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Bougainville gets caught in China’s Pacific power game with West

Bougainville’s huge copper reserves and independence vote draw global interest

Fumi Matsumoto, Nikkei Asian Review | December 11, 2018

A small island has found itself caught in the escalating battle for influence in the South Pacific.

On both economic and diplomatic fronts, Papua New Guinea’s autonomous region of Bougainville has become a key piece in the game between Beijing, on one side, and the U.S. and its allies on the other.

With Bougainville holding one of the world’s largest untapped deposits of copper, Chinese and Western companies are weighing the prospects for reopening its Panguna copper mine — closed since a vicious civil war broke out in 1989. The island is also set to hold an independence referendum on June 15, potentially creating a new country that could vote in international forums such as the United Nations.

John Momis, president of the Autonomous Bougainville Government, told the Nikkei Asian Review that Chinese businesspeople raised the matter of investing in the mine on a visit to PNG ahead of last month’s Asia-Pacific Economic Cooperation summit in the capital, Port Moresby.

Momis said he told them that, “Panguna is not an easy issue, and as far as ABG’s concerned we have decided to put it on the back burner until the referendum.”

The peace agreement signed by the PNG government and island leaders in 2001 created the ABG and set the stage for the referendum. Chinese involvement with the mine would give Beijing a direct role in the economic future of a newly independent nation as it seeks to secure resources and expand its strategic network. It would also boost China’s sway in its power game against the U.S. and regional rivals such as Australia.

But given its potential resources, the government in Port Moresby would be loath to lose the island, especially the Panguna mine. And while the referendum is not binding, blocking a secession backed by most of the local population might be a recipe for renewed unrest in the volatile country.

Diplomatic sources said 99% of residents will support independence; Ted Wolfers, a professor at Australia’s University of Wollongong, said the consensus is an “overwhelming majority” will vote that way. But he also suggested PNG would not let the island go easily.

“PNG’s government might talk the autonomous government into settling for greater autonomy that falls short of independence,” Takehiro Kurosaki, a junior associate professor at Japan’s Tokai University said.

The island, and particularly the mine, have a tangled present shadowed by a brutal past. The decade-long civil war that killed more than 20,000 people — about 10% of Bougainville’s population — was triggered by resentment over pollution and revenue distribution from mining. Bougainville was also a battlefield when Japan invaded the island during World War II in an attempt to cut off a sea-lane between the U.S. and Australia.

PNG desperately needs foreign currency. In September, the government issued its first dollar bonds and managed to raise $500 million — crucial funds as the country attempts to manage $2.5 billion in foreign debt, almost $590 million of which is owed to China, according to Reuters.

“Beijing’s trade and investment in the region is focused mostly on Papua New Guinea, the region’s largest economy and home to rich gold and nickel mines, liquefied natural gas, and timber forests,” the U.S.-China Economic and Security Review Commission said in a report in June.

The report notes that state-owned China Metallurgical Group manages development of a $1.4 billion nickel and cobalt mine in PNG, with funding from the Export-Import Bank of China. This, the report says, is “China’s largest single investment in the region and its biggest foreign greenfield mining project.” About 40 Chinese companies operate in PNG, according to China’s state-run Xinhua News Agency.

Indeed, Beijing offered PNG about $60 million worth of aid to host the recent APEC forum, according to a diplomatic source. This included road repairs and a supply of bulletproof vehicles.

China currently has eight South Pacific countries in its corner, including PNG, while Taiwan has the recognition of six, such as the Solomon Islands. Chinese President Xi Jinping has made little secret of his desire to deepen Taiwan’s isolation; there is talk of the Solomons, where China has also opened up its checkbook, switching allegiances.

China’s outreach to the South Pacific has spurred Western allies to, belatedly, push back.

In the run-up to the APEC meeting, Australia and New Zealand — long the main benefactors for South Pacific nations — joined the U.S. and Japan in announcing a plan to build up PNG’s electricity infrastructure.

