Acknowledgements

This report was prepared by Douglas Ian Scott under the Trott Internship for Conservation International (CI). Special thanks go to: The CI Africa team, the Beijing Axis group, as well as friends and colleagues in Angola, Zimbabwe, Liberia, Madagascar, Johannesburg and Pretoria for all their assistance and advice. Particular thanks is given to Rowena Smuts (Mining Engagement Advisor at CI) based in the Cape Town office who conceptualised the project and supervised the research, Benoit Kisuki i, Sean Gilbertii, Martin Sneary iii, Kathryn Sturman and Chris Aldeniv, Sanusha Naiduv, Yoon Jang Parkvi, Johanna Jansson, Lucy Corkinvii, and Peta Thornycraft. The Trott Family Foundation for kindly funding the research and CI for providing the opportunity to conduct this research. Sean Gilbert and Chris Alden are both thanked for their comments provided on the draft report. All country maps displaying areas of environmental concern were compiled using the Integrated Biodiversity and Assessment Tool (IBAT).viii The opinions expressed in the report and any possible factual errors are the responsibility of the author. CI is not responsible for content derived from external sources. For further information please contact douglas.i.scott@gmail.com or rsmuts@conservation.org or ecoppenger@conservation.org

Conservation International Country Director for the DRC China Director at the Global Reporting Initiative (GRI) iii Senior Information Management Adviser at BirdLife International and Conservation International; IBAT project. iv Dr Kathryn Sturman and Dr Chris Alden are Project and Programme Heads respectively at the South African Institute of International Affairs (SAIIA). Particular thanks are given to Dr Chris Alden for reviewing this report. v Former Director of the Emerging Powers project at Fahamu now at the Human Sciences Research Council vi Formerly of the University of Johannesburg, Senior Researcher in the Centre for Sociological Research vii School of Oriental and African Studies, PhD candidate viii IBAT, retrieved: 3 March 2011, https://www.ibatforbusiness.org
ii

Executive Summary
The study aimed to address three main questions. Firstly, do Chinese mining, oil and gas (MOG) operations in Africa occur in areas of conservation value as defined by the Integrated Biodiversity and Assessment Tool (IBAT) and Conservation International (CI)s geographic areas of interest? Secondly, if there are common areas of interest which countries and which companies should CI focus its efforts on with respect to engaging Chinese actors. Thirdly, how should CI strategically pursue possible collaboration with select Chinese companies in order to ensure the conservation of biodiversity and the ecosystem services that underpin human wellbeing in Africa. The body of this report is broken up into three sections. The first section provides background on Chinese MOG investments in Africa, the importance of these investments to China, how this is changing, and describes the companies involved. The second section includes a country by country account of Chinese MOG activities accompanied by maps which illustrate their location in relation to areas of conservation value. The third section outlines five alternative strategies of engagement with the relevant Chinese extraction companies. The study was made possible through funding obtained for the Trott Internship and the research was undertaken over a 3 month period. The study relied primarily on desktop research, reports from select African as well as international media sources, and interviews with professionals in Sino-African studies and the extractives industry. Chinese firms intend to continue expanding their extraction operations across the globe. Africa, along with Australasia and South East Asia have all seen an exponential increase in the number of Chinese mining investments since 2004. Given Chinas continuing rapid economic growth and industrialisation this trend looks likely to continue for a number of years to come. Despite this rapid increase the actual number of Chinese extraction operations in the African countries identified through this desktop study was less than would have been expected based on the literature. The Corporate Social Responsibility (CSR) policies of Chinese companies today are in a similar state to the CSR policies of their western peers in the mid-1990s. Although there is growing awareness and an increasing interest in CSR and environmental impact mitigation policies by Chinese companies operating outside of China there is still considerable room for improvement with regards to how these companies address environmental issues associated with their extraction activities. Chinese mining operations in Africa can be divided into two different types. Investments held and driven by State Owned Enterprises (SOE) and private investments largely controlled by a small group of private individuals who happen to be Chinese nationals. The vast majority of the extraction operations described in this report involve Chinese SOE. Most of Chinas investments (both private and SOE) in African extraction projects are in the form of joint ventures with all of the operations that Chinese SOE are involved in being joint ventures. Joint venture partners are either public SOE owned by the local African government, privately owned local companies,

western based corporations (often Australian), East Asian firms (often from Hong Kong) or some combination of the above. Operations owned by SOE tend to be better run and more interested in and capable at implementing environmental impact mitigation and CSR programs than privately owned Chinese mining operations. They also tend to be considerably larger in size and scale. These factors indicate that should CI seek to engage Chinese mining and extraction companies that are operating in Africa the best firms for CI to approach would be operations that are run by SOE. The study identified that there are a number of Chinese mining, oil and gas operations which do occur either in or adjacent to areas of conservation value as defined by IBAT. Of the eleven African countries studied it is recommended that CI focus its efforts to engage Chinese actors on Liberia, Madagascar and South Africa. Of the 27 extraction operations investigated the specific projects that may warrant further investigation by CI include Soalala iron ore mine in Madagascar run by WISCO; Sheba mine run by Zijin, Tweefontein and Dilokong chrome mines run by Sinosteel and the Frischgewaagd-Ledig platinum mine run by Jinchuan Group all located in South Africa; and Bong Mines run by China Union mining iron ore in Liberia. It may also be recommendable for CI to monitor some of the other projects still in their early stages of development and which may impact on nearby environmentally sensitive geographical areas. These include Muali mine in Zambia run by Jinchuan Group, Riversdale Zambeze project in Mozambique, and Oil blocks 3113 and 2104 in Madagascar being done by Shaanxi Yanchang Petroleum Group. Alternative strategies for approaching and establishing relationships with the recommended Chinese extractive industry companies were evaluated. It is recommended that the best approach is one that would involve lobbying both the Chinese government and African governments with an emphasis placed on African governments. Chinese companies and Chinese SOEs in particular would find it very difficult to ignore overtures by any organisation should that organisation be recommended to them by the relevant African government. The approach may also differ depending on the objective of a potential cross-sector partnership. If the intention was to shift the benchmark within the sector in terms of how CSR and social and environmental aspects of these projects area addressed it might make more sense to approach Chinese actors in Beijing whereas working with a particular company at a particular project site might require direct engagement in that country.

Contents
Acknowledgements2 Executive Summary....................................................................................................................................... 3 Contents ........................................................................................................................................................ 5 List of Acronyms ............................................................................................................................................ 7 Definitions ..................................................................................................................................................... 8 Introduction .................................................................................................................................................. 9 Study Approach ........................................................................................................................................... 11 Scope of study ......................................................................................................................................... 11 Methodology........................................................................................................................................... 11 Background ................................................................................................................................................. 12 China in Africa and mining ...................................................................................................................... 12 China in Africa and the environment ...................................................................................................... 14 Country Profiles .......................................................................................................................................... 16 West Africa: Liberia ................................................................................................................................. 16 Middle Africa:.......................................................................................................................................... 18 Angola ................................................................................................................................................. 18 Congo, The Democratic Republic of .................................................................................................... 19 Equatorial Guinea ............................................................................................................................... 20 East Africa ............................................................................................................................................... 21 Madagascar ......................................................................................................................................... 21 Mozambique ....................................................................................................................................... 23 Zambia................................................................................................................................................. 24 Zimbabwe............................................................................................................................................ 27 Southern Africa: ...................................................................................................................................... 30 Botswana............................................................................................................................................. 30 Namibia ............................................................................................................................................... 31 South Africa ......................................................................................................................................... 32 The Way Forward ........................................................................................................................................ 37 Projects of interest .................................................................................................................................. 39 Focus Justification: .............................................................................................................................. 39 5

Approaching Chinese companies ............................................................................................................ 41 Five possible strategies of approach ................................................................................................... 41 Appendix ..................................................................................................................................................... 45 Chinese Mining Firms .............................................................................................................................. 45 Jinchuan Group ................................................................................................................................... 45 Qingdao JISCO ..................................................................................................................................... 45 China Non Ferrous Metal Company (CNMC) ..................................................................................... 45 Chiman Manufacturing Ltd. ................................................................................................................ 46 China Minmetals Corporation ............................................................................................................. 46 China North Industries Group ............................................................................................................. 46 Sicomines ............................................................................................................................................ 46 Sinosteel .............................................................................................................................................. 47 Sinopec ................................................................................................................................................ 47 Shaanxi Yanchang Petroleum Group .................................................................................................. 47 Wuhan Iron & Steel Group.................................................................................................................. 48 Zijin Mining Group Co. ........................................................................................................................ 48 List of Chinese owned ore processing companies in the DRC ................................................................ 48 Selected Biography ..................................................................................................................................... 49 References .................................................................................................................................................. 50

List of Acronyms
CAD Fund CI CNFC CNMC CNOOC CREC DRC EIA EITI EMP ESIA ESMP EXIM Bank HBWA IBAT JISCO MOG NORINCO OECD SASAC Sinopec SOE Sonangol SSI China-Africa Development Fund Conservation International China Non Ferrous Metal Company China Nonferrous Metals Mining & Construction Inc China National Offshore Oil Corporation China Railway Engineering Corporation Democratic Republic of the Congo Environmental Impact Assessment Extractive Industries Transparency Initiative Environmental Management Plan Environmental Social Impact Assessment Environmental and Social Management Plan Export-Import Bank of China High Biodiversity Wilderness Area Integrated Biodiversity and Assessment Tool Jindal Iron and Steel Company Mining, Oil and Gas China North Industries Group Organisation for Economic Co-operation and Development State-Owned Assets Supervision and Administration Commission of the State Council China Petroleum & Chemical Corporation State Owned Enterprise Sociedade Nacional de Combustiveis de Angola Sonangol-Sinopec International 7

WISCO ZMDC

Wuhan Iron & Steel Group Zimbabwe Mining Development Corporation

Definitions
Key Biodiversity Area A site identified as a conservation priority for a variety of species. These sites are ideally based on manageable land units defined by local experts using global standards.1 Biodiversity Hotspot Regions of global conservation importance due to the large number of endemic plant species in area (at least 1,500 endemic plant species) that are threatened due to at least a 70% loss of habitat. One hotspot can include multiple eco-regions. These hotspots represent the set of broad-scale priority regions for work by Conservation International.2 High Biodiversity Wilderness Area (HBWA) Large areas of at least 10,00km2 in size and consisting of regions that have a relatively undisturbed environment that is at least 70% intact. In addition these areas also have a at least 1,500 endemic plant species. These three factors combined form a supplementary broad-scale priority to biodiversity hotspots for Conservation international. 3 Endemic Bird Area A region, identified by BirdLife International, of global conservation importance that lays within the habitat of two or more restricted-range bird species. These birds are restricted (endemic) to an area of 50,000km2 or smaller. Half of all restricted-range species are already globally threatened while the other half are vulnerable due to the loss or degradation of habitat owing to the small size of their ranges. These unique landscapes amount to just 4.5% of the earths land surface. The EBAs also support more widespread bird species as well as other animal and plant groups. These areas are often particularly rich in unique human cultures and languages. 4 West Africa, East Africa, Middle Africa, Southern Africa This report uses the United Nations geographic classification scheme5 to determine which geographical region in Africa a particular country is in.

