What’s happening at China’s overseas mines?

People like to talk China, but deeper looks are hard to come by. A new report sheds light on what makes Chinese projects both unique and familiar

Jun 10, 2021

Climate technologies require enormous amounts of metal. I’m Ian Morse, and this is Green Rocks, a newsletter that doesn’t want dirty mining to ruin clean energy.

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A lot happened while I was away — the IEA report, Biden’s EV metals plan, labor and environmental issues at mines around the world. It’s best to take our time diving into those topics, to speak with experts and elevate perspectives that don’t have a million-dollar megaphone. We’ll get to it all over the next several weeks.

Today, I want to highlight a report out from SOMO, an Amsterdam-based research center on multinational corporations.

The only Permian exposure I’ll tolerate. (Permian Basin is the region in the Southwestern US with heaps of oil below the surface. The Permian Period was a swampy time for that piece of land, 250 million years ago, which rivers now cut through and reveal. This is Palo Duro Canyon State Park in Texas, where a river has unearthed Permian sediments.)

China doesn’t mine alone

Beijing and its dominion over vast Asian territories was top of the news cycle long before pundits realized that the country is going to play a crucial role in renewable energy technologies. China produces an overwhelming majority of important minerals and metal products for solar panels, wind turbines, and EV batteries. With a global push to spread climate technologies, Chinese companies are poised to benefit in a colossal way, and that has US and European national security officials nervous.

I haven’t chosen to spend much time on highlighting China’s “tight grip” on key materials, because most of the discussion has been dominated by hawkish competition (and sometimes thinly veiled racism). The US, in particular, has in the past few years prioritized aggressive trade policy over expanding cheap climate technologies. That has led some groups, like the Center for Strategic and International Studies, to recommend that for the sake of climate, the US could create a more amicable relationship with China.

Anti-China resource nationalism is also not borne out by Chinese actions: regulatory changes indicate that the country isn’t too keen on retaining that tight grip, nor can it with dwindling reserves. As a result, some Chinese companies in the past 15 years have begun to search abroad for mineral deposits it can import. If the country can gain a controlling stake in foreign mines, it can also balance prices. In these projects, Chinese companies can be the target of social and environmental conflicts, but they hardly ever act alone.

That’s one of the main conclusions of SOMO’s report out today, which analyzes 20 Chinese foreign mining projects. Chinese companies have taken major stakes in prominent mines around the world, particularly those related to climate technologies like rare earths, cobalt, nickel, and lithium. However, they only control roughly 3% of global output. When they do get involved in major projects, it’s often in collaboration with North American or European companies, which are much more prominent than Chinese companies, especially in Africa. Chinese companies are jumping on the booming mining bandwagon, but Europeans have spent decades steering that bandwagon to its current path.

How communities push back

“We knew about China’s important role in the global mineral supply chain, but we wanted to get more clarity on communities’ counter-strategies aimed to mitigate social and environmental risks,” says Luis Scungio, author of the report.

There are a few things about Chinese projects that stood out to SOMO.

While some companies have attempted to start projects in Australia, most projects are located in poor countries and many use production as collateral for financing other projects. For example, Ghana’s government will pay back the costs of building a hydropower dam with the proceeds from an aluminum mine (which threatens to destroy the biodiverse Atewa Forest). In these places, a mine is not only a hole in the ground, but also a set of agreements that countries use to pursue a vision of development.

When communities stand up to projects, success is rare. Companies often have close relationships with government officials, which make it difficult to leverage power when the body that dictates land management has conflicting interests. These companies have typically been less responsive to public opinion, too. Scungio:

Criticism [of projects] tends to fall on deaf ears. When local communities suffer the consequences of problematic mineral operations, many Chinese companies do not perceive civil society organizations as legitimate stakeholders in conflictual situations.
…
Additionally, as mineral resources are often located in remote areas, including territories inhabited by ethnic minorities and indigenous people, upholding vulnerable groups’ entitlements becomes challenging using in-country legal avenues.

In Ecuador, a community lawsuit resulted in the suspension of the Rio Blanco mine. In Papua New Guinea, government officials responded to environmental concerns and refused to extend the Porgera mine’s license. Both of these cases relied on government support for local communities. In Indonesia, Chinese projects initially responded to backlash about ocean dumping plans, but officials have not yet guaranteed that it won’t happen.

Regulations in consuming regions, like the EU’s sustainable batteries initiative, could make it difficult for problematic mines to find buyers. In China, some financial regulators in China are discussing the possibility of boosting climate and social-environmental disclosures, which could improve companies’ image abroad.

“Such developments in China represent a step in the right direction for opening up information about companies’ activities and will have, perhaps, an effect also on accountability,” says Scungio.

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Climate goes Metal

The European parliament said that the EU should likely institute a moratorium on deep-sea mining before the impacts are better understood.
Mining giant Glencore will pilot a blockchain tool to trace its cobalt from the Democratic Republic of the Congo.
A new major copper miner has begun production, in the DRC, and owned by a man would believes the renewable energy transition is the ‘revenge of the miners.’
The rare Nevada flower under threat from a lithium miner is set to be listed as endangered, which may deal a fatal blow to the proposed project.
Vale has slowed its output at two of its Brazilian iron ore mines as prosecutors order the evacuation of the area around a tailings dam.
An international mediator ruled that Costa Rica does not owe a Canadian gold miner any compensation after it canceled its project in the country 10 years ago.
A proposed lithium mine in Serbia that has received significant opposition may go to a public vote, the president suggested.
The world’s richest tin mine has been leaking waste into Indigenous lands in Brazil since March.
A report finds that the vast majority of US reserves of ‘climate metals’ are found within 35 miles of tribal lands.
After days of strikes at BHP copper mines in Chile, workers have submitted a proposal to the company for a collective labor contract.
BHP has agreed to spend $93 million to repair damages from its water use in Chile’s salt flats.
Mexican lawmakers say they are dropping plans to nationalize lithium reserves and will instead pursue private investment.

What’s Biden planning?

The Biden administration outlined a path to gather the metals it needs to enact a climate agenda, with a focus on domestic supply from recycling and innovation that aims to rid cobalt and nickel from batteries.
The administration has backed the copper project would tear up the sacred Oak Flat site in Arizona, among other mining projects supported by Trump. (Tribe cites 169-year-old treaty as key argument against copper mining near reservation)
Biden also said the country would rely on ally countries to provide the minerals needed for climate technologies.
Recycling will also play a role in securing battery metals, administration officials said, which will include expanding research. There was no word on whether that might include additional requirements on manufacturers.