U.S. Vice President Mike Pence, in his speech at the APEC summit, announced a plan for U.S. cooperation in bolstering a naval base on Papua New Guinea’s Manus Island. In remarks clearly directed at China, Pence referred to recent naval exercises with India and Japan, and said: “We will work with these nations to protect sovereignty and maritime rights of the Pacific islands as well.”

For now, the island states find themselves in the enviable position of being courted by China, the U.S. and its allies all at once.

PNG has accepted a Chinese proposal to build an internet network using loans from the Chinese Ex-Im Bank and technological support from Huawei Technologies. PNG picked the Chinese proposal over one from the U.S. and Australia.

A similar story is being told across the South Pacific.

Vanuatu signed an agreement with China to take part in Beijing’s Belt and Road infrastructure initiative. In return, China agreed to a moratorium on nearly $3 million worth of debt, according to a local newspaper. In April, reports surfaced that China was planning to build a military base in Vanuatu. Alarmed by this, the U.S. and Australia swiftly moved to start talks with the island state on a bilateral security treaty.

The increased attention from partners, both old and new, means that Pacific nations “now have more leverage,” said Jonathan Pryke from the Lowy Institute, an Australian think tank.

The issues of the mine and referendum puts Bougainville firmly in the spotlight. While the situation on the island is replete with risks, Panguna’s reserves are very attractive to China, the world’s largest copper consumer.

The deserted mine contains more than 1 billion tons of ore, according to a study from 2009 — more than the 675 million tons extracted over the 18 years it was open. These deposits look even more valuable given global concerns over copper supplies, due to emerging market demand, depletion of known resources, rising mining costs and limited new discoveries.

A number of companies are circling. A Lowy report said there has also been corporate interest in the mine from Australia, the U.S., Canada and Brazil.

Whoever wins out will be able to cement a foothold in the region, but it will come at a financial cost.

Professor Wolfers said interested parties would have to consider the startup costs of reopening the mine, which he sees reaching as much as $8 billion.

Bougainville’s President Momis said the island’s government was taking a cautious stance on the investment interest.

“We don’t believe anybody who comes and talks about these issues until we see things in concrete and on paper,” he said.

Nikkei staff writer Sarah Hilton in Tokyo and researcher Jennifer Walpole in Sydney contributed to this report.

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China takes baby steps in the bottom of the Mariana Trench

The chubby, fish-like Qianlong-2 submersible is lowered from its mother vessel prior to a dive in the Indian Ocean. Photo- Xinhua.jpg

According to China’s oceanic authority, the next step for the country’s deep-sea technology is developing and testing a drilling facility named Shenlong, plus a mining platform named Kunlong and an information-sharing system called Yunlong.

Asia Times | October 22, 2018

China is getting closer to exploring the bottom of the ocean after a research mission deep in the Mariana Trench, the largest crack in the Earth’s surface that is more than 10 kilometers deep in the Pacific Ocean.

China’s oceanic research vessel Tansuo-1 returned to its home port of Sanya in southern China’s Hainan province last week, wrapping up a 54-day, 7,292-nautical-mile deep-sea research mission.

During the mission a team of 59 researchers remotely piloted and grabbed some close-up looks into the Mariana Trench.

Researchers from the Institute of Deep-sea Science and Engineering at the Chinese Academy of Sciences tested deep-sea equipment for geophysics, marine geology, geochemistry and marine biology.

Deep sea exploration vessel the Tansuo-1. Photo: Xinhua

During the expedition, two 7,000-meter-class deep-sea gliders operated continuously for 46 days, making it the only abyss-class glider in the world proven to be able to work continuously for an extended period of time under the sea.

A magnesium seawater fuel cell carried out two tests as the world’s first new metal seawater fuel cell tested in the 10,000-meter abyss. In addition, researchers also used a remote-controlled robot to complete high-definition live-streaming 10,000 meters down near the bottom of the trench.

Earlier this year, Chinese media reported the development of underwater platforms to be launched after 2020 to take samples on the bottom of the South China Sea, as well as plans to probe the Mariana Trench.

The People’s Daily has reported that China’s most advanced manned submersible, the Jiaolong, or “flood dragon” in Mandarin, was undergoing a retrofit at the National Deep Sea Center in the eastern coastal city of Qingdao.