Introduction
Chinas increasingly significant presence in Africa is one important effect of the countrys rapid economic growth and its rising importance on the world stage and has attracted a lot of attention in the last five years. Many misunderstandings and inaccuracies exist about Chinas presence in Africa, particularly amongst western observers. One of which is the scale of Chinas investment in Africa often thought to be much larger than it actually is the other is the callous disregard for the environment by Chinese companies. Whilst it is true that Chinese investors are greatly expanding their investments in the continent those investments are not as large as many might expect. The small number of Chinese investments in the mining, oil and gas (MOG) extraction industries in relation to the large presence of western and South African companies with such investments in Africa is still remarkable. The Organisation for Economic Co-operation and Development (OECD) has noted that while natural resources-seeking is clearly a primary motivation for Chinese investors, Chinas outward foreign direct investment in Africa has not been particularly skewed towards the natural resources sector in international comparison.6 Similarly, whilst it is also true that Chinese companies have had a bad environmental track record in the course of their own countrys economic rise there is also an increasing awareness and desire to improve their environmental footprint with noticeable progress being made by a subset of companies although not by the majority. While a number of studies have been made into the nature of Chinese overseas investment and how to deal with it none of these studies have looked specifically at the eleven African countries in this report or made any attempt to chart and locate those investments. Shankelman (2009) has looked in great detail at how the expansion of overseas Chinese investment has affected the governance of resource wealth and the state of corporate social responsibly (CSR) policy within Chinese companies. 7 How to deal with the outward expansion of Chinese investment and trade, its impact on the environment of countries other than China, and how to mitigate that impact on the environment is covered by Pamlin and Long (2007).8 Chinese engagement in the energy and extractive sectors in Gabon and Angola and their perceptions of EITI are looked at by Burke, Jansson & Jiang (2009).9 A broad and extensive overview of Chinese engagement in Africa is covered in Brautigam (2009).10 A report compiled by Executive Research Associates named China in Africa: Strategic Overview (October 2009) for the Institute of Developing Economies of the Japan External Trade Organization tracks the reasons behind Chinas successful rise in Africa and argues that Western institutions fail to take into account the true motivations behind Chinese investments in Africa. Namely the pursuit of long term national security and strategic interests over and above the pursuit of profit; and that financial and institutional support provided by the Chinese government to Chinese investors has had the effect of insulating Chinese companies from traditional risk factors that face Western companies, providing them with an important competitive edge in the race to acquire resources in Africa.11

The study aimed to address three main questions. Firstly, are companies from Chinese mainland with large investments in mining, oil and gas (MOG) extraction operations in Africa present in Conservation International (CI)s geographic areas of interest? Secondly, if Chinese companies are present in environmentally sensitive areas which countries and which key companies should CI focus its efforts on with respect to engaging Chinese actors. Thirdly, should CI strategically pursue possible collaboration with select Chinese companies in order to ensure the conservation of biodiversity and the ecosystem services that underpin human wellbeing in Africa and if so how what should the strategy of engagement with said companies be? The structure of this report reflects these three goals. The first section gives a general background of Chinese mineral extraction and resource demands from Africa and a brief overview of the most important Chinese companies with a substantial interest in the mining sectors of the countries studied. The second section illustrates the location of extraction operation in relation to environmentally sensitive sites as defined by the Integrated Biodiversity and Assessment Tool (IBAT), ownership structure, and what each company is extracting. The third and final section evaluates various strategic options for approaching firms and recommends the best course of action for establishing a partnership with these firms so as to help them minimise any negative environmental impact their operations might have.

10

Study Approach
Scope of work
This report focused on eleven African countries where CI has a strong presence and/or the capacity to work with partners on the ground. The countries investigated included Angola, Botswana, Democratic Republic of Congo (DRC), Equatorial Guinea, Liberia, Madagascar, Mozambique, Namibia, South Africa, Zambia and Zimbabwe. These countries are broken up into four sub-regions, West Africa, Central Africa, East Africa and Southern Africa. Exploration and prospecting activities were not included in this report. Only sites where mines already exist or are confirmed to be underdeveloped were included in this report. Due to the large number of smaller Chinese operators, their rapidly changing profile, and limited resources this report only focused on large scale investments in MOG extraction by Chinese interests, both public and private above the value of US$10 million. The report did not include the beneficiation and processing of mined ore. Further study on Chinese prospecting operations and prospecting and exploration operations in Africa in general would be useful and informative due to the scale of such operations currently taking place in the region.

Methodology
The study relied primarily on desktop research and informal interviews with experts in relevant fields to gather information on this ever evolving and poorly understood topic. Numerous experts in the field of Sino-African relations in addition to CI staff on the ground in the relevant countries were contacted and informal telephonic and face to face discussions were carried out. A number of other experts from the mining industry and other disciplines such as the head of the Namibian Chamber of Mines, geologists, African journalists and Sino-African researchers have also been contacted and interviewed for this report. Desktop sources included but were not limited to academic articles, media sources (both international and African) and mining newswires. Particular attention was given to African media sources as they are closer to the physical location of these investments.

11

Background
Since 1997 the Chinese governments economic policy has been to establish a socialist market economy, an important component of this is converting SOEs into more independent profit-seeking corporations in which the state has a controlling share.12 An important objective of the Chinese government since Deng Xiaopings economic reforms is to increase the number of Chinese Global Fortune 500 companies and multinationals. As of 2008 China has turned eight of its large SOEs into such companies. The State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) have been given the mandate to carry this out.13 This means that unless one is negotiating with a truly private Chinese firm one is not negotiating with an organisation whose immediate goal is profit although that is an increasingly important objective of Chinese SOEs- but more likely with an organisation that by and large seeks to serve the long term economic policy priorities of the Chinese government as its primary objective.14 The Chinese government has had some success at achieving this. A growing number of Chinese extraction companies are now comparable in size to their OECD-based counterparts and are becoming increasingly integrated into world markets. State owned mining firms in China are currently going through a period of consolidation that is increasing their economies of scale and making them more internationally competitive. In addition ever more Chinese mining firms are listing themselves on international stock markets to reduce their reliance on Chinese state owned banks by giving them access international capital.15

China in Africa and mining

Chinas rapid economic growth and vast size has turned the country into the prime driver of world commodity prices. A number of African countries have become important beneficiaries of this trend. China has moved from a net exporter of many primary resources in the 1970s and 1980s into a massive importer of most raw materials today.16 Chinas domestic sources of oil and minerals met most of the countrys needs until the late 1990s.17 Since then China has become increasingly reliant on imports of raw materials. Despite producing five percent of total world oil production in 2007 China consumed nine percent of total world oil production in the same year, thereby necessitating the importation of four percent of world oil production to make up the short fall. By 2008 oil imports exceed domestic production for the first time.18 In 2008 China imported US$100 12

Percentage consumption of annual global output of base metals in 20081

China aluminium Rest of the world

iron & steel

copper

zinc

lead 0% 50% 100%

billion worth of base metals representing more than twenty five percent of the worlds production of base metals.19 Almost all of Chinas cobalt (a strategic metal used in the production of super-alloys) comes from Africa, predominantly the DRC. Most of Chinas manganese imports come from the three African countries of Gabon, Ghana, and South Africa. South Africa, Madagascar, and Sudan each supply around one seventh of Chinas chromium. Chromium is an important strategic resource that is rare in China. Currently China imports over ninety-five percent of its chromium.20 Gabon, Cameroon and the DRC are also important suppliers of hardwood timber to China. Sub-Saharan Africa is a small but increasingly important supplier of iron ore and copper to China. 21 China has been showing increasing interest in acquiring mineral deposits throughout southern Africa particularly in Zambia, South Africa, Tanzania, and Mozambique. Currently a large prospecting boom is taking place throughout southern Africa with Chinese interests making by far the largest part of this boom.22 Ever since Australian mining giant Rio Tinto was accused by the Chinese government of bribery and espionage in an effort to fix Chinese iron ore prices - in July 2009,23 Chinese companies have had greater reason to expand and acquire more overseas iron ore reserves to reduce Chinas reliance on imports from foreign firms.24 Companies such as Minmetals, Wuhan Iron & Steel Group (WISCO), Chinalco, and other Chinese mining giants have been rapidly expanding their overseas holdings so as to meet this goal. One common aspect of almost all the deals that Chinese SOEs who are involved in by far the largest number of Chinese owned extraction operations- have entered into is the common use of joint venture partnerships with local African companies. Often targeted companies are government owned enterprises of the host African country where the operation is situated.

By the end of 1978, Chinese officials had signed seventyfour contracts with Japan to finance turn-key projects that would form the backbone of Chinas modernization. All would be repaid in oil. - Brautigam (2009): 47

In return for the necessary equipment, technical training and financing Chinese producers get a secure source of important raw materials. This is a model that the Chinese have learned from their own developmental experience, primarily from Japan prior to the reform and opening up of the Chinese economy in 1978.25 Chinese extraction companies like this model both because it is one that they have firsthand experience with, but also because it brings on board domestic players from host African countries that have an interest in protecting their investments. These same actors -their local joint venture partners- also have access to local knowledge that Chinese extraction companies are well aware they do not have. Thereby decreasing risks whilst, securing a source of raw materials as well as allowing the Chinese to pay in Chinese goods and services. This often gives Chinese firms the opportunity to gain a foot hold in many African countries.

