update on General Nice and Burkina Faso

The transitional government of Burkina Faso has authorised Frank Timiș’ Pan African Burkina to resume manganese exports from their Tambao mine. Their export license had been suspended in March over the company’s alleged failure to invest in road and railway infrastructure (Jeune Afrique).

The reason this appears in an ostensibly Northern-looking blog is that the Tambao mine used to belong to a subsidiary of General Nice Group (俊安集团), the current owner of the (dormant) Isua iron mine in Greenland. General Nice conducted exploration activities at Tambao through 2012, and, at least according to their interpretation of the license agreement, had exclusive rights to take the mine to the production stage. The government of Blaise Campaoré (who had been president since 1987) begged to differ, and instead resold the mine to Timiș, a Romanian-Australian miner.

It probably speaks in General Nice’s favour that Campaoré had done more or less the same thing before: rights to explore the mine had first been sold to UAE-based Wadi Al Rawda before the Campaoré administration decided to sell them again to General Nice. The Emiratis sued at an arbitration tribunal, a dispute settled in 2013. General Nice also sued when they were in turn deprived of their permit. Quite unusually in the context of Chinese companies in Africa, a rather strong-worded campaign was launched on Facebook and local media defending General Nice’s position and accusing Campaoré and his entourage of corruption, as described in my background article on General Nice.

Compaoré was ousted in 2014 and fled to Côte d’Ivoire. The transitional government announced it would revise mining contracts signed by the previous administration, such as the award of the Tambao permit to Timiș’ company. With their nemesis Compaoré in exile (and just issued an arrest warrant) and Timiș prevented from exporting, things were starting to look better for General Nice. Talks to reach a settlement (GN are claiming $50m in compensation) started again, and as of last July the country’s Council of Ministers was voicing its will to “continue negotiations” with GN “in order to reach a definitive settlement of the dispute”.

A new president, Roch Marc Chistian Kaboré, has just been elected and will be sworn in next week.

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Greenland airports: possible Chinese investment?

All three parties in Greenland’s ruling coalition, Siumut, the Democrats and Atassut, have signed a “historicagreement on infrastructure development that envisages expanding two existing airports and building three new ones as well as building a container port in Nuuk and new hydroelectric power plants. The guidelines sketched so far favour building several of these projects through public-private partnerships.

Infrastructure projects, and specifically airports, have been discussed in talks between Greenlandic authorities and potential Chinese investors. Such talks received a good deal of media attention in 2012, but didn’t stop there. During a visit to China last October, Vittus Qujaukitsoq, a minister whose portfolio included finance and trade, explained Greenland’s development plans to representatives from Sinohydro (中国水电), China State Construction Engineering (CSCEC, 中建) and China Harbour Engineering (CHEC, 中国港湾) among other companies. Besides airports, Vittus talked about hydraulic and mining infrastructure projects. The meeting, which appears to have gone unreported in Danish or English-language media, is a sign of continued Chinese interest in investing in Greenland. The coalition partners’ proposal, unveiled just over a month after Vittus returned from China, will surely make a lot more sense if backed by a degree of serious interest from Chinese SOEs.

Prospective Chinese investors might be less happy to learn about the controversy some aspects of the airport plans could generate in Greenland.

At any rate, the first Chinese investor in Greenland could be integrated miner China Nonferrous (中色), if metal prices keep the momentum behind the Citronen fjord and Kvanefjeld mines. Having one Chinese company there could help generate enough confidence for others to follow (and indeed China Nonferrous’ chairman has recently talked of the company playing such a pioneering role in Iceland).

update on mining in Greenland

Chinese interest in mining in Greenland hasn’t received a lot of media attention this year, after General Nice (俊安) bought the Isua iron mine, which probably no one would think of developing at the moment (‘cucurbitae caput non habemus‘). That doesn’t mean Greenlandic officials have stopped promoting the island’s ores to Chinese potential investors (there have been meetings in October), or that Chinese interest no longer exists; quite the contrary. As two projects China Nonferrous is expected to help finance and build approach the production stage, Chinese investment in Greenland could become a reality pretty soon.

My latest piece for the China Policy Institute blog discusses these developments.

