Month: October 2016

October 5, 2016

Norway afraid to ask China to approve new ambassador

Svein Ole Sæther, Norway’s ambassador to China, has been in his post for nine years, writes Aftenposten, partly because the Norwegian government fears China would delay or refuse to approve a successor. Norwegian ambassadors usually stay in their posts for four years, with a 68 year ‘age limit’ (which Sæther is reaching this year).

Norway has gone to some lengths to try and improve relations with China, but the (nominally unofficial) boycott imposed after the award of the 2010 peace Nobel prize to Liu Xiaobo 刘晓波 is still underway. The boycott has created a peculiar dynamics where Norwegian businesses and academics are punished by Beijing while projects seen to help further Chinese interests are allowed to go ahead unimpeded. Sichuan Road and Bridge’s participation in the construction of the Hålogaland bridge, a major infrastructure project in the Arctic of potential significance for Chinese construction companies in Europe, has faced no visible obstructions from the Chinese government.

October 4, 2016

more on Shenghe’s Greenland deal

A couple of weeks ago, I noticed that Shenghe Resources’ agreement to buy into the Kvanefjeld (Kuannersuit) uranium and rare-earth project in Greenland from ASX-listed GME includes an option to eventually acquire a controlling stake. That simple observation, based on just reading Shenghe’s Shanghai Stock Exchange disclosure, generated some attention after being picked up by Danish daily Politiken and later reflected in Greenlandic media. While rather unremarkable, the 60% option snowballed into something of a controversy after GME started denying its existence, which even prompted Greenland’s resource minister to say they were “investigating” the matter. The fact that GME’s own announcements and press comments didn’t say a word on Shenghe’s further plans for over a week led sources to speculate on the reasons they’d want to keep quiet about what would seem to be rather good news. Yesterday, after letting all this speculation brew for more than a week, GME published an announcement to ‘further clarify’ the issue, now in terms entirely consistent with Shenghe’s announcement. GME also wrote to Greenland’s state broadcaster KNR, admitting for the first time that Shenghe “can be interested in a direct share of the project on a level of up to 60%” (my back-translation from the Danish). Any misunterstandings are blamed on ‘translations’. (Translator-scapegoating is a time-honoured custom in the Chinese business world; cf. this old post of mine, that includes quotes from the Sino-Arctic Bard.)

At any rate, whatever discord ‘translators’ (or the media) might have sown, GME’s current official stance doesn’t contradict Shenghe’s official announcements. We can therefore continue to consider the SSE announcement authoritative.

I don’t normally publish translations of extended passages here, since that feels like doing other people’s homework, but in the interest of readers from Greenland, who are surely entitled to know the details about a project of such importance, I’m going to provide the relevant parts of Shenghe’s SSE disclosure together with a quick-and-dirty (rather literal) translation (original text here).

Page 2, under “Overview of the transaction”.

在科瓦内湾项目取得采矿证且技术优化完成后，基于双方届时洽谈的商业条款，盛和资源可选择收购不超过60%项目权益。

After the Kvanefjeld project has obtained an exploitation permit and completed technical optimisation, on the basis of commercial terms that will be negotiated between the two sides, Shenghe Resources may choose to acquire an interest in the project not exceeding 60%.

Page 9, under “Future cooperation in the project”.

在目标公司就科瓦内湾项目的采矿权申请取得相关格陵兰政府批准且技术合作项目的进展得到各方的满意后，认购方可以书面方式通知公司：其希望取得项目60%的权益。公司收到该通知后，各方将友好协商并购交易的条款，包括收购的交易对价、项目的融资情况，以及成立合资实体（不论是公司还是非公司形式）以开发项目。该并购将受限于所有必要的政府许可。

After the Target Company [GME] has obtained the approval of the Greenlandic authorities regarding the application for an exploitation permit for the Kvanefjeld project and technical cooperation has progressed to the satisfaction of both sides, the Subscriber [Shenghe Leshan] may formally notify the Company [GME] in writing of its intention to obtain a 60% interest in the project. After receiving said notification, both sides shall amicably negotiate the terms for a merger or acquisition transaction, including the value of the transaction, the project’s financial situation, and establish a joint entity (be it of company or non-company type) in order to develop the project. Said merger or acquisition shall be subject to all the necessary government approvals.

Thus spake Shenghe. As anyone who’s been involved in business negotiations with Chinese partners knows, the language tends to be less explicit in Chinese than in English documents. In particular, it could be argued that the Chinese document is ambiguous on whether GME has an obligation to consider Shenghe’s eventual intention. In practice, however, this ambiguity is of little practical consequence, since, as I noted in my previous post, the language implies that there’s no obligation to sell (that’s the ‘amicable’ part).

For completeness, here are the relevant parts of GME’s latest ASX announcement:

As part of the broader strategic relationship and subject to the Company receiving a mining (exploitation) licence for the Kvanefjeld Project and the successful completion of technical cooperation to enhance the Project, Shenghe may notify the Company of their intention to negotiate terms to acquire a direct interest in the Project, in association with project development.