13

China in Africa and the environment

A persistent and widespread belief amongst NGOs and other sustainable development stakeholders is that Chinese mining and extraction companies do not take social and environmental issues seriously.26 It is true that in the past, particularly in the early years of Chinas opening up and industrialisation in the 70s and 80s, Chinese firms had very little (if any) regard for CSR and the environment in China. However these days there is a growing interest in CSR and the environment in China and this interest has largely been driven by the state. The steps that most companies have taken to improve their social and environmental performance are comparable to those taken by western companies in the late 1990s.27 However basic social and environmental regulatory compliance in China is still weak with much room for improvement as Shankelman (2009) points out:
[T]hey have not yet developed detailed policies or procedures for impact mitigation so that projects can be evaluated in advance, nor have they undertaken detailed analyses of their impacts or of the complexities of operating in countries with different cultures, where the support of officials is no guarantee of a license to operate.28

Shankelman (2009) also notes that while the pressure for western companies to improve their environmental policies came from NGOs, for Chinese firms pressure comes from government29 and popular opinion.ix As the Chinese have become increasingly concerned about improving their commitment to CSR they have developed a number of new innovations to encourage polluting industries to clean up their act. One such innovation was the Green Credit Policy which is designed to improve the compliance of Chinese companies with Chinas environmental regulations by limiting their access to commercial credit if they fail to sufficiently implement mandatory environmental assessments or are unable to pass pollution checks.30 Another two innovations are the Shanghai Corporate Social Responsibility Notice and Shanghai Environmental Disclosure Guidelines created by the Shanghai Stock Exchange in 2008 to create a voluntary forum for Chinese investors to confidently invest in companies with good environmental records;31 however very few Chinese companies have as yet chosen to sign up to the Shanghai Environmental Disclosure Guidelines. There is a small cross-section of very large companies that are developing the same type of management systems as established leading multinationals, but this does not necessarily translate into good regulatory compliance. Most environmental management skills are focused on resource efficiency and pollution control with virtually no mention of biodiversity protection at least this has not emerged at sustainability conferences (Sean Gilbert, pers. Comm. Global Reporting Initiative - Beijing). In cases where Chinese companies are operating in countries with poorly developed environmental protection regulations Chinese companies will often adopt Chinese environmental regulations as a way to set at least a basic set of environmental standards so as to mitigate risk in case they are accused of intolerable environmental degradation.
ix

Instances where popular opinion has changed the environmental policies of Chinese companies is often the result of a wide spread public outcry over a particular issue often leading to public protests. This was the case in 2007 in Xiamen, Fujian Province where the local government agreed to relocate a paraxylene chemical plant after repeated protests by local residents.

14

Need for Cooperation? Chinese companies are aware that their environmental record both within and outside China is an important issue and that by improving their environmental and social policies and practices they are reducing risks and improving their corporate image. Some western mining companies have formed partnerships with conservation NGOs to assist in strengthening their environmental commitments and ensure that their activities are aligned with international good practice that guides how the company should address environmental and social issues. CI has a history of engaging mining oil and gas companies through its Centre for Environmental Leadership and Business (CELB). CI has worked with eleven different mining companies in fourteen different countries over the past decade. CI engages partners in the mining industry who demonstrate a genuine commitment to pursuing a leadership position on environmental sustainability and corporate social responsibility. CI has provided objective, science-based advice to companies focused on: strategy and policy development, environmental risk identification and management, the development of field demonstration models and conservation investments. Based on the heavy reliance by Chinese MOG companies of investing in Africa through joint ventures it is possible that Chinese partners may be required to comply with the environmental protection policies of the joint venture partner. Where these policies are aligned with international good practice the potential associated environmental and social risks would presumably be addressed through the partner companys existing regulatory structures.

15

Country Profiles
The countries highlighted on the map of Africa in turquoise indicate countries that are located within the region discussed but are not described in this report whilst countries investigated are highlighted in green

West Africa: Liberia

Liberia

1. Bong Mines Co., Ltd. Bong Mines Co., Ltd. Ownership: WISCO (though ownership of China Union) Mining: Iron ore Status: Currently carrying out their EIA, ESIA, and other studies for EMP and ESMP

In late April 2010 China Union, a joint venture between Wuhan Iron and Steel (WISCO) and ChinaAfrica Development Fund (CAD Fund), officially launched the Bong iron ore mining project. WISCO has bought a 60% controlling share from CAD Fund for US$68.46 million; in total the Chinese have 16

invested US$2.6 billion into the project. This is the largest investment in Liberia since the end of the second Liberian Civil War in 2003.32 33 34 The project will give WISCO access to 1.31 billion tons of proven iron ore deposits and a potential 2.78 billion tons of as yet unproven reserves of iron ore. The mine is connected to the countrys ports by an 80km railway.35 The government of Liberia has signed a 25 year mineral development agreement with the joint venture in 2008. The project is projected to create over 20,000 jobs. The Bong Mine lies within both an endemic bird area and a biodiversity hotspot. Given the scale of the Bong Mine project, its location in an environmentally sensitive region, CIs strong presence in Liberia, and the number of other projects of interest that WISCO is involved in, mean that this should be a high interest project to CI in the context of a Sino-African environmental mining impact mitigation project.

17

Middle Africa:

Angola

1. Block 15 2. Block 17 3. Block 18 Apart from oil and gas extraction operations run by directly or indirectly by China Sonangol and its subsidiaries there are, as yet, no significant Chinese mining operations in Angola. A report by the U.S.China Economic & Security Review Commission36 postulates that it is part of a collection of investments and companies all run from 88 Queensway, Hong Kong; that have ties to Chinese state-owned enterprises and government agencies, including China International Trust and Investment Company (CITIC), and China National Petrochemical Corporation (Sinopec), and possibly Chinas intelligence apparatus.37 In September 2009 Sinopec and CNOOC attempted to buy a 20 percent stake of Marathon Oils stake in block 32 for US$1.3 billion. However this deal was blocked by the Angolan government owned oil firm Sonangol.38 Sonangol-Sinopec International (SSI) is a joint venture established in March 2006 between 18

China Sonangol - which holds a 45 percent equity stake - and Chinas China Petroleum & Chemical Corporation (Sinopec) which holds the remaining 55 percent of the venture.39 SSI has a 20 percent stake in block 15, a 27.5 percent stake in block 17 and a 40 percent stake in block 18. Block 17 and 18 are estimated to have a combined 4 billion barrels of oil.40 China Sonangol currently owns shares in blocks 3, 31 and 32. In February 2011, China Sonangol was awarded three deep-water concessions in blocks 19, 20 and 38.41 Angola has traded its oil concessions to the Chinese for infrastructure development; using its oil reserves to take out US$8- 12 billion worth of loans from China for that purpose between 2004 and 2007.42 All three of these oil and gas blocks are located offshore in areas that are not marked by IBAT as being of any particular biodiversity importance and therefore should not be of too much interest to CI.

Congo, The Democratic Republic of

1. Dima mining complex Although there is a substantial Chinese presence in the Democratic Republic of the Congos (DRC) mining sector, very few of them are directly engaged in mining activities. Most are involved in the beneficiation of minerals and choose to buy their unprocessed ore from many freelance miners in the locality of their operations. In one report published by Bloomberg Moise Katumbi, the governor of Katanga province estimated that at least 60 of the provinces 75 processing plants are owned by Chinese nationals.43 These firms are predominantly privately owned operations that often flout local labour and environmental laws.44 45 Because these firms are not directly involved in the mining of ore they are excluded from this report. 46 Due to various administrative challenges the implementation of EITI in the DRC has been stalled. As such very few Chinese companies operating in the DRC are aware of EITI to the extent that none of the respondents to a study undertaken by the Centre for Chinese Studies at Stellenbosch University had heard of it or its core principles.47 However in the same study they expressed a strong interest in learning more about and possibly implementing EITI but also stated their scepticism at their ability to implement it under current conditions in the DRC; noting that poor governance as well as high levels of corruption in the mining sector would complicate their efforts at implementing EITI.

19

DIMA mining complex Ownership: Sicomines Mining: Copper and Cobalt Status: will come on line, at the earliest, in 2013.

The Dima mining complex refers to a collection of three open pit copper mines (Mashamba West, Mashamba East, and the Dikuluwe mine) outside of the town of Kolwezi in the western area of Katanga province (see map).48 It is estimated that the complex contains 10.6 million metric tons of copper and 626,619 metric tons of cobalt. In a deal initially worth US$ 9 billion at inception in April 2008, and funded by Chinas EXIM Bank, US$3 billion would go into rehabilitating the mining complex whilst the remaining US$6 billion was to be used for infrastructure investments across the country. The deal is structured as a resource backed loan. Critics of the deal believe that the total value of the mine could be well in excess of US$9 billion.49 The IMF criticized the deal stating that it would disqualify it from the World Banks debt cancellation program as the deal would mean that the country would be taking on new debts after the old ones had just been cancelled by the bank. In May 2009 US$3 billion of the project, the mining phase, was put on hold while mineral concession feasibility studies were being completed.50 The DIMA mining complex is located in a high biodiversity wilderness area.

Equatorial Guinea

Block S

In February 2006, China National Offshore Oil Corporation (CNOOC) Africa Limited, a subsidiary of the China National Offshore Oil Company (CNOOC) Ltd, signed a five year long production sharing contract (PSC) for an oil block in Equatorial Guinea. Currently CNOOC is drilling for oil in Block S51&52 which covers an area of approximately 2,287km2 and contains the Ceiba oil field and is capable of producing 40,000 barrels of oil per day.53 In 2007 China was Equatorial Guineas largest export market, accounting for 18.3% of the total export earnings, mostly from oil.54

20

East Africa

Madagascar

1. Soalala 2. Block 2104 3. Block 3113 Soalala project Ownership: Mining: Status: Location: of Mahajanga. WISCO Guangxin iron ore purchase complete Soalala, about 100km west

In May 2010, through a joint venture company named WISCO Guangxin, Wuhan Iron & Steel Group (WISCO) paid $100 million for iron-ore exploration rights55 in the Soalala iron-ore deposit roughly 100km west of Mahajanga. WISCO Guangxin is a 21

joint venture company of which 42 percent is owned by WISCO, 38 percent is owned by the Guangdong Foreign Trade Group Co and 20 percent by Hong Kong based Kam Hing International Holdings. This deal gives Wuhan Steel access to 800 million tons of iron ore deposits. The project covers an area of more than 430km2.56 Thirty percent of the projects capital comes from the partners that make up the joint venture with the remaining 70 percent coming from EXIM Bank. The Soalala iron ore project is located within a key biodiversity area, a biodiversity hotspot and an endemic bird area. The project is located close to the Baie De Baly National Park.

Block 3113 and Block 2104 Ownership: Shaanxi Yanchang Petroleum Group Mining: oil & gas Status: early stages of exploitation Location: see map In the early 2000s Chinese oil companies formed alliances with local partners to develop oilfields on the island. These operations were expected to produce its first barrel of crude in 2007.57 However in June 2006, Sinopec and CNPC halted negotiations with Madagascar Oil for participating in the exploration and development of heavy oil in Madagascar because of doubts over the reserve size of the Bemolanga oilfield.58 In January 2010, Shaanxi Yanchang Petroleum Group struck a deal with Sino Union Energy Investment Corp (Hong Kong) to allow Yanchang to tap two oil blocks -- block 3113 and block 2104.59 60 Due to the wide area that block 3113 and block 2104 lie within and the environmental sensitivity of the area it would be worth approaching Yanchang to both illustrate the areas environmental sensitivity and how they might be able to mitigate the negative effects of their operations in the area.

