yakutia

May 6, 2016

Yakutsk bridge: Sinohydro to study Lena ice drift

Sinohydro (中国水电) will study the Lena river May ice drift in preparation for the design of the Yakutsk bridge, says YakutiaMedia.

The Heilongjiang Economic Daily (黑龙江经济报) reports that Sinohydro has already presented the Russians with a proposal on the “basics” of financing for it. Once meant to be paid for the Russian government, with a degree of Chinese participation in the construction, the bridge is now expected to be built by a Chinese contractor with Chinese financing, to be eventually repaid in instalments, in rubles, after the bridge is finished.

April 25, 2016

Sinohydro to propose financing for Lena bridge

Chinese SOE Sinohydro (中国水电) will propose a “basic financing model” for the construction of a bridge that will join Yakutsk to Russia’s transport network, says RIA quoting the federal road agency (Росавтодор). The proposal should materialise before the end of this month.

More on the Lena bridge project here.

December 8, 2015

Chinese-Russian ‘intergovernmental commission’ to discuss Yakutsk bridge: Russian sources

An “intergovernmental commission” including vice-premiers Zhang Gaoli 张高丽 and Igor Shuvalov will look into proposals for Chinese companies to build the long-awaited bridge over the Lena river and join Yakutsk to the Russian transport network. That’s according to a press release from the Yakutian railway company ОАО (behold the nested quotes: ОАО «АК „Железные дороги Якутии“»), jointly owned by the federal and Yakutian governments. This information has been reflected in media reports by Interfax and others, but so far all Chinese reporting is just sourced to Sputnik’s Chinese service.

The information about the remarkably high-level involvement comes in the context of an agreement signed a few days ago in Moscow between the Russian side and Sinohydro (中国水电) and somehow related to the construction of the bridge. Again, this information is still based only on Russian reports, and not of the highest quality (as evidenced by a miscyrillisation of the name of Sinohydro chairman Song Dongsheng 宋东升 in the Interfax story, a sign that suggests reporting involving no Chinese expertise).

I’ve discussed the background of the Lena bridge project in some detail in the past. In a nutshell, long-term interaction between the Sakha Republic (i.e. Yakutia) and Heilongjiang governments, originally mediated by private businesspeople, has led to increasingly concrete plans for Chinese contractors to build the much-needed bridge, but funding from the Russian federal government failed to materialise after Crimea’s accession to the federation reshuffled infrastructure development priorities. While the Yakutians have been actively looking for Moscow and/or the Chinese to finance the bridge, the federal government seems to need some more convincing. For an analysis of how much importance Chinese (and specifically Heilongjiang) government entities are likely to attach to infrastructure development in the Russian Far East, you’ll have to wait for my forthcoming writeup on the topic.

October 23, 2015

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.

September 3, 2015

Silk Road through the Russian Far East: Chinese to invest in Yakutsk IT park

Meetings with Chinese companies at the East Russia Economic Forum (Восточный экономический форум) in Vladivostok have resulted in agreements to build an IT park in Yakutsk, capital of the Sakha Republic, also known as Yakutia. There have also been further talks on an oil refinery project said to be backed by CNPC.

The Chinese partner is Huaqing Housing Holdings (华清安居控股有限公司), a developer established by research institute of Tsinghua University (‘Huaqing’ is just ‘Tsinghua’ spelt backwards) and backed by SOEs and state financial institutions. As I’ve been describing in a series of posts during the last few months, Huaqing have been one of the Yakutian government’s main interlocutors in talks on potential Chinese investment in the republic, and Zhu Chunyu 朱春雨, the company’s chairman, is a frequent visitor to Yakutsk.

Huaqing has also signed an agreement to cooperate with Almazergienbank Алмазэргиэнбанк, the largest in Yakutia, which has been increasingly partnering with Japanese and Chinese institutions, including China Construction Bank (建设银行).