Greenland minister optimistic on financing for Citronen Fjord Pb+Zn mine

Vittus Qujaukitsoq, a Greenlandic minister (naalakkersuisoq) whose portfolio now includes natural resources, has expressed optimism that Ironbark’s zinc and lead project in Citronen Fjord is likely to succeed in attracting financing and start production as planned. The mine is located in the island’s far North (KNR). The statement came during a public meeting on the project in Nuuk, a step in the approval process for an exploitation license. Meetings planned in other Greenlandic towns have been suspended due to bad weather.

At least part of the financing for the Citronen mine is likely to come from China. Ironbark has signed (non-binding) agreements with China Nonferrous (中色) according to which the Chinese SOE could help finance and build the mine, as well as eventually own a stake in it. China Nonferrous is also expected to be involved in the Kvanefjeld U+REE mine in the south of the island. Another Arctic project of them is a plan to build Iceland’s fourth aluminium smelter in Hafursstaðir.

Although Chinese SOEs have been involved in exploration in Greenland since 2009 (and their interest in the island’s ores goes back to four years earlier), China Nonferrous seems likely to be the first Chinese company to actually take part in the extraction of Greenlandic minerals.

If it goes ahead, the project will require a couple hundred (mostly foreign) workers.

Citronen Fjord is above 80°N, probably the world’s northernmost mine. The second northernmost mine with Chinese involvement could well be in Russia: as I mentioned in my latest post on Yakutia, Heilongjiang province companies are considering investing in the Tirekhtyakh Тирехтях lead deposit, at around 69°N.

Chinese contractor to build Yakutsk bridge, get concession without tender

Yakutsk, capital of the Sakha Republic (Yakutia) in the Russian Far East, could at last be joined by land to the rest of the country if an agreement is reached with Chinese state investors to build a bridge over the Lena river. Although the project, and a degree of Chinese involvement in it, have existed for quite some time, the likelihood that it will actually be built is increasing as Chinese investors take a more central role and get more favourable conditions from the Russian side.

The bridge project was talked about last week at the event formerly known as the Harbin International Economic and Trade Fair (哈洽会), which Li Keqiang and Medvedev agreed last year to rename the China-Russia Expo (中俄博览会). The name change, fitting to the climate of cooperation between China’s Northeast and Russia’s Far East, implies a change of venue as well. Next year‘s edition will be held in Russia, and the city of Khabarovsk has already come up as a candidate to host it.

Yakutsk was founded in the 17th century on what, from the point of view of today’s existing transport infrastructure, looks like the wrong side of the Lena river. The river can be crossed by ferry in summer, on ice in winter, and not at all the rest of the year. Once on the other bank, things aren’t necessarily easy, but they used to be worse. One option is to drive east through the world’s coldest inhabited area on the road (called the ‘Kolyma road‘ (Колымская трасса)) to Magadan 2000km away. The road in the other direction was once known as one of the world’s scariest, but it has recently been paved. The railway is also about to reach Yakutsk: a line that took nine years to construct now links Nizhny Bestyakh, just opposite Yakutsk across the Lena, to the national network.

The missing link is thus the Lena bridge. It has been planned for years. Funds were earmarked for it, and a tender to build it was won by a Russian consortium (which I understand already included the Chinese contractor as a partner), but then the federal government’s priorities changed, allegedly as a result of Crimea’s accession to the Federation. (One of Crimea’s infrastructure needs is also a bridge, the one over the Kerch Керчь strait, that will link the peninsula to the rest of the country.) The fund reallocation meant the Yakutians would have to wait until 2020.

Yakutian officials haven’t given up though. Yakutia has been quite active in the last couple of years looking for Chinese (as well and Korean and Japanese) investment to develop the region, something I’ve written about on a few occasions. In the Chinese case, most of the exchanges I know about have been facilitated by a few businesspeople with heavyweight SOE contacts (the most visible names can be found in my earlier post on the Yakutsk bridge), and the main state interlocutors have been the Heilongjiang provincial government and a few municipalities.