22

Mozambique

1. Riversdale Zambeze project

Apart from the Riversdale Zambeze project that is currently in the early stages of development, no other large scale Chinese mining investments of note in Mozambique have been made public. Former Prime Minister Luisa Diogo of Mozambique gave the following reason for Chinas apparent lack of interest in Mozambiques mineral reserves when she stated that: China wants Mozambique to give some guarantees, like natural resources, which we cannot do under Mozambican law. Any use of natural resources -- minerals, land, fish, timber -- must be based on project proposals. By law, Mozambique cannot set aside resources for anyone, and Mozambique is very careful in following the laws. - Luisa Diogo, Speech at SOAS, 24 November 201061 This is a clear indication that Chinas strategy of gaining access to resources by securing guarantees to access them is not compatible with the law or the business culture of a number of African countries. Riversdale Zambeze project Ownership: WISCO has signed a non-binding memorandum of understanding to buy 40% of the operation. Mining: coal Status: early stages of mine development, feasibility study is expected to be completed by the end of 2012, mine is estimated to be online in 2014. Location: lower sections of the Zambezi River, will be located somewhere in a 24,700 62 hectare area between Tambara and Chinde (spaced roughly 280km from each other).63

WISCO bought a 40 percent equity stake in the Zambeze project from the Austrailian based company Riversdale for US$800 million. The deal gives WISCO the right to buy 40 percent of the coking coal produced by the mine. Riversdale has also signed deal with the China Communications Construction Company (CCCC) to conduct a mine-to-ship logistics study. The US$800 million will be paid in three phases with the first US$200 million paid upon signing the deal, a further US$150 million will be payable upon the completion of a commercial feasibility study and on condition that the mine is able to produce more than 30 million metric tons of coal a year. The last and final payment will be payable when the 23

project is has obtained all the necessary regulatory approvals, including its environmental impact assessment.64 However it is important to note that Australian mining giant Rio Tinto and Brazilian mining giant Vale are currently looking to purchase Riversdale.65 Should this happen then there is a good chance that WISCO will be dropped from the project. The mine is estimated to have 9 billion metric tons of coal and is projected to produce 45 million metric tons a year66 but could be capable of producing as much as 90 million metric tons a year. The lower section of the Zambezi River where the project is likely to be located is an endemic bird area. Substantial parts of the 24,700 hectare area running between Tambara and Chinde are also high biodiversity wilderness areas or bio diversity hotspots. Due to the fact that there is only one mine of significance with any degree of Chinese ownership being opened up in the country and that mine being a joint venture with an Australian firm that is dealing with the environmental affairs of the mine it is unnecessary for CI to approach the Chinese partners WISCO. This is not a project for CI engage firms within the context of CIs planned engagement with Chinese extraction companies in Africa.

Zambia

1. 2. 3. 4. 5. 6.

Chambishi Luanshya Mpongwe Chinese Collum Kabwe Munali

Of all the African countries looked at in this report Zambia has the most advanced engagement with China. Around 26 percent of Zambian copper exports and 100 percent of Zambias manganese exports went to China in 2006.67 Zambia also has one of the largest deposits of copper in the world and in 2007 was the fourth largest producer of the metal.68 However Chinas long and intensive relationship with Zambia has not been without its problems. In April 2005 fifty-one employees at a Chinese-owned explosives plant were killed in an explosion that levelled the plant. Five Zambian workers were shot and wounded by a panicked Chinese manager at the Chamibishi mine that same year. The issue of Chinese investment and labour relations on Chinese24

owned mines became one of the biggest issues of the 2006 Zambian presidential elections. Opposition candidate, Michael Sata, took a strong stance against Chinese operations in Zambia and would abandon Zambias recognition of the PRC should he be elected president. 69 Although Sata had one of the strongest electoral showings in his career he still lost by a substantial margin.

Chambishi and Luanshya mines Mining: Owned by: Status: Location: copper China Non Ferrous Metal Company (CNMC)70 both mines are online and active. in and around Luanshya, Zambia

CNFC purchased 85 percent of the Chambishi copper mine in 1998 for US$20 million and invested a further US$130 million in rehabilitating the mine, reopening it in 2003. The purchase of the Chambishi mine was one of Chinas first mining investments outside of China.71 In total more than US$200 million has been invested into the mine pushing up the mines production capacity to 150,000 tons of copper per year in 2008.72 The Musakashi Tailing Dam, situated 10km north of the mine, is due to be expanded to a 700m long, 21.5m high dam with a storage capacity of 23 million tons contaminated material from the mining site.73 Both the Chambishi mine and the Luanshya mine are located within a high biodiversity wilderness area. Mpongwe mine Mining: Owned by: Status: Location: copper and other minerals CNMC Mpongwe Mining Company Ltd. initial start-up stage 10km west of Nuala, Copperbelt province74

In April 2010 CNMC entered into a joint venture with Sanshika Bulalo Enterprises Limited of Zambia to found CNMC Mpongwe Mining Company Ltd. In the deal CNMC would get an 85% equity stake in the new venture with Sanshika receiving the other 15% equity stake. Although the project is still in its early stages three copper sites, one gold site, one uranium site and one graphite site have been confirmed.75 The Mpongwe mine is located within a high biodiversity wilderness area. Chinese Collum Mine Mining: Owned by: Status: Location: coal privately owned online Sinazongwe, Zambia 25

The privately owned Chinese Collum Mine in Sinazongwe district was established by Chinese national Xu Jianxue76 and his four brothers; each brother invested US$5 million into the venture in 2003 when the mine came online. The mine has been beset by environmental and labour relations problems in the past couple of years. In February 2010 a Chinese manager at the mine was murdered by a Zambian employee.77 In October 2010 eleven Zambian mine workers were shot and wounded by a Chinese manager while complaining to mine owners of dangerous working conditions and poor pay.78 79 In February 2011 local residents staged a demonstration protesting that the mine was destroying their lively hoods and health by discharging coal effluent in the Sikalamba River. The river is used extensively by local communities as the main source of drinking water for themselves and their livestock. The mine has also been accused of causing numerous out-brakes of cholera in the surrounding area.80 The Chinese Collum Mine is located within a high biodiversity wilderness area. Kabwe mine Mining: Owned by: Status: Location: manganese Chiman Manufacturing Ltd. (Private company) closed indefinitely Kabwe, Zambia

Chiman Manufacturing Ltd. began developing the mine with 4 million tons of proven manganese deposits in 2004.81 By early July 2007 the firm had invested US$10 million into the project and employed 120 Zambians and 11 Chinese nationals. 82 By mid July 2007 the Zambian government shut the mine down indefinitely due to excessively high levels of air pollution produced by the mine.83 84 The Kabwe mine is/was located a high biodiversity wilderness area.

Munali mine Mining: Owned by: Status: Location: nickel Jinchuan Group (majority holding) online 60km south of Lusaka

The Muali mine was run and owned by the Australian company Albidon Ltd. until it was closed in 2009 due to the financial crisis. The mine was reopened in March 2010 after Jinchuan Group bought a majority share in the mine and invested a further US$37million into rehabilitating the mine.85 The mine is expected to sustain operations for the next ten years.86 The Munali mine is located on the edge of a key biodiversity area and within a high biodiversity wilderness area. 26

Zimbabwe 1. Kanyembe Uranium 2. Ngezi Platinum Mine 3. Marange diamond fields Numerious chrome smelters in Zimbabwe are owned by Chinese nationals. The largest of which is Zimasco which was purchased by Sinosteel Corporation of China in December 2007 for US$200 million.87 Much the like the situation in the DRC, Chinese processing firms do not mine their ore themselves but prefer to purchase their ore from suppliers, most of whom are freelance miners. Despite having some of the largest and richest deposits of platinum group metals and chromium in the world and embarking on a Look East policy the Zimbabwe government has been unable to attracted significant Chinese investment in its mining sector. This is largely due to the unreliability of the Zimbabwean government and its inability to guarantee the safety of Chinese assets or pay for large capital intensive deals.88 Many of the investments and loans that the country has been able to obtain in the past ten years have used access to resources to back up the loans due to the countrys lack of ability to repay the loans in any other form. This includes a number of loans given by Chinese suppliers of military hardware such as NORINCO in which sales of weapons to the Zimbabwean army were guaranteed by Chinese loans to Zimbabwe that were backed up by Zimbabwean mineral deposits.89 In an article published by SW Radio Africa news professor John Makumbe of the University of Zimbabwe has stated that Mugabes political party, ZANU PF, will make every effort to maintain its relationship with the Chinese, not only because the country is one of Mugabes key supporters on the United Nations Security Council. China has used its position as a permanent member of the Security Council to block any action against the ZANU PF regime.90 However Chinas real involvement in Zimbabwes mining industry and its economy in general -although growing- remains relatively small. Due to the controversial nature of many of the mines in Zimbabwe, particularly the diamond mines in Marange, it is advised that CI does not get involved in projects in the country. Kanyembe Uranium Mining: Owned by: uranium China Uranium Corporation (through Afri- Sino Resources Ltd) 27

Status: Location:

initial start-up stage 60km south of Lusaka

Local media reports in Zimbabwe have stated that the China Uranium Corporation has established a joint venture with Zimbabwes state owned mining company the Zimbabwe Mining Development Corporation (ZMDC) to exploit a uranium deposit close to the village of Kanyembe. The deposit is in a 500m by 1km area and lays 400m-deep in a location just south of Kanyembe village in the Dande Communal Lands in the far north of Zimbabwe close to the Zambian, Mozambique boarder. It is estimated that the deposit could yield up to 1500 metric tons of uranium.91 Afri-Sino Resources is a joint venture between the China Uranium Corporation, New On Investments and the ZMDC.92 The site was originally to be mined by the German company Saarberg Interplan. However Saarberg abandoned the project in 1992 due to low uranium prices. The Zimbabwean government has had a difficult time finding new investors for the project partly due to the complex nature of the deposit. The deposit is situated within a physically small area lying below a natural reservoir. 93 The Kanyembe site located within a high biodiversity wilderness area and just outside of a key biodiversity area. Ngezi Platinum Mine Mining: Owned by: Status: Location: platinium NORINCO Group established mine Ngezi, Great Dyke, Zimbabwe