August 3, 2015

China goes into Russian rare earths

A Rostec subsidiary is in talks with Chinese partners to extract rare earth elements in Russia with Chinese technology. Rostec, together with Aleksandr Nesis’ ICT and other investors, own TriArk Mining, with rights over two major sources of rare earth elements: Th+REE monazite concentrate stocked in Krasnoufimsk near Yekaterinburg since the ’40s, and large REE deposits in Tomtor, in the Far Eastern region of Yakutia.

Chinese companies have shown a degree of interest in new REE deposits abroad (cf. China Nonferrous at the Kvanefjeld mine in Greenland, potentially Minmetals in Greece).

July 31, 2015

Chinese-invested refinery in Amur oblast

A private company from China and its Russian partner will refine oil in the Far Estearn Russian region of Amur oblast to ship fuels to Chinese customers across the border (Amurskaya Pravda). In order to do that, they’ll have to build the refinery first. The location is the village of Beryozovka Берёзовка, some 50 km from the regional capital of Blagoveshchensk which itself faces Heihe 黑河, Heilongjiang across the Amur river. The place is expected to be designated as one of the ‘areas of priority development’, a federal government initiative to transform old ‘monotowns’ in the Far East into industrial parks through tax benefits and state investment (these areas are attracting a good deal of interest in China, as I wrote a few days ago). This should be good news for the refinery project, that has existed for a few years but only last April was approved by the National Reform and Development Commission.

The Chinese investor is Menglan Xinghe Energy (梦兰星河能源股份有限公司), a subsidiary of Jiangsu-based Menglan Group, led by chairwoman Qian Yuebao 钱月宝. Menglan started as in the textile industry but has diversified to invest, notably, in the company behind the Loongson (龙芯) microprocessor (said last February to be planning to invest in Intel rival AMD). Menglan have been active in the Russian Far East for a while, notably in Yakutia (to which I’ll return in a future post).

July 24, 2015

Chinese-built bridge over the Lena in Yakutsk?

Chinese investors, including a subsidiary of China Railway Construction Corporation (CRCC, 中国铁建), appear to have shown interest in building a bridge over the Lena river near Yakutsk in the Russian Far East, a challenging, long delayed project that would finally join the isolated city to the country’s road network.

Yakutsk, capital of the Sakha Republic (Yakutia), lays west of the Lena river, crossable by ferry during the summer, on ice in winter, and not at all the rest of the year. Once on the east bank, the options used to be the 2000km ‘Kolyma road’ (Колымская трасса) farther east to Magadan, going through some of the coldest places on Earth, or the road along the river (just paved; formerly rather scary) that eventually joins the Trans-Siberian highway. A railway line (so far for freight only) reached Nizhny Bestyakh on the east bank last August after nine years under construction, but the bridge over the Lena, the final stretch that would finally provide Yakutsk with a land link to the rest of the country, was delayed until at least 2020, allegedly because funds earmarked for it were repurposed for infrastructure investment in Crimea. (A major project there is the bridge over the Kerch Керчь strait, meant to link the peninsula to the rest of Russia. Reports a year ago that CRCC, the Chinese state company now said to be interested in the Yakutsk link, would be involved in building the Crimean bridge were promptly denied by the company.)

Unwilling to wait until 2020, Yakutian officials have seemingly set out to find private investors to build the bridge anyway, and are scheduled to present their plans at the East Russia Economic Forum (Восточный экономический форум) next September in Vladivostok. The good news is that investors have apparently just popped up, from the east.

A month ago, a delegation from the Heilongjiang federation of industry and commerce (黑龙江省工商联) was in Yakutsk. (Contacts between Chinese provinces and Russian federal subjects are increasingly frequent.) Among the visitors was Tao Ran 陶然, chairman of Sirius Holdings/Sirius Power Station Equipment (天狼星电站设备有限公司), who told TASS about a $40bn Chinese transport infrastructure fund as one source that could be used, “on the basis of a state-private partnership, for building a bridge crossing over the Lena river.” An account of the visit from the Chinese side also says a “railway bridge” (the TASS report talks of a road link) was a topic of the exchange among other potential projects, but there’s no mention of any company specifically related to that kind of infrastructure (alongside Tao’s power plant business, there were representatives from a coal miner and baijiu distiller Beidacang 北大仓, for example).