Chinese interest seemed to have been successfully aroused last July, when representatives from China Railway 24th Bureau (中铁二十四局集团), a subsidiary of the state-owned CRCC (中铁), showed up in Yakutsk to go into the technical nitty-gritty of the project. Even more auspiciously, Russian media quoted Chinese (private) interlocutors as explicitly referring to the possibility of Chinese financing for the project. Although I haven’t read it in so many words in Yakutian sources, Chinese financing is what the promotion activities Yakutian officials have been so busy at recently regarding the bridge project (first at the East Russia Economic Forum (Восточный экономический форум) in Vladivostok, now at the Harbin Expo) are conceivably about, given that a contractor for the actual construction has already been found in the 24th Bureau.

The 24th Bureau (ultimately owned by the central government) is likely going to be involved in the Yakutian project in partnership with the Heilongjiang provincial government, through a jointly owned company such as Zhongtie Longxing (中铁龙兴), that is already active in projects in Siberia. (More details on companies called Longxing, sometimes mistransliterated ‘Lunsin’ from its Palladius Cyrillisation Лунсин, in my previous post on the subject.) It was indeed with the Heilongjiang gov’t that Yakutian officials agreed to form a “work group” on the bridge project, and the same group of Heilongjiang companies is also getting ready to make other investments in Yakutia (notably the Tirekhtyakh Тирехтях lead mine in Ulst-Yansky Усть-Янский district, at around 69°N and just 200km from the Laptev sea).

There’s also talk of favourable conditions being advertised to convince Chinese investors to come over and get the thing built. Aleksey Zagorenko Алексей Загоренко, director of Yakutia’s investment development agency, has said the concession agreement will guarantee the investors “an acceptable level of profitability”. What’s more, unlike in the previous attempt to build the bridge, the contractor will be chosen (or has been all but chosen already) under new fast-track rules that don’t require public tender procedure before awarding them the project.

Certain details about the project remain unclear, such as how much it will cost, who will pay for it, and, crucially, whether it will be a road and railway bridge from the start, or first a road bridge to be later made railway-and-road somehow.

If all goes well and everyone agrees on everything by next year, construction could start in 2017 and finish in 2022 on time to celebrate the centenary of the end of the Yakut Revolt and the establishment of the Yakutian ASSR.

It wouldn’t be the first time Chinese intervention gets such a project done after Russian funding fails to materialise. The rail bridge that will link Tongjiang 同江 in Heilongjiang to Nizhneleninskoye Нижнеленинское in the Jewish Autonomous Oblast across the Amur river, could be finished by early 2017 now that the Chinese companies building the Chinese half (with which they say they’ll be done before the end of the year) have agreed to do the Russian half as well (the Russians hadn’t even started). Auspiciously for the Yakutians, some of the companies involved in the Yakutsk project also have interests in the Amur bridge. Perhaps a bit less auspiciously, the international bridge over the Amur is considerably more important for Chinese economic interests (including, serendipitously enough, for General Nice through IRC) than the Yakutsk bridge, well inside Russia.

Nor would it be the first Chinese-built bridge in the (near-)Arctic. The steelwork for the Hålogaland bridge, near Narvik in northern Norway, is being built by Sichuan Road and Bridge Group (SRBG, 四川路桥). That deal was technically won through a tender, but SRBG’s bid was found to have been prepared in, shall we say, involuntary symbiosis with a better known German company. The case earned the engineer who led SRBG’s winning bid four years in a German jail, but the project went on anyway. (I wrote about the German court case last December. The story has recently reached (paywall) Norwegian local media.)