Chinas state owned NORINCO Group bought the Zimbabwean Armys stake in Zimplats 70 percent share in the Ngezi Platinum Mine.94 NORINCO is a large diversified SOE that specialises in the exportation of weapons with no direct ties to the Chinese Army. Norinco has also bought a 60 percent stake in a joint venture with the Zimbabwean Army and ZMDC to prospect for chromium in the Ngezi area.95 The Ngezi mine is located within a high biodiversity wilderness area. Anjin Marange diamond mine Mining: Owned by: Status: Location: diamonds Anjin Investments Private Limited operational Marange diamond fields, 90km south west of Mutare

Anjin is a 50/50 percent joint venture between the Zimbabwean government and Anhui Foreign Economic Construction (Group) Co. Ltd to mine the highly controversial Marange diamond fields (otherwise known as the Chiadzwa diamond fields). In July 2010 Anjin completed and submitted an 28

environmental impact assessment outlining its commitment to and compliance with ISO 14 001:2001 Environmental Management Standards.96 As of March 2011 Anjin was in the process of obtaining a certificated of compliance with the minimum Kimberly Process requirements.97 Anjin has established a large modern diamond mining operation in the area98 and is one of two Chinese owned operations in the Marange fields. The other company being Sino-Zim which has recently laid off most of its workers citing concerns that its operation in Marange might not have enough resources to be viable99 and as such is not a feature of this report. Numerous allegations of gross human rights abuses by members of the Zimbabwean army have taken place in the area in an effort to exploit the diamond deposits.100 101 The Marange diamond fields lay within a high biodiversity wilderness area and on the south western outskirts of an endemic bird area and biodiversity hotspot. Due to the controversy around the Marange diamond fields amid the aforementioned human rights abuses it is strongly recommended that CI does not involve its self with any project associated with the area.

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Southern Africa:

Botswana

As of February 2011 there are no major Chinese mining operations in Botswana. However there are currently many Chinese prospecting operations going on in Botswana. This is part of a wider increase in the number of prospectors and prospecting companies conducting surveys across southern Africa. The Increase in the number of Chinese prospectors or prospectors prospecting on behalf of Chinese firms has been disproportionally larger.102 Botswana has issued more than 100 uranium prospecting licences alone in the past few years. One hundred and twelve prospecting licences were issued to prospect in the Central Kalahari Game Reserve; with sixteen of those licences being awarded for uranium exploration and forty for coal exploration.103

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Namibia 1. Marenica Uranium Project As of February 2011 there are no Chinese extraction operations in Namibia. The explanation given for this is that Chinese and Namibian business and government styles are too incompatible and the stakes for the Chinese are too low in Namibia. There is a feeling amongst Namibian mining companies that Chinese companies expect the Namibian government to dictate joint venture terms to Namibian companies on the Chinese behalf. This approach by the Chinese has, in the view of the Namibians, been a big barrier to their entry into the countries mining sector.104 A check of all of the mining contracts currently granted or in the process of being granted by the Namibian Ministry of Mines and Energy confirms this.105 However China remains interested in investing in Namibia and the Namibian mining sector. Of particular interest seems to be gaining access to the countrys substantial deposits of uranium. China is currently building twenty four nuclear reactors, more than the rest of the world combined.106 In 2010 Hanlong Energy Limited signed a relatively small debt and equity deal with Marenica Energy worth 5 million Australian dollars to help develop the Marenica Uranium project in the centre of Damaraland. The project could produce as much as 1,590 metric tons of uranium per annum.107 The Marenica Uranium project is located on the border of a key biodiversity area.

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South Africa 1. Grootvlei 2. Orkney 3. Frischgewaagd-Ledig 4. i. Tweefontein ii. Dilokong 5. Buffelsfontein 6. Blue Ridge 7. Sheba 8. Naboom 9. Townlands

Chinese firms are encouraged by the government to grow their investments in Africa and South Africa. - Wang Yi108 Although around 15 percent of the US$150 billion traded between Africa and China in 2010 went to South Africa, Chinas investment in South Africa is remarkably different than it is in other African countries. Despite the best efforts of numerous Chinese firms over the past ten to fifteen years relatively few Chinese firms seem to be able to compete with local firms or adequacy adapt to the countrys strong institutions and stringent labour laws so as to establish a foothold in the country. South Africas complex affirmative action regulations have also been noted as a barrier to entry for Chinese firms interested in investing in the country with at least one large deal involving a Chinese SOE failing because of it.109 However South Africas vast deposits of gold, platinum group metals, manganese, chrome, coal, and vanadium have attracted a slew of Chinese investments in the countrys mining sector. Of all the countries looked at in this report South Africa has the largest number of Chinese mining operations and investments.x Most of the mining investments that Chinese firms have made in the country have been situated in the Bushveld Igneous Complex which has some of the largest deposits of chromium in the world.

A rough calculation of the value of Chinese investments in South African mines in this report is no less then US$1.52 billion. This figure looks likely to expand greatly as China continues to seek mining investments in the country.

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A relatively recent acquisition that is not illustrated on the map is the ownership of South African gold and uranium mining firm Rand Uranium by a collection of Chinese firmsxi through their joint 59.7- 74.7 percent ownership in Australian mining firm Gold One.110 111 Orkney and Grootvlei Ownership: Mining: Status: Location: As yet undisclosed (thought to be Shandong Gold) gold closed established mines in final stages of ownership transfer Orkney Mine: Orkney, North West province112 Grootvlei: Grootvlei Proprietary Mines, Springs, South Africa 113

An as yet unnamed state owned Chinese company is in the final stage of talks to buy the Orkney and Grootvlei gold mines114 in a deal worth US$100 million from a defunct South African gold mining company named Pamodzi.115 A South African company named Aurora currently manages the mines and is bidding to buy the troubled mines from their previous owner in a joint venture with the as yet unknown Chinese company. The High Court has given the liquidators of the company that owned the mines and its prospective Chinese buyer until the 15 August 2011 to finalise the deal. 116 One party involved in the saga the National Union of Mineworkers have accused the liquidators of lying about any interest in the mine from Chinese investors.117 In late May 2011 two of the liquidators have been fired so as to "safeguard the integrity of the liquidation process."118 As the drama around this deal continues it looks increasingly unlikely that the deal will go ahead. It is thought that an SOE named Shandong Gold is the as yet undisclosed Chinese company seeking to purchase the Pamodzi mines.119 Shandong Gold is one of Chinas largest gold mining companies and is directly affiliated with the government of Shandong province.120 The Grootvlei mine currently discharges 100 megalitres of contaminated acidic water a day into the Blesbokspruit river.121 The Blesbokspruit river is one of the largest feeder rivers of the Marievale Wetland which hosts the Marievale bird sanctuary. The Orkney mine is located about 10km outside of a key biodiversity area whilst the Grootvlei mine lays 15km North West from an endemic bird area. Should the deal be completed in due time it would be of interest for CI to approach the owners particularly with regards to assisting them clean up the pollution problem at the Grootvlei mine and improve the mines environmental reputation. However there is a good possibility that the deal with the Chinese might not go ahead due to the complexities and politics around the deal.

xi

The three Chinese firms with a significant interest in Gold One are: Baiyin (a mining and metal smelting group), China-Africa Development Fund (CAD-Fund) and Long March Capital. The geographical location and profile of the Rand Uranium mines were not added because the announcement of the deal was announced when this paper was in its final editing phase.

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Frischgewaagd-Ledig Ownership: Mining: Status: Jinchuan Group Platinum purchased in December 2010.

In one of the largest Chinese investments in Africa the Chinese SOE Jinchuan Group and CAD Fund bought a 45% stake in South African based Wesizwe Platinum for US$877 million. The Chinese have committed to invest a further US$650 million to develop the Frischgewaagd-Ledig mine. All of the platinum group metals produced by the mine will be taken by Junchuang Group. 122 The Frischgewaagd-Ledig mine lies within a key biodiversity area and as such should be of interest to CI for further instigation. Tweefontein Ownership: Mining: Status: Location:

Sinosteel (50% ownership) Chrome operational Steelpoort, Mpumalanga123

In 2006 Sinosteel spent US$230 million to setup a joint venture (Tubatse Chrome Minerals (Pty) Ltd.) with South African firm Samancor with a 50-50 percent ownership structure. Tubatse Chrome Minerals owns the Tubatse Ferrochrome Plant and the Tweefontein Chrome Mine in Steelpoort, Mpumalanga roughly 30km south of the Dilkong chrome mine. Sinosteel estimates that the mine is capable of producing one million metric tons of chrome ore a year with reserves of more than 76 million metric tons. The total production capacity of the nearby Tubatse Ferrocrome Plant is estimated to be 300,000 metric tons a year.124 125 The Tweefontein mine lays 15km south west of a key biodiversity area and within an endemic bird area. This means that the mine lies within an area that is significantly environmentally sensitive and therefore would be of considerable interest to CI.

Dilokong Ownership: Mining: Status: Location: Sinosteel (through joint ownership of ASA Metals) Chrome operational Ragopola, Greater Sekhukhune District Municipality, Limpopo Province126

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A wholly owned subsidiary of Sinosteel, East Aisa Metals Investment, has a 60 percent share in the company that owns and operates the Dilokong mine, ASA Metals. The remaining 40 percent of ASA Metals is owned by the Limpopo Economic Development Enterprise. The Dilokong mine has an annual production capacity of 400,000 metric tons with more than 50 million metric tons of reserve chrome ore. Two large smelters are located within the mine and have an annual production capacity of 120,000 metric tons of ferrochrome. Expansion plans are underway to expand that production capacity to 360,000 metric tons of charge ferrochrome. The mine exports its ferrochrome to China, Europe and other East Asian countries where it is used in the production of stainless steel.127 The Dilokong mine lays 7km south west of a key biodiversity area and within an endemic bird area. The Dilokong mine is of equal interest to CI as the Tweefontein mine that lies 30km north of it.