Should this occur, the parties would enter into commercial negotiations in good faith. Any such project level investment and associated agreement would be subject to regulatory and commercial considerations, as well as relevant approvals. There is no contractual obligation on either party to reach such an agreement.

This is consistent with Shenghe’s announcement, except it doesn’t say ‘60%’ and adds an explicit statement that the option is non-binding.

To sum up, a Chinese state-linked company has a non-binding option to buy a majority stake in a major uranium and rare-earth project in Greenland, as I was the first to report in two blog posts. This is important news, but entirely unsurprising, as it has long been known that the main Greenland mining projects are actively seeking to involve Chinese players.

Kvanefjeld is the most important mining project with short and medium-term real prospects in Greenland, and is of global significance as a major REE deposit. The agreement (and especially the 60% option) is very good news for GME, whose shares rose sharply during the weeks leading to the signature of the deal, and are expected to keep climbing as more information emerges on the project’s technical progress. Greenland ministers also welcome the deal, which is also unsurprising given they’ve been actively looking for Chinese investors (with mixed success) for a long time.

On the other hand, the project is not free from controversy. Opposition to the project is known to exist in both Greenland and Denmark. Such opposition mainly comes from two angles: concerns, strongest in Greenland, about environmental issues (both about mining in general and uranium mining in particular) and qualms, mainly operative in Denmark, about China’s influence in the region. Greenland is a democratic society, meaning that engaging the public on these issues is an essential part of developing a mining deal. Chinese companies (and Shenghe specifically) tend to be poorly prepared to deal with that aspect of mining investment, which is one of the reasons partnerships with Western companies are sought. GME have been active in Greenland for quite some time and can be expected to interact with the public in a reasonably smooth way, even if their handling of the 60% storm-in-a-teacup wasn’t that slick. Kvanefjeld, Chinese investment and Chinese labour are also enough of a known quantity in Greenlandic public discourse by now, meaning that the brouhaha that surrounded the Isua project isn’t likely to come back, at least not in the same form.

To my great delight, the online edition of Greenland paper Sermitsiaq, which I frequently read, has reported in Danish on my account of Shenghe’s state links.

October 1, 2016

Kalendis Octobribus: Tibetan magic water

At Tibeto-Logic, Dan Yerushalmi (aka Dan Martin) recalls being laughed at outside Drepung Monastery for drinking Xizang shenshui 西藏神水 mineral water. The bottle translates its brand as ‘Tibet Magic Water’ in English, but the hilarity ostensibly came from the Tibetan: བོད་ཀྱི་ལྷ་ཆུ་མཆོད་རྟེན་ཉི་མ། bod kyi lha chu mchod rten nyi ma. Dan relapsed into “the kind of a cowed smile you smile when you have no real clue what the laughter is all about”.

The first half of the Tibetan name means the same as the Chinese brand, ‘Tibetan divine water’. The second half, as Dan realised decades later, refers to Chorten Nyima, a holy site in Gampa Town (གམ་པ་གྲོང་རྡལ། gam pa grong rdal, 岗巴镇), Gampa County (གམ་པ་རྫོང། gam pa rdzong, 岗巴县), Shigatse Prefecture, whose water can wash away the worst sins, down to and including incest. That’s the water Dan was drinking, which presumably explains the hilarity.

Dan’s post provides extensive sources on the source’s sin-erasing properties, as well as pictures. Go read it.

I was curious to see what Chinese media sources might have to say about the issue. A number of reports (usually in the puff-piece genre) do talk about the brand.

This one on tibet.cn (中国西藏网) has pictures of the water at the source and of the bottling facilities. This 2008 article in the Tibet Daily (西藏日报) has pictures of employees packing bottles. Based on how the articles describe the Chorten Nyima site, I’m not sure those laughs were warranted. They would make sense if a water from the site, or named after it, was something for the tourists, who would be unaware they’re drinking water people have bathed in. (Believers in homeopathy could argue you’d become incestuous from drinking it.) But according to the articles, the Chorten Nyima area includes water in several forms. There’s a river, a water source, a grotto and three lakes (called the Gold, Jade and Bronze Lakes). Some pilgrims will bathe in the river, but it would seem most popular to collect water from it, given that it has the ability to cure “424 contagious and 360 chronic and acute diseases”. Looking at the pictures, the water seems to flow from a number of places near the river, meaning that the water people collect has not been in contact with other people. A large source (where the river water comes from?), reportedly quite impressive, is located at a rather inaccessible point some 7 metres above the river itself. A temple (picture here) is located in the area, apparently near the river, and a rather inaccessible grotto near has the ability to ‘measure’ people’s sins: below a certain level of guilt, one is able to climb out of it; grave sinners who enter it can never leave it. (The temple is also described in sources quoted in Dan’s post, and the description is consistent with the Chinese articles, that also talk of three stupas.) The articles aren’t terribly clear about this, but the three lakes seem to be farther up the mountain (400 m higher, according to a third source) and might be (part of) what all that water comes from. The lakes are also attributed magical properties, suggesting they might also be reached by pilgrims, but it’s unclear if anyone bathes in them. So it’s perfectly possible that the water bottled for sale is reasonably disjoint from any water people have bathed in.