A more specific discussion took place earlier this month, when the Yakutian officials went into the “technical aspects” of the bridge project with Zhang Hui 张辉, a deputy department head at China Railway 24th Bureau (中铁二十四局集团), a subsidiary of the state-owned CRCC (中铁). There was also Chen Haijun from a Blagoveshchensk-based subsidiary of Longxing International Resource Development (黑龙江龙兴国际资源开发集团), a company established by the Heilongjiang provincial government. (The name Longxing, occasionally mistransiterated ‘Lunsin’ from the Cyrillisation Лунсин, is better known as for the similarly-named operator of the Kyzyl-Tashtyg Кызыл Таштыг (‘red stone‘) polymetallic mine in the Tuva Republic, that has just entered production. The company behind Kyzyl-Tashtyg is majority-owned by Zijin 紫金 Mining, with Heilongjiang province’s Longxing as a minor partner. The Longxing who visited Yakutia appear to be a direct subsidiary of the Heilongjiang province, thus not implying any Zijin participation.) Details aside, the fact that people from CRCC actually visited the site of the projected bridge and discussed technical issues lends more credibility to the claim that there is serious Chinese interest in the bridge.

The bridge was also a topic of discussion during a visit this week by another Chinese delegation. This time the guests included Zhu Chunyu 朱春雨, chairman of Huaqing Housing Holdings (华清安居控股有限公司), an investor whose background I had occasion to describe when the company signed an agreement to build an oil refinery in southern Yakutia. (Also present was Liu Li 刘理, involved for years in working with Yakutia for the Yunjin 云津 investment fund, now credited as representing a Heilongjiang province investment commpany.)

Here’s what Zhu had to say about the bridge over the Lena: “We’re interested precisely in such large-scale infrastructure projects. I think that this project should be looked at based on a 30 to 50 year perspective, when technology will be more developed. Now we can’t even predict what kind of transportation will be circulating on this bridge within 20 or 40 years.” Based on the capabilities and experience of Chinese companies, he estimated that “we could build the bridge in 3.5 years” which sounds quite specific. Huaqing don’t build bridges themselves as far as I’m aware; their role would probably be attracting funding and bringing along technical partners, the way they apparently got CNPC’s support for the refinery deal.

If it goes ahead, the Lena bridge wouldn’t be the first such project in the Far East to be spurred by Chinese participation. The rail bridge over the Amur river, between Tongjiang 同江 in Heilongjiang and Nizhneleninskoye Нижнеленинское in the Jewish Autonomous Oblast, has also suffered a series of delays, but construction on the Chinese side is going quickly at the moment and might be finished this year. The Russians haven’t started their part yet, and Russian officials are now saying the Chinese contractor could end up building the whole thing.

Yakutsk is some 400km south of the Arctic circle, but with -38 °C January averages it honorarily belongs inside. From that point of view, the Yakutsk bridge would be the second Arctic one with Chinese participation, the first being the Hålogaland in northern Norway, the tender for whose steelwork was won (in rather peculiar circumstances) by Sichuan Road and Bridge Group (四川路桥) in 2013.

July 24, 2015

Chinese to invest in industrial park in Yakutia

Construction just begun at the Kangalassy industrial park near Yakutsk, capital of the Sakha Republic, also known as Yakutia, in far eastern Russia. Out of ten projects scheduled to begin this year, one is a joint venture with a Chinese partner, a company alternatively called (a Cyrillisation of) ‘Songyang’ or ‘Hongyang’ and said to be from Liaoning. Whatever the name, the Chinese partner will use local raw materials (including refuse from a nearby coal mine) to make ceramic blocks and bricks.