There’s an old argument over whether Lenin chose his alias after the Lena river. From what I’ve read, he didn’t, since he was already signing ‘Lenin’ years before the Lena Massacre alleged to have motivated the choice of the moniker, and when his earlier Siberian exile was spent near the Yenisei, not the Lena. Whoever came up the modern Chinese name for the river (勒拿) seems to agree with that view: the modern name has nothing Leninist about it (instead it rhymes with the Chinese for ‘Saint Helena’). A more Leninny name (列拿) can be found here and there though. The earliest Chinese name for the river is the one that appears in (at least some) Qing documents, namely 里雅那江 Liyana jiang. That’s a word of some historical significance. The negotiations between the Qing and Russian empires that led to the Treaty of Nerchinsk in 1689 started off with Qing official Langtan 郎坦 announcing his side wanted the border to be as far as the Lena. The Chinese name itself looks like a transcription from a Manchu intermediate form, and it indeed makes sense for the name of the Lena to have entered the Chinese language through a Manchu rendition of the Russian name. Nerchinsk negotiations were carried out in Latin through Jesuit interpreters, and documents were translated into Russian and Manchu. (Manchu was possibly the primary language of several of the Qing representatives, including Songgotu, the leader of the Qing delegation, and indeed Langtan.) The ‘Map of the Nine Rivers of Jilin’ (吉林九河图) used by the Qing side at Nerchinsk has place and river names in Manchu only (as reproduced here on the website of Taiwan’s National Palace Museum, unreadable at this resolution though; look for the Lena near the top left corner).

Now you’re waiting for me to say that perhaps Langtan would rejoice at the sight of a Chinese-built bridge over the Liyana, three centuries after he angered the Russians by throwing that name in. But I won’t.

Chinese mining in Greenland one step closer: Ironbark applies for mining license for Citronen Zn project

ASX-listed Ironbark have just applied for an exploitation permit for the Citronen Fjord zinc and lead project in Greenland’s far north, where they have been exploring for several years now. A series of public consultation meetings on the project will take place until next January. China Nonferrous (中色) is expected to become a partner in the financing and construction of the project.

The project is expected to employ a couple hundred people during its construction and exploitation phases. Ironbark documents submitted to the Greenlandic gov’t (and available online) explain that around 80% of these will be foreigners at first, but that they will be later “progressively replaced” with local staff. The mine’s remote location means that foreign staff will be flown in from abroad, meaning it will hardly be seen in Greenlandic towns. Although the main local trade union have aired some worries about immigrant workers and their employment conditions, the scale and location of the project likely mean it won’t create the sort of controversy that once surrounded the Isua iron project.

State-owned integrated miner China Nonferrous, through their main listed arm NFC (中色股份), signed non-binding agreements with Ironbark in 2013 and 2014 that envisage the Chinese SOE’s involvement in financing and building the mine and eventually owning a stake in it.

Nonfezza, also through NFC, are also involved in the Kvanefjeld rare-earth mine in the south of the island, a project that has already started trial production. They’ve also signed a preliminary agreement to build an aluminium smelter in Iceland.

Here’s an overview of Chinese involvement in Greenland mining.

General Nice buys into Canadian oil

General Nice (俊安集团), owners of the Isua iron ore project in Greenland, have acquired a 30% stake in a small Alberta oil company through their HK-listed arm, Loudong General Nice Resources (楼东俊安). The operaton cost Loudong General Nice, where General Nice and related parties are shareholders, some $65m in consideration shares.

The Calgary-based target of the acquisition, Rockeast Energy, has a few oil licences in Alberta. The company was, already before General Nice’s entry, at least partially Chinese-run and owned. Rongshi United Investment Management (嵘世联合) aka Runiworld have a stake in Rockeast, and some sort of ‘alliance‘ has existed between Rockeast and Zhefu 浙富 Holding Group. Zhefu, chaired by Sun Yi 孙毅, primarily make hydropower equipment, but they have an interest in Canadian oil since the purchase of a number of oil fields from Zargon. As of last year, Zhefu’s Canadian subsidiary, Ascensun Oil and Gas, shared an address with Rockeast. It’s unclear who did General Nice buy the stake from, since the transaction was made through a series of BVI companies.

Loudong General Nice Resources, the HK-listed company that has bought Rockeast, is partially owned by General Nice Group (I’ve written about other shareholders here). The Isua licence in Greenland is not owned through Loudong General Nice, but through a Jersey-based of another, non-listed, company of the group. I have a whole series of posts and a background article on General Nice.

A bit as in the case of the Greenland mine and other recent acquisitions, this latest move can be seen as part of General Nice’s effort to diversify away from its historical core business, Shanxi coal, by buying cheap overseas assets.

Meanwhile in Australia, Pluton Resources, partially owned by General Nice, has halted operations at the Cockatoo Island mine amid a dispute with the Western Australian government over unpaid royalties.