Buffelsfontein Ownership: Mining: Status: JISCO owns 26.1% Chrome operational

JISCO has ownership of the Buffelsfontein mine through a 26.1% share in International Ferro Metals that it bought for US$30 million. The mine has an annual production of 267,000 tons of ferrochrome. JISCO will receive 50% of the mines ferrochrome production in addition to having marketing rights.128 The Buffelsfontein mine lies a couple of kilometres of a key biodiversity area. The mine is of limited interest to CI although its relatively close proximately to a key biodiversity area might be of some interest for further investigation. Blue Ridge and Sheba Ownership: Ridge Mining (29.9% owned by Zijing Mining Group Co.) Mining: primarily platinum based metals but also gold, and silver

The mines have a reserve of 51 million tons of ore and an estimated life span of 18 years with mining operations starting in late 2008. 129 During the course of writing and researching this paper it was strongly recommended to the author130 that Zijin be looked at as a good case study example. The reasons mentioned were that CI could come in at an early stage as the mine needs to be built. The companys efforts to get its South African project off the ground have been frustrated by South African role-players. The company is trying hard to improve its image as well as make more meaningful changes and is open to suggestions. Further research would however be required to verify this. The Blue Ridge mine lies within no environmentally sensitive areas as

35

shown by IBAT. The Sheba mine lays on the edge of an endemic bird area, a key biodiversity area and a biodiversity hotspot. Both mines would seem to be of very little interest to CI. Naboom Ownership: Mining: Status: Location: Minmetals Chrome completing feasibility study. near Lebowakgomo, Limpopo Province

Minmetals bought the Naboom ferrochrome mine in 2007 for US$6 million.131 Currently EMP, EIA and public participation process for the Naboom mine have been completed using local consulting firm SRK Consulting. 132 The Naboom mine is located within both a key biodiversity area and an endemic bird area. Due to the mines location in a key biodiversity area and an endemic bird area it might be worthwhile for CI to investigate this operation more closely. On the other hand it must be noted that, based up this preliminary investigation, the Naboom mines environmental policies are just as good, if not better then, the majority of other mining operations in South Africa. Townlands Ownership: Mining: Status: Minmetals Chrome final stages of feasibility study.133

Minmetals acquired the Townlands chrome mine when it purchased a 70% share of Vizirama in 2009 which owns the extraction rights for the area.134 It is estimated that the Townlands project will come on line after March 2011 as the company plans to fast track the final stages of the feasibility study to bring the mine online as soon as possible.135 Minmetals has already invested US$81 million in the Townlands deal. The Townlands mine is located just outside of an endemic bird area.

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The Way Forward

The Chinese strategy for entering into mining operations in Africa tends to involve joint ventures. The majority of mining operations undertaken by SOEs as described in this report involve joint ventures, either with a local mining company or a mining company from OECD countries, mostly Australia. There are also a number of joint ventures between SOEs and Hong Kong based firms operating in Africa such as the Soalala project in Madagascar. Chinese companies often seem to expect African governments to facilitate joint ventures with local companies in the extraction industry. In the oil and gas extraction industry in particular both Western and Asian oil companies are finding that African states are calling the shots and that joint venture partnerships including with their rivals or host NOCs are the future.136 Navigating the often complex joint venture agreements between the Chinese and their partners will be difficult. In each case it will be necessary to closely examine the joint venture agreement and understand what each partys requirements are towards the environment before CI (or anyone else) can work out who is responsible for environmental protocols and how to improve them in the context of CI or any other conservation NGO serving as a technical partner. One method of lobbying a Chinese MOG firm to enhance its environmental standards might be through their own joint venture partners. However, as has already been noted, if their partner already has a well-defined environmental policy which is aligned with international good practice then it is possible that they would be required to comply with these policies under the joint venture agreement. This is the case in Australia where a large number of Sino-Australian joint ventures exist in the mining sector. It must be noted thought that the extent to which a Chinese MOG firms joint venture partner is able or willing to influence the environmental polices of their operation would still need to be investigated. However as events in Namibia and Mozambique have shown the way in which prospective Chinese partners go about looking for joint venture partners by expecting local governments to introduce and force these relationships on local African firms does not always prove successful. This approach is often incompatible with the way in which business is done in these countries. Mozambique and Namibia are the two countries where this phenomenon appears to be most noticeable and is one of the best explanations why Chinese investment in their mining sectors is relatively small. Often, as is the case with the DIMA copper and cobalt mine in the DRC, these deals come in the form of resource backed loans whereby the Chinese will give a substantial loan that is to be backed up and repaid in kind with resources. There is a sentiment within China that their involvement in Africa is being unfairly over examined whilst other emerging powers, such as India and Brazil, with growing investment profiles in Africa are being largely ignored. The fact that the biggest driver of research into Chinas growing presence in Africa comes from Western countries, most notably the United States and the United Kingdom, only serves to reinforce Chinese suspicions. Western NGOs are already viewed by the Chinese government and Chinese Communist Party as a fifth column of Western interests and so are treated with some suspicion.137 For CI, a Washington based NGO, this means that any unannounced overtures to Chinese companies, particularly to SOEs, may be met with resistance. However environmental NGOs such as CI 37

and WWF are treated with greater deference than other NGOs. The high esteem that China has for the WWF is a good example of that. Often it is the case that Chinese firms will simply revert to the best developed set of environmental regulations based on where the project is located. If the project is located in a country with relatively undeveloped or no environmental regulations then the Chinese joint venture partner is likely to insist that Chinese regulations be adhered to; as they are likely to be better developed then the host countries regulations, containing many of the host countries regulation as well as containing relatively higher standard Chinese regulations. If it is located in a developed country with sophisticated environmental regulations like Canada or South Africa then it is likely that they will adhere to those as they set the bar very high relative to Chinese regulation. Whilst SOEs might be interested in learning more about and implementing EITI and CSR than private firms they are also more susceptible to being affected and influenced by political sentiments felt by the Chinese government. If the Chinese government, and by extension Chinese SOEs, feel that they are being unfairly treated, particularly by western institutions, in their operations and interactions in Africa then it is unlikely that they will be receptive to unsolicited overtures by western based organisations to engage with them in an African context. There is also a growing suspicion in African countries of western and Chinese insertions collaborating and coordinating their activities within Africa without their blessing and involvement. The best way to overcome these problems would be to approach Chinese companies through African governments on a country by country basis, using CIs already well developed relationship with these governments.

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Projects of interest
Of the eleven countries looked at in this report three stand out for particular attention. Of the 27 extraction operations looked at in this report the operations of greatest interest to CI are: Soalala iron ore mine in Madagascar run by WISCO Sheba mine in South Africa run by Zijin The Tweefontein and Dilokong chrome mine in South Africa run by Sinosteel The Frischgewaagd-Ledig platinum mine run by Jinchuan Group in South Africa Bong Mines in Liberia run by China Union mining iron ore

It is also recommended that CI monitors the following projects due to the environmentally sensitive geographical areas they could affect and the still early formative state of the projects: Muali mine in Zambia run by Jinchuan Group Riversdale Zambeze project in Mozambique Oil blocks 3113 and 2104 in Madagascar being done by Shaanxi Yanchang Petroleum Group

Focus Justification: Soalala iron ore mine: Due to the mines location within a key biodiversity area, a biodiversity hotspot and an endemic bird area as well as its close proximity to the Baie De Baly National Park there is a strong environmental case to be made for engagement. CIs strong presence in Madagascar and the involvement of Chinese SOE WISCO in the project are additional reasons. Bong Mines: The Bong mines location within an environmentally sensitive region of Liberia and CIs strong presence in the country mean that this project should be of considerable interest to CI. Another factor is that the company running the project, China Union, is a subsidiary of WISCO (a company that is already of interest to CI due to its Soalala project in Madagascar) adds emphasis to this projects importance.

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The Tweefontein and Dilokong chrome mine: The Tweefontein and Dilokong mines close location to a key biodiversity area (15km and 7km respectively) as well as being within an endemic bird area illustrate the fragility of the local environment they might be effecting. Their close proximity to each other, being only 30km apart is also an important factor. Both mines are located in the north of South Africa were the largest concentration of Chinese owned mines are located and where CI has its African head quarters and a very strong presence as well as a long legacy of working with South African mining companies. The operations are owned by Sinosteel, one of the largest and most important ferrous-metal producers and traders in China.xii The Frischgewaagd-Ledig platinum mine: The scale of Jinchuan Group and the size of the companys investment (US$877 million) in the South African firm operating the mine as well as the mines location within a key biodiversity area are three of the reasons that highlight the mines importance. The final factor is the aforementioned location of the mine in South Africa and the strength of CIs presence in the country in addition to its established track record of working with the South African mining industry.

Two companies stand out in terms of the scale, location, nature and potential environmental impact of their projects in the countries looked at in this report, WISCO and Sinosteel. CI should seek to establish a relationship - or at least dialogue with - these two companies. Additionally CI should seek to create a relationship with Chinese financial institutions that are often responsible for financing these deals and might be more sympathetic to the importance of the environment; institutions such as CAD-Fund, China Construction Bank and the Development Bank of China. Two countries that had surprisingly little in the way of large, established Chinese extraction activities in environmentally sensitive areas are the DRC and Angola. There seems to be a strong but mistaken belief that the Chinese mining presence in these two countries is vast. Whilst there are certainly a number of very large and important extraction operations and a substantial small to micro-scale mining activitiesxiii they are either all off shore in the deep ocean as is the case in Angola - or there is only one, but very large, operation in the DRC that has not yet taken off. Neither of these projects are located in particularly environmentally sensitive areasxiv particularly when compared to the sensitivity of the areas that the Bong and Soalala mines are located in.

xii

An important source of information for any further interest in this and other South Africa based projects would be the EITI and environmental reports that have to be compiled before any mining project can go ahead. xiii It is noted that CI should not focus on operations with an investment value of less than US$5 million as they are too numerous to keep track of and the informal and chaotic nature of the companies often engaged in such small scale mining would be too difficult at this stage for CI to work with. xiv It must be pointed out that whilst the Dima mining complex in the DRC is not in a particularly sensitive area it is located in a much larger high biodiversity wilderness area that stretches for many hundreds if not thousands of kilometres that is known for its abundance of wildlife.