Kangalassy recently gained recognition as one of the federal-designated ‘areas of priority socio-economic development’ (территории опережающего социально-экономического развития, ТОР) in the Far East. So far there are nine of them, meant to transform crumbling Soviet ‘monotowns’ (моногорода) into ‘locomotives‘ of local development, through federal government investment and tax benefits. That’s likely to make the priority areas more attractive to foreign investors, and they are receiving increasing attention from China. One consequence would be a certain influx of foreign workers. In the specific case of the Chinese brick factory in Kangalassy, the park’s director promises those would’t outnumber the local workforce (“for each Chinese worker, [there will be] one of our locals”).

There’s also been talk of investment in Kangalassy by a larger player, Baoli Bitumina, a Singapore-based joint venture of Bitumina Group and the Shenzhen-listed Baoli International (宝利国际), until recently called Baoli Asphalt (宝利沥青), whose chairman and biggest shareholder is Zhou Dehong 周得洪. I haven’t seen Chinese reports on their involvement in Kangalassy (Russian media say they would build two factories there), but at any rate Baoli are going big into Russia, looking towards building an integrated asphalt production chain for federal road infrastructure in the nortwest and the Far East with up to $2bn investment. Baoli are also expected to become the first foreign investor in another ‘priority development area’ in Khabarovsk.

Chinese potential investors keep showing up to Kangalassy, with two visits in the last two months, so you wouldn’t be surprised to see more Chinese companies as denizens of Kangalassy in the near future. Yakutia isn’t historically a focus of Chinese investment, that has tended to concentrate on border regions, but contacts have dramatically increased after the Ukraine crisis, especially at the Russian federal subject-Chinese province level. Over the last half a year or so there have been multiple contacts and events between Yakutian officials and potential investors in Heilongjiang, Jilin and Jiangxi (not to mention Japan and South Korea, which I wrote about some time ago).

May 4, 2015

Chinese company to build refinery in Yakutia

An agreement was signed two weeks ago in Beijing between Russian and Chinese companies to build an oil refinery in Aldansky district (Алданский улус) in the south of the Sakha Republic, a Far Eastern Russian region also known as Yakutia. The plant is planned to be have a refining capacity of 2m tonnes of oil per year, making it the fourth largest in Yakutia, and to cost $2bn.

The Chinese investor, Huaqing Housing Holdings (华清安居控股有限公司), is a developer established by a Tsinghua University architecture researc institute, with the backing of train manufacturer CNR (北车), a central SOE, financial institutions including China Development Bank (CDB) and the China Association for the Promotion of Development Financing (CAPDF, 中国开发性金融促进会, a new–ish institution whose top people come from CDB, among them its former and current chairmen Chen Yuan 陈元 and Hu Huaibang 胡怀邦). Huaqing is led by Zhu Chunyu 朱春雨. Besides a couple of projects in China, they claim to be about to build some villas in Dubai. The Beijing meeting also included representatives from oil giant CNPC, so presumably they might also become involved in the project.

On the Russian side we have a local company, Tuymaada-Neft (OAO НК Туймаада-нефть), based in Yakutsk and led by Ivan Makarov, who also chairs Sakhatransneftegaz Сахатранснефтегаз, a gas pipeline operator majority-owned by the Yakutia government, and sits as a deputy at the Il Tumen, the local parliament. Also present in Beijing was Valery Tian Валерий Тян, who besides working for Tuymaada is often involved in contacts between Chinese companies and the local government in his capacity as advisor to the president of the Republic.

The plant will refine oil into fuels to be sold locally. Fuel prices in Yakutia are among the highest in the country.

I have written before about the increasing cooperation between the Russian Far East and specifically Yakutia. The latest example semms to be an agreement between the sport bureaus of Yakutia and Heilongjiang province.