Its next dive will be in the deepest part of the South China Sea, a central basin with an average depth of five kilometers. The Jiaolong can dive up to seven kilometers deep.

The launch of the Jiaolong is a landmark in China’s deep-sea exploration as scientists will be able to reach the sea floor for a closer look and complete refined sampling missions.

China is also developing a manned submersible that can dive to 11km and withstand the immense pressure with its sea trial scheduled in 2021, to “scour the bottom of the 11,034-meter-deep Mariana Trench,” according to the People’s Daily.

In April last year, the Jiaolong finished three dives in the South China Sea. It normally carries three people, a pilot and two scientists.

A dive usually starts around 7am and takes 10 hours. The three people inside can only move in a round, cramped space that has a diameter of 1.4 meters, said Gao Xiang, a senior engineer at the center.

According to China’s oceanic authority, the next step for the country’s deep-sea technology is developing and testing a drilling facility named Shenlong, plus a mining platform named Kunlong and an information-sharing system called Yunlong.

This equipment is expected to be finalized in 2020 and put into the South China Sea sometime after that.

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As Gas Boom Falters in Papua New Guinea, China Steps In

A plant at the Exxon Mobil-led natural-gas project in Papua New Guinea. Government revenues from the $19 billion project, which began production in 2014, have fallen far short of estimates.

Faced with revenue crunch, country is relying on Chinese loans to develop ports, airports, roads and power stations; Beijing expands influence in Pacific

 Rob Taylor and Rachel Pannett | Wall Street Journal | August 11, 2018

When Papua New Guinea joined the ranks of the world’s significant energy exporters four years ago, the government was betting on a revenue windfall it hoped would transform the impoverished South Pacific nation better-known for jungles, violence and corruption.

But the payday from a $19 billion Exxon Mobil Corp. -led natural-gas project has so far been a trickle, crimped by a downturn in gas prices that allowed Exxon and its partners to claim losses against royalty payments.

To bridge the revenue gap and revive its slowing economy, Papua New Guinea has increasingly turned to China. The government now owes the state-owned Export-Import Bank of China close to $1.9 billion in low-cost loans for infrastructure and other construction projects, almost a quarter of its total debt. That has raised concerns the country’s growing indebtedness is allowing Beijing to further expand its influence in the Pacific.

China’s stamp on Papua New Guinea will be on show in November when Pacific Rim leaders, including President Donald Trump and China’s President Xi Jinping, gather in the capital, Port Moresby.

Delegates attending the Asia-Pacific Economic Cooperation forum will meet in a convention center built by Chinese workers and paid for with a Chinese grant. Official motorcades will travel on a six-lane boulevard constructed and financed by Chinese loans.

Papua New Guinea Prime Minister Peter O’Neill meeting with China’s President Xi Jinping in Beijing on June 21. Almost a quarter of the country’s debt is owed to the state-owned Export-Import Bank of China. PHOTO: POOL/GETTY IMAGES

“We took on APEC knowing it would be a massive challenge for such a small country,” said Charles Abel, Papua New Guinea’s treasurer and deputy prime minister. “It is a bold undertaking by our small country to introduce ourselves to the world.”

A former Australian colony of eight million, Papua New Guinea has long relied on foreign aid. The country has minimal infrastructure outside Port Moresby and companies typically negotiate terms with local landowners to gain access to resources—a knotty problem in a country with hundreds of ethnic groups.

The government has historically looked to Australia for assistance. The country, along with other APEC members, is also chipping in for the summit, covering about a third of the cost. Australia’s foreign minister, Julie Bishop, said the country wants to be the “natural partner of choice” for Papua New Guinea and other Pacific countries.

But China’s presence is becoming much more visible. Chinese loans have helped redevelop a port and airport in the second largest city, Lae. In November, China promised to build $3.5 billion of roads, a commitment that if realized would make it the country’s biggest aid donor, according to the Sydney-based Lowy Institute’s Pacific program. It also imports natural gas from Papua New Guinea and has invested in nickel mines, power stations and other projects.

