niger is about to expire). CNPC’s activities in the region have been facing increased scrutiny: last August, CNPCIC, their subsidiary in Chad, was ordered to suspend its operations for more than a month after being found to be in breach of environmental regulations.
Halldór Jóhannsson, Huang Nubo’s spokesman in Iceland, conveyed last week to Viðskiptablaðið his approval of the fact that the commission revising the Icelandic foreign investment legislation will produce a draft law by January, earlier than originally planned. Interior minister Hanna Birna Kristjánsdóttir (Independence Party) had insisted on an earlier completion of the commission’s work as a way to create an environment more receptive to foreign investors.
Some such work will indeed be necessary if Iceland is to become a bit less restrictive to foreign investment. While historically investment from other European countries is considerable in comparison to the size of the economy, when it comes to non-European investors the restrictions can be quite stringent, and, in the case of real estate, squarely prohibitive. These restrictions have prevented Mr Huang, a Chinese billionaire real estate tycoon, from purchasing a tract of barren land in the north of the country, that he would like to turn into a tourist resort. Despite all the bile exchanged, he remains committed to the project and has said in the past he will wait for Iceland to sort out their investment legislation so he can buy his plot.
Halldór’s involvement in Chinese activities in Iceland also includes helping provide the land for a Chinese-Icelandic aurora observatory.
Mr Huang’s other endeavours have recently taken him to Germany, where a volume of his poetry has just been translated under the title Kakerlaken-Kunde (something like ‘cockroach lore’). The English edition (Dorrance Publishing, 2010) is called Bunnies, which translates the original Chinese title (《小兔子》), and back in March my main article on Huang quoted one (long) verse from it:
The greatest treasure of the dead ought to be the inability of the living to know that moment of death, and the joy or pain of that moment, just like a 1981 Chateau Laffite [sic] Rothschild, the appreciation of which is greater than the desire to taste it.
While Sierra Leone’s foreign minister Samura Kamara was in Beijing on an official visit earlier this month, a “high-powered” delegation from the Chinese Communist Party visited Sierra Leone. High-level exchanges between the two countries have increased of late. Chinese investment in Sierra Leone includes the Tonkolili iron-ore mine, of which Shandong Steel (山东钢铁) owns 25% since 2011 while another 16.5% was agreed to be bought by Tewoo (天津物产) in September. Another iron site in Sierra Leone is the Marampa mine, exploited by London Mining, the company just awarded a license for the Isua project in Greenland.
Asked by Doris Jakobsen, a member of the Danish parliament representing Greenland, whether he was visiting her to talk about eventual exports of uranium to his country, Iranian ambassador Hamid Bayat said no. Iran has a surplus of uranium and doesn’t need any from Greenland, thank you very much. The ambassador was approaching Ms Jakobsen to discuss investment in things like fisheries, perhaps to become possible if sanctions are eased (Sermitsiaq).
Aminata Kelly-Lamin from the Network Movement for Justice and Development, a Sierra Leonean NGO, to Politiken: “My advice to Greenland would be that they should be very careful with what they write in their agreements with London Mining.” London’s Mining alleged failure to live up to its promises on local recruitment and environmental protection, as well as rather generous tax exemptions it benefited from, have led to criticism from local and international NGOs and protests at its Marampa iron ore mine. Some unrest earlier this month led the company to halt operations at the mine for a few hours.