update on China Nonferrous’ Iceland Al smelter project

China’s ambassador to Iceland Zhang Weidong 张卫东 was at China Nonferrous (中色) headquarters in Beijing last week, where he discussed the company’s aluminium smelter project in Iceland with chairman Zhang Keli 张克利 and Wang Hongqian 王宏前, second in charge at Nonferrous’ listed arm NFC. The ambassador highlighted the importance of the project, whose success could set the ground for more Chinese companies to take part in similar endeavours in the future. Chairman Zhang talked of China Nonferrous’ responsibility as a central SOE whose projects abroad, besides their economic significance, are important for the country’s image and foreign relations.

China Nonferrous’ formal commitment to the project so far has the form of what I understand is a non-binding agreement between NFC (中色股份) and local company Klappir Development, signed last July. The Chinese embassy has been involved all along, declaring their support for the project as early as 2013. The Chinese ambassador was present at the signature of the agreement in July, and a few days later toured the site of the projected plant and met with municipal government representatives.

In September, an Icelandic delegation paid NFC a visit in China. They were taken on a tour that included Jinjiang 锦江 Group’s aluminium smelter in Holingol (Chinese 霍林郭勒 Huolinguole, Mongolian Qoolin gool* Хоолингол) in Inner Mongolia, and two Shenyang-based companies controlled by China Nonferrous: NFC Metallurgical Machinery (中色沈阳冶金机械有限公司) and Northeastern University Engineering and Research Institute (NEUI, 东北大学设计研究院). The Icelanders are reported to have praised Chinese aluminium smelting technology and its high environmental standards.

Meanwhile in Iceland, Klappir are expecting to announce the start of the project next spring. NFC’ Wang talks of the Chinese and Icelandic sides both working for construction to start soon.

China Nonferrous are also active in Greenland. With the important proviso that their agreements there are also non-binding, they look poised to become the world’s northernmost miner at the Citronen fjord Zn+Pb project, in partnership with Ironbark, as well as GME’s partner at the Kvanefjeld U+REE mine. Both projects are advancing towards the production stage.

(Hat tip to Hjálmar Friðriksson.)

*This blog will implement Mongolian script toponyms as soon as I figure out the font and display issues. So far I’m going with the usual transcription. Here’s the name in Balk-Janhunen Romanisation, which I think deserves more publicity as a true transliteration system: Quuliv qhuul.

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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.

China Nonferrous to build aluminium smelter in Iceland

Soon after visiting the NFC-built aluminium smelter in Pavlodar, Kazakhstan, Wang Hongqian 王宏前, the company’s GM, flew to Iceland to sign an agreement with local company Klappir Development about plans to build a new aluminium smelter in Hafursstaðir, between the villages of Skagaströnd and Blönduós (some 100 km west of Akureyri). Actually, Wang visited the Kazakh smelter a month before going to Iceland, but I just wanted to juxtapose the projects. The Hafursstaðir plant has a planned capacity of 120 tonnes per year, but in a second stage it might eventually reach twice as much, just a bit below that of Pavlodar smelter. PM Sigmundur Davíð Gunnlaugsson and Chinese ambassador Zhang Weidong 张卫东 were present at the signature. NFC (有色股份) is the largest listed subsidiary of state-owned integrated miner China Nonferrous.

The agreement is being called a letter (‘statement’) of intent (viljayfirlýsing) by Icelandic media and an MOU (谅解备忘录) by the Chinese embassy. Whichever the case, we might assume the agreement is non-binding, given that the project’s feasibility depends on securing electricity from nearby power plants, for which it must compete with other, more advanced projects. Icelandic reports talk of a turnkey deal for which NFC would help muster 70% of the financing from ‘Chinese and other’ banks. The Chinese embassy simply says NFC will conduct a feasibility study and then talk again.

Landvernd, an environmental NGO, are firmly against the idea. Nearby municipalities are OK with it, likely looking forward to the 240 permanent jobs the smelter would create.

Klappir has been trying to get NFC involved in building an Al smelter in Iceland for more than two years. Ma ‘Blubbermouth’ Jisheng 马继生, the previous Chinese ambassador and apparetly a Japanese spy, had welcomed the negotiations during a 2013 meeting with Klappir’s owner Ingvar Unnsteinn Skúlason.

There are already three aluminium smelters in Iceland. In 2013, the aluminium industry accounted for 35% of the country’s exports of goods and more than two thirds of its electricity consumption.

China Nonferrous is also involved in mining in Greenland, through agreements with Ironbark for the Citronenfjord zinc project and with Greenland Minerals and Energy for the Kvanefjeld uranium and rare-earth mine, where a pilot plant has already yielded some concentrate.

China Nonferrous deepens involvement in Greenland Zn project

China Nonferrous (中色) listed arm NFC has signed a new non-binding MoU with Ironbark for its Citronen zinc project in northern Greenland. A previous agreement already mentioned NFC would facilitate Chinese funding for a large part of the development costs, to which the new MoU adds an option for the Chinese company to eventually buy a minority share in the project.