During a visit by Prime Minister Peter O’Neill to Beijing in June, Papua New Guinea became the first Pacific country to sign up to China’s One Belt One Road, an initiative to build a global network of ports, railways, roads and pipelines. For Beijing, the program is a way to expand business and trade and extend strategic influence, in part by distributing loans.

Mr. Xi said during the visit that relations between the two countries had “entered a fast track, and political mutual trust and mutually beneficial cooperation have both reached a new level in history.” In July, Mr. O’Neill invited Pacific leaders to a meeting with Mr. Xi in Papua New Guinea ahead of APEC.

But China’s infrastructure push in the region has raised some alarms. A Chinese-financed building spree in Pakistan has been dogged by concerns about the country’s growing debt burden to Beijing. Sri Lanka’s government, unable to repay a Chinese loan for a port, last year granted a Chinese state company a 99-year lease on the facility.

The International Monetary Fund said Pacific nations including Tonga, Samoa and Vanuatu have significant debts to China and face repayment pressures. Papua New Guinea is no exception.

“The speed and scale with which China is acquiring natural resources and amassing debt raise long-term concerns,” foreign-policy scholars Gabrielle Chefitz and Sam Parker wrote in a May paper for Harvard Kennedy School’s Belfer Center for Science and International Affairs.

Standard & Poor’s in April lowered Papua New Guinea’s credit rating to B from B-plus, citing slower economic growth and expanding government deficits. It expects the ratio of government debt to gross domestic product to reach 40% by 2021 from 30% now.

Papua New Guinea’s Treasurer, Mr. Abel, said he has been closely following the loans offered by China to small Pacific nations. “There remains some concerns about the way that they do conduct business,” he said. “But in PNG’s case, we quite strictly manage our debt.”

A road damaged by a February earthquake near Mendi in Papua New Guinea’s highlands region. The earthquake killed more than 100 people. PHOTO: MELVIN LEVONGO/AFP/GETTY IMAGES

China’s Ministry of Foreign Affairs said its assistance to Papua New Guinea and other Pacific Island nations has been welcomed by their governments. “China has provided assistance, especially assistance without any political conditions, to the Pacific Island nations, including Papua New Guinea,” the ministry said. “It is not targeting on any third party.”

Mr. Abel, speaking of the Exxon-led gas project, conceded that for the hundreds of millions the government paid for its stake — through a state-owned oil company — “we have not had the corresponding revenue growth.”

Before production began in 2014, the country’s Treasury department estimated the project would boost government revenue by roughly $600 million, or two billion Kina, a year through 2021, rising to more than $1 billion, or 3.5 billion Kina, a year between 2022 and 2030. Instead, as of September 2017, roughly $45 million in royalties and development levies had been paid, according to the IMF.

“When commodity prices are depressed like they have been for the last few years, revenues to all joint venture participants, including government, are reduced,” Exxon said in a statement.

The shortfall has weighed on the commodity-dependent economy. The IMF in a December report estimated GDP grew 2.2% in 2017, down from 2.4% in 2016, far below the government’s predictions a few years ago that the country would grow 21%.

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Taga: Volatile nature of mining impacts bauxite

The number of bauxite export cannot be estimated for 2017 because of volatile nature of the mining business, says director Mineral Development Dr Raijeli Taga. Picture: Luke Rawalai

Serafina Silaitoga | The Fiji Times | May 17, 2017

Director Mineral Development Dr Raijeli Taga said this resulted in one shipment being sent so far this year to China.

This, she said, was sent in March.

Despite this situation, Dr Taga said XINFA Aurum Exploration Fiji Ltd would continue with its mining operation to stockpile for later export when the commodity price improved.

“The number of bauxite export cannot be estimated for 2017 due to volatile nature of the mining business,” she said.

“Further exports will be purely a business decision of the tenement holder which will depend on the market price in terms of profitability and sustainability of their operations.

“If the export price is not feasible then the tenement holder would continue with the mining activity and export when the price is right.”

For last year, Dr Taga said the export declined because of low commodity price in China who was the primary buyers of Fijian bauxite.

“Since the bauxite from Fiji is not of premium grade, it has to compete with