[We know more about the location now. See the update at the end of this post.]

The source is reported to have been created by Buddhist master Padmasambhava (པདྨ་འབྱུང་གནས། padma ‘byung gnas 莲花生) as he was leaving Tibet. Padmasambhava spent some time in a grotto in the Gamba area, and imparted tantric teachings to a local nomad couple. As he was leaving, he hit some rocks with his cane, and water with miraculous properties started flowing from there.

The articles say that drinking Chorten Nyima water is a Tibetan custom. Of course they would still say that if the whole thing was concocted for the tourists, but judging from what I’ve seen the market for Chorten Nyima bottled water was limited to Tibet for much of its history (which of course doesn’t exclude the possibility of a primarily Han customer base).

The company behind the bottled water brand was established in 1993 by the Gampa Town government. Private capital apparently joined the business only in the early aughts, in the form of a joint venture between the Gampa gov’t-owned company and a local company, apparently Tibetan-owned, called Yamei 亚美 (which I assume is for Tibetan ཡ་མེད། ya med ‘matchless’). Yamei’s other products include(d) Tibetan arts and crafts (which is consistent with the Han-targeted business hypothesis). A bigger bottling plant was established in 2007 in Mönde Village (སྨོན་སྡེ་གྲོང་ཚོ། smon sde grong tsho, 门德村), still within Gampa Town. The time for that expansion makes sense if we think that the railway reached Lhasa around that time, but a breakthrough in terms of market reach at the national scale apparently failed to materialise. (Other brands, especially 5100, had it easier in terms of both capital and logistics; Gampa is still far away, and the railway only reached Shigatse in ’14.) A Shanghai company called Xirun (上海希润实业有限公司; might be connected to this company) invested later on. A deal with an American company whose English name I haven’t been able to identify (something like ‘Hoff’? 赫夫 Hèfū) to sell their water in the US is said to have existed in ’07. (That might (or might not) be related to the mysterious 中美 ‘Sino-American’ prefix in one of the labels in Dan’s post. I haven’t seen any other indication that the company bottling or selling the water is a Sino-American JV, or any evidence the ‘Magic Water’ is sold in the States.)

Other than ‘Magic Water’, this corporate entity also markets another brand, namely Xigezi 喜格孜. My understanding is that 喜格孜 Xǐgézī is just an alternative Chinese form of Shigatse, closer in pronunciation to the Tibetan གཞིས་ཀ་རྩེ། gzhis ka rtse that the traditional/official name 日喀则 Rìkāzé (for example, Shigatse Pedestrian Street in Shigatse is called 喜格孜步行街 Xǐgézī bùxíngjiē in Chinese (Ch., Tib. sign)), so the brand’s English name, if it has one, is just ‘Shigatse’. To the best of my knowledge, Shigatse water isn’t claimed to have any magical properties and might therefore be cheaper.

Even under the hypothesis that the primary target of the Magic Water is the non-Tibetan public, I don’t think the above is consistent with the idea that drinking water from the Chorten Nyima source is laughable in itself. Perhaps it was for the specific people Dan met in Lhasa, or perhaps there was something else they found funny.

This has gone well beyond the accepted scope of this blog. It’s a Kalendae octobres (国庆节) thing. To establish some thematic link with my usual topics, I’ll mention that the reasons why China (proper) is such a good market for Tibetan water are just as relevant to the Arctic, and indeed I have written about Iceland Spring, a product of a peculiar Sino-Icelandic entrepreneur, and with an auspicious pH of 8.88.

[Update: I’ve finally been able to find the precise location of the temple: 28°03’27.8″N 88°14’39.9″E. The temple is indeed located near a river, not a lake. The lakes are a further 6 km south (and possibly 300+ m up). Here‘s a Google Maps view, showing the temple and the lakes. That appears to contradict the account by Peter of Greece and Denmark quoted on Dan’s post, that talks of a temple on a lake; the temple was destroyed during the Cultural Revolution and rebuilt in the ’80s, so a relocation away from the lake(s) after Peter’s visit isn’t impossible; but based on pictures of the lakes I think it’s unlikely they were much closer to them. As for the lakes, there are more than three in the area, and I haven’t been able to determine which specific ones are traditionally associated with the temple and the Padmasambhava story. Averaging the online accounts of a few Chinese visitors, I would say the two similarly shaped ones located directly south from the temple are the holiest ones. This travelogue by Qiuqiu 球球, published on Zbcool by user Kel has been the most useful in identifying the site’s location. Qiuqiu provides a detailed itinerary, multiple pictures and (crucially) maps. This one shows the temple and lakes. Most of the lake names are given as Tibetan names transcribed into Chinese, some of which are at variance with those used in Tibetan government sources (e.g. 莫古龙措 vs 莫姑隆错). I haven’t tried to figure out the original Tibetan names (it might just be easier to find a map in Tibetan). For the two lakes most relevant to this post, Qiuqiu gives Chinese names, 东圣湖 and 西圣湖, respectively the Eastern and Western Holy Lake. More pictures and other details can be found here and here and here (notice in particular this picture of the temple).]