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Approaching Chinese companies

Should CI wish to engage Chinese firms in partnership to ensure conservation of important biodiversity and ecosystem services the following section discusses which mines and companies would be of greatest interest to CI and what the best strategy of engagement might be. Five possible strategies of approach 1. Approach the firms directly. This approach would involve directly contacting Chinese firms at their main offices in China or their regional offices in Africa. Based on the experiences of other organisations and individuals this approach would be considered less effective. It is even conceivable that an unsolicited overture to a Chinese company (particularly if it is an SOE) might make it even more difficult to approach them in the future. There is a possibility that they will grant an audience and organise a meeting only to allow the organisation approaching them to save face. If this happens then it is possible that it would only become apparent to the approaching organisation that they are unlikely to make any progress after considerable period of time and amount of resources have been wasted in pursuing that company. It is unlikely that a Chinese executive would want to risk working with a western NGO without any political cover should things go wrong or that NGO fall out of favour with Beijing or the relevant African government. There is a good chance that particular companies would be inclined to view enacting EITI and other environmental impact mitigation policies as an added overhead that would reduce their competitiveness both in China and internationally. However there is a growing interest in learning more about EITI and other such environmental policies amongst Chinese companies. This is partly due to an increasing awareness of environmental issues within China on a political level. 2. Lobby the government in Beijing through CIs office there, introducing the idea of working with CI in Africa and allow government to introduce CI to the relevant companies. This approach would involve using contacts that CI has already established within the Chinese government and environmental ministries to facilitate and abridge establishing relationships with the relevant Chinese extraction companies on the grounds of improving their environmental record in an African context. Lobbying any government is a slow and opaque process; this is particularly true of Chinese government. However the Chinese government is increasingly receptive to environmental NGOs as the country becomes more interested in improving its environmental record. Lobbying the government can be done through a number of Chinese institutions. Most notably the Ministry of the Commerce People's Republic of China, the State-owned Assets

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Supervision and Administration Commission and Chinese financial and banking institutions.xv A challenge will be to identify which institutions can influence Chinese foreign direct investment. The Chinese Ministry of Commerce and the Ministry of Foreign Affairs often set the framework for Chinese investment but a lot of investment falls outside of their mandate and is not directly regulated. 3. Lobbying African governments to catalyse partnerships between CI and Chinese firms. This approach involves approaching and working with African governments to get them to catalyse relationships between CI and relevant Chinese companies. The drawback of this approach is that it is indirect and working with government officials is slow and time consuming. However it is better than simply approaching Chinese companies and government actors for a number of important reasons and is highly likely to produce a positive response. As such it is a strategy that should be given the highest priority. One reason is that African governments are made key players in a project that directly involves the welfare of their own countries. Working with the relevant African governments is absolutely necessary sooner or later in any successful project of this type and magnitude on the continent. CI already has a well developed relationship with many African governments and working with them from an early stage as a key partner in a project like this would only serve to improve that relationship. Working through African governments to approach Chinese companies would greatly enhance CIs chances of success. Chinese companies would be compelled to comply with requests by African governments as it complies with the Five Principles of Peaceful Coexistence and the Ten Principles of Bandung that include the Five Principles; particularly the first principle, that of mutual respect for sovereignty and territorial integrity and the fourth principle, equality and mutual benefit. 138 Chinese leaders still regard the Five Principles as the bedrock of their foreign policy. Any approach that does not directly include African decision makers might be seen by Chinese decision makers as circumventing these fundamental principles of Chinese foreign policy in developing countries. 4. Using Chinese research organisations would see CI using established and respected Chinese research organisations to communicate the importance of good environmental standards for Chinese firms operating outside of China. The same research organisations can also communicate to them how they can improve their policies and who (for example CI) can help them improve said policies. By talking to as well as giving research, case studies and publications that CI has accrued over the years to established Chinese research organisations to translate and disseminate; CI may be able to inform Chinese companies of the importance of good environmental
xv

Such as China Construction Bank, China Development Bank, China EximBank and the China Africa Development Fund (CAD-Fund).

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practices in developing countries that have not yet developed sophisticated environmental impact mitigation policies of their own. Over the years CI has generated, gathered and analysed a lot of research that Chinese companies would find very helpful. Such a practice would create a win-win-win relationship. Chinese companies would benefit from learning about the sensitivity of the environmental they are operating in outside of China as well as gain access to ideas on how to improve their own policies. Chinese research organisations would improve their own body of knowledge at no real additional cost to themselves and it would help CI fulfil its mandate to work with companies to protect the environment. 5. Mixed approach that seeks to lobby the Chinese government in Beijing as well as lobbying African governments. Whilst this approach has all the benefits of the previous three strategies (not including the direct approach) but it is also more complex and difficult to pull off with if such a project is only given limited resources. It would require that the team or individual responsible for carrying out this approach be stretched between lobbying Beijing, meeting and working with Chinese research organisations and lobbying the relevant African governments. A small team of at least two or three individuals, each with separate tasks but a common vision and in coordination with each other would be needed to pull it off effectively in a less than two or three years. Each individual would need some support from their colleagues (and should seek to harness their colleagues connections and institutional knowledge) within CIs country missions to gain access to relevant decision makers within government, this particularly the case so far as working with the relevant African governments. Despite the drawbacks of the Mixed approach it does ensure a greater degree of success by pursuing multiple avenues of approach and engagement whilst bringing on board important African role players and building off Chinas own policies of engagement. As has already been noted above the Mixed approach allows CI to build off of its existing relationships with African governments to bring them on board and lobby on CIs behalf. It is hard not to over emphasise the importance of working with African governments to make such a project work. Chinese firms would be loathed to go against the advice and wishes of African governments for a number of reasons. It runs counter to Chinas established foreign policyxvi and opens them up to criticism from within China as well as the rest of the world should an environmental problem emerge in the future. Encouragement from African governments also gives the green light to Chinese executives on the ground to take the intuitive and engage with NGOs without having to go through the very long and tedious process of consulting all interested parties in Beijing.
xvi

Such an approach is consistent with Chinas commitments to the Bandung Declaration which forms a central pillar of Chinas foreign engagement policies. A fundamental aspect of the Bandung Declaration is the importance of state sovereignty.

43

The need is as apparent as is the assistance that CI could providexvii Chinese companies to improve their environmental polices abroad. With sufficient commitment of resources dedicated over a three or four year time period and with a clear objective in mind a project that seeks to enhance the quality of Chinese companies environmental policies a great deal of good work can be done. The end goal would be to catalyse change across industry sectors in the long run. However to attain this it would be necessary to start on a more modest scale by working with a single company in a specified location to improve its environmental policies and practices. Getting Chinese firms on board in the early stages will be more difficult then it will likely be in later stages of the project when they start seeing and learning about successful examples. As such it will be most prudent to select the a company that is receptive to this idea and likely to be successful. This will be a company that has both the greatest potential need for improvement of their environmental policies over and above industry norms for that countryxviii and is most dynamic and open to adaption and change.xix On balance it would appear that the best company upon preliminary investigation, although it will need to be explored further that satisfies both aspects would be Zijin in South Africa.

xvii

For more information on CIs partnerships with mining companies refer to: Smuts, Rowena (2010), Are partnerships the key to conserving Africas biodiversity?, Conservation International. Available at: http://www.cbd.int/impact/case-studies/cs-impact-USAID-africa-mining-conservation-en.pdf xviii An example of such a company would be Zijins operation in South Africa xix An example of a highly dynamic Chinese firm that is already taking its environmental record relatively seriously is Sinosteel.

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Appendix
Chinese Mining Firms
Below is a list of Chinese firms that currently have mining operations in the eleven African countries looked at in this report. Jinchuan Group Jinchuan Group is a large integrated state owned non-ferrous metallurgical and chemical engineering firm and based in Gansu province. Jinchuan was founded in 1958; the Peoples Government of Gansu Province and the China Development Bank are its major shareholders. Jinchuan specialises in the processing and beneficiation of nickel, copper, cobalt, precious metals and platinum group metals. The company currently processes or produces around 90 percent of Chinas nickel and platinum group metals output139 and is the 2nd largest producer of cobalt and 4th largest producer of nickel in the world.140 Jinchuan is in the process of expanding its operations outside of China and is seeking to buy mines so as to boost its copper holdings by 20 million metric tons.

Qingdao JISCO JISCO is a privately owned firm that was originally founded in South Korea firm in 1980. In 2006 much of the companys focus and manufacturing capabilities were relocated to the Chinese port city of Qingdao, Shangdong province. Its Qingdao operations have made it into one of the largest producers of nails in the world. Currently the firm owns 26.1% of International Ferro Metals which in turn owns the Buffelsfontein chromate mine. China Non Ferrous Metal Company (CNMC) Is a large Chinese SOE based in Beijing, China that specialises in mining and mining related activities. 141 The company was founded in 2002 by China Nonferrous Metals Mining & Construction Inc. together with another sixteen shareholders.142 CNMC was listed on the Hong Kong Stock Exchange in 2005 in an effort to reduce its reliance on Chinese state owned banks for capital.143 CNMC currently working on projects in over twenty countries and is currently in a process of expanding its operations outside of the Chinese mainland. Currently CNMC has two very large operations in Zambias copper belt. CNMC has publicly stated that it prides its self on its strict compliance with environmental requirements.144

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Chiman Manufacturing Ltd. Chiman Manufacturing LtD. is a private firm based in Liaoning province, China and registered in Zambia to mine and refine nickel. Its nickel operations were closed in Zambia due to excessively high levels of air pollution. China Minmetals Corporation Minmetals is a State Controlled metals trading company based in Beijing, China. It is currently one of the largest metals and minerals trading companies in the world employing over 53,000 people and an annual turnover of US$26.6 billion. Founded in 1950 the company is one of the oldest SOEs in China. As of December 2010 the company has indirect owner ship of the Naboom and Townlands chromium mines in South Africa. The companys executive director, Zhang Ye, has stated that over the next five years the company aims to "multiply ferrous mining assets by tenfold during the next five years, with overseas mining assets accounting for more than 50 percent."145 China North Industries Group China North Industries Group (NORINCO) is a large transnational state owned corporation specializing in a combination of weapons and engineering technology, manufacture and trade that reports to the State Council. The company is one of Chinas top ten industrial defence complexes and is based in Beijing, China. The company was setup in the early 1980s as an export arm of the Fifth Ministry of Machine Industry. In May 2003 the US government imposed sanctions on NORINCO for exporting missile technology to Iran.146 The company currently has mining interests in Zimbabwe. Sicomines Sicomines is a joint venture between a consortium of state owned Chinese firms (led by CREC and Sinohydro) and the state mining corporation of the DRC, Gcamines. 68% of the company is owned by the consortium of Chinese companies with Gcamines owning the remaining 32%. Most of the Chinese companies in the consortium are construction companies.147 The following Chinese firms, all of them SOEs, are involved in the joint venture: Sinohydro China Railway Engineering Corporation (CREC) Water Resources and Hydropower Construction Group Corporation Zhejiang Jiang Huayou Cobalt Company Limited

Sinohydro and CREC seem to be the most active Chinese firms in the joint venture.

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Sinosteel Is a large Chinese SOE founded in 1993 and based in Beijing, China. The company is the countrys second largest importer of iron ore. Sinosteel is primarily an iron ore importer into China but is also involved in the extraction and beneficiation of metals, primarily ferrous metals such as iron and steel. It is one of Chinas largest SOEs. The company is the largest best established Chinese companies in South Africa and Africa as a whole. A number of research and development companies exist within Sinosteel operating in areas such as environmental protection, geological exploration, beneficiation, and engineering design. The company is also a supplier and agent for a number of Chinese and international equipment and technology companies. Sinosteel has a significant interest in chrome mining and/or processing operations in South Africa and Zimbabwe, specifically the Tweefontein chrome mine in South Africa and the chrome beneficiation company Zimasco in Zimbabwe. Sinosteel is also has part ownership of chrome mining and processing company ASA Metals Pty Ltd. of South Africa. A company that it established in a joint venture through the Eastern Asia Metals Investment Co Ltd, a wholly owned subsidiary of Sinosteel, and the Limpopo Economic Development Enterprise to establish in 1996.148 Sinosteel cut deals in Gabon in 2006, and two years later expanded in Zimbabwe and Cameroon, bringing its total investments on the continent to about US$ 1 billion. It's now the largest, most deeply rooted resource-based Chinese enterprise in South Africa. And it operates 10 companies with 8.9 billion yuan in assets across Africa, all from a regional headquarters in Johannesburg. Sinopec Sinopec is an SOE based in Beijing, China and is one of countrys largest petroleum companies. Sinopec is a subsidiary of China Petrochemical Corporation otherwise known as Sinopec Group- and is the largest petrochemical enterprise in Asia. 149 In 2008 Sinopec had an operating income of US$220.8 billion.150

Shaanxi Yanchang Petroleum Group Shaanxi Yanchang Petroleum is an SOE directly owned by the Shaanxi Provincial Government and based in the city of Yanan, Shaanxi. First founded in 1905 it is one of four companies in China that is qualified in oil and gas expiration. The company primarily engages in the exploration, exploitation and transportation of oil and gas. In 2008 the companys gross assets were valued at over US$13 billion, making it Chinas 93rd largest enterprise.151 Currently it has entered into a deal with Hong Kong based Sino Union Energy Investment Corp to exploit oil blocks in their possession in Madagascar.

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Wuhan Iron & Steel Group Wuhan Iron & Steel Group (WISCO) is a state owned Chinese iron and steel processing company. WISCO was founded in 1958 in Wuhan, Hubei province as Chinas first massive iron and steel company. The company was listed on the Hong Kong stock exchange in 1999 and is one of Chinas largest companies and Chinas third largest steel producer by output.152 In recent years the company has sought to reduce its reliance on foreign suppliers of iron ore by buying iron mines of its own around the world, particularly in Brazil, Australia and Africa.153 The company currently has the following operations in Africa: Soalala, Madagascar (42% ownership) iron ore Bong, Liberia (60% ownership) iron ore154 Riversdale, Mozambique ( 40% ownership) coal155

Zijin Mining Group Co. Zijin Mining Group is a provincial SOE based in Fujian Province, China. The company specialise in the mining and beneficiation of gold and platinum base metals and is publicly listed on the Hong Kong Stock Exchange. It is currently one of the largest gold mining and beneficiation firms in China.156 Currently it owns a 29.9% stake in Ridge Mining which in turn owns the Blue Ridge and Shebas Ridge.157

List of Chinese owned ore processing companies in the DRC

Although these firms have been exclude some of Chinese owned beneficiation firms have been listed here for the convince of the interested reader: Tongxiang, owned by Zhejiang Huayou Cobalt Co. Congo Dong Fang International Mining Sprl: Kolwezi Depot and Lubumbashi smelter (owned by Zhejiang Huayou) Mining Company of Lubumbashi Jiaxing Mining: Kolwezi depot and Lubumbashi smelter Lida Mining South China Mining Sprl. Cota Mining Sprl: Lubumbashi smelter Congo Loyal Will Mining: Lubumbashi smelter Emmanuel Mining: Kolwezi depot 48

Huachin: smelters in Lubumbashi and Likasi JMT: Kolwezi depot Song Hua: Lubumbashi smelter Feza Mining: Likasi smelter

Selected Biography
Shankelman, Jill (2009), Chinese Oil and Mining Companies and the Governance of Resource Wealth, Woodrow Wilson International Center for Scholars [Online], Available at: http://www.wilsoncenter.org/topics/pubs/DUSS_09323Shnkl_rpt0626.pdf Brautigam, Deborah (2009). The Dragon's Gift:The Real Story of China in Africa. New York: Oxford Unviersity Press. ISBN 9780199550227. Pamlin, Dennis; Long, Baijin (2007), Re-Think Chinas Outward Investment Flows, World Wide Fund for Nature (WWF), April 2007, Available at: http://wwf.panda.org/about_our_earth/all_publications/?100400/WWF-Report-Re-ThinkChinese-Outward-Investment-Flows Burke, Christopher; Jansson, Johanna; Jiang, Wenran (August 2009). Chinese Companies in the Extractive Industries of Gabon & the DRC: Perceptions of Transparency. Centre for Chinese Studies, Stellenbosch University. Hon, Tracy; Jansson, Johanna; Shelton, Garth; Liu, Haifang; Burke, Christopher; Kiala, Carine (2010). Evaluating Chinas FOCAC commitments to Africa and mapping the way ahead, Centre for Chinese Studies, University of Stellenbosch, Available at: http://www.ccs.org.za/wpcontent/uploads/2010/03/ENGLISH-Evaluating-Chinas-FOCAC-commitments-to-Africa-2010.pdf Vines, Alex (2010). Thirst for African Oil, Global Policy Forum, Available at: http://www.globalpolicy.org/images/pdfs/Thirst_for_African_Oil.pdf Shambaugh, David (2008), Chinas Communist Party: Atrophy and Adaption, Woodrow Wilson Center Press: Washington D.C., second printing (2010), ISBN: 978-0-520-26007-8 Leonard, Mark (2008). What Does China Think, Fourth Estate: Great Britain, ISBN: 978-0-00723068-6 Edited by: Liu, Hongwu; Yang, Jiemian (2009). Fifty Years of Sino-African Cooperation: Background, Progress & Significance Chinese Perspective on Sino-African Relations, Yunnan University Press: China, ISBN: 978-7-81112-932-8 Naughton, Barry (2007). The Chinese Economy: Transitions and Growth, MIT Press: Cambridge, Massachusetts, ISBN-10: 0-262-14095-0

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Ibid Ibid 130 In the course of two informal interviews with sources that requested, for professional reasons, to remain anonymous Zijins operation in South Africa was recomened. The people who mentioned this are well informed and deeply involved in Chinas mining interests in southern Africa and South Africa in particular. 131 Minmetals to acquire stake in South African chromite mine (13 January 2009), Chinamining, Available at: http://www.chinamining.org/Investment/2009-01-13/1231831507d20993.html, Retrieved: 7 March 2011. 132 Public Participation Process in Support of a Notic of an Enviromental Authoraization Application for the Proposed New Naboom Chrome Mine, Makurung near Lebowakgomo in the Limpopo Province, Issues and Response Report Focus Group Meetings, (October 2010), SRK Consulting, Available at: http://www.srk.com/files/File/SouthAfrica/publicDocuments/Naboom/DSRApp/AppC/C4/SRK%20Naboom%20EIA%20Consolidated%20IRR%20FINAL.p df, Retrieved: 20 march 2011. 133 Minmetals to buy more assets (2 March 2011), by Zhang Qi, China Daily, Beijing, Available at: http://www.chinadaily.com.cn/business/2011-03/02/content_12100636.htm, Retrived: 12 March 2011. 134 Minmetals to acquire stake in South African chromite mine (13 January 2009), Chinamining, Available at: http://www.chinamining.org/Investment/2009-01-13/1231831507d20993.html, Retrieved: 7 March 2011. 135 MDC Managing Director He Jianzeng Inspected Minmetals (1 May 2010), Press statement: China Minmetals Corporation, Available at: http://www.minmetals.com/english/search_detail.jsp?article_millseconds=1288764169402&article_column=0734, Retrived: 10 March 2011. 136 Alex Vines, Thirst for African Oil, Global Policy Forum, (2010), p.20, Available at: http://www.globalpolicy.org/images/pdfs/Thirst_for_African_Oil.pdf, (retrieved: 11 March 2011). 137 Shambaugh, David (2008), Chinas Communist Party: Atrophy and Adaption, Woodrow Wilson Center Press: Washington D.C., second printing (2010), ISBN: 978-0-520-26007-8, pg 90-91. 138 Brautigam (2009), pg: 30 139 Jinchuan company website, retrieved: 4 March 2011. Available at: http://www.jnmc.com 140 Jinchuan International Actively Develops Overseas Mining Business (21 February 2011), ACNnewswire, source: Jinchuan Group, Available at: http://en.acnnewswire.com/Article.Asp?Art_ID=6001&lang=EN, Retrieved: 11 March 2011. 141 CNMC Website, About CNMC- Available at: http://www.cnmc.com.cn/p375.aspx, Retrieved: 13 January 2011 142 Infomine, About China Non-Ferrous Metal Company, Available at: http://www.infomine.com/index/companies/CHINA_NONFERROUS_METALS_INT%27L_MINING_CO._LTD._%28CN MIM%29.html, accessed: 13 January 2011 143 CNFC Website, Available at: http://www.cnm.com.hk/sc_webcat/ecat/cms_view.php?lang=1&web_id=1, Retrieved: 13 January 2011 144 CNFC Website, CNFC factsheet Dec 2009, Available at: http://www.cnm.com.hk/sc_upload/images/cnm_factsheet_EN_Dec2009%282%29.pdf, Retrieved: 13 January 2011 145 Minmetals to buy more assets (2 March 2011), by Zhang Qi, China Daily:Beijing, Available at: http://www.chinadaily.com.cn/business/2011-03/02/content_12100636.htm, Retrived: 12 March 2011. 146 China North Industries Group (2004), Nuclear Threat Initiative, Available at: http://www.nti.org/db/china/norinco.htm, Retrieved: 16 March 2011. 147 Burke, Christopher; Jansson, Johanna; Jiang, Wenran (August 2009). "Chinese Companies in the Extractive Industries of Gabon & the DRC: Perceptions of Transparency". Centre for Chinese Studies, Stellenbosch University. 148 Overseas Organizations: ASA Metals Pty. Ltd., Sinosteel Corporation, Available at: fhttp://en.sinosteel.com/qqzg/hwjg/2007-09-13/1761.shtml, Retrieved: 24 August 2011. 149 Sinopec heads list of country's top earners (3 September 2007), by Zhang Ran, China Daily, Available at: http://www.chinadaily.com.cn/bizchina/2007-09/03/content_6075621.htm, Retrieved: 11 March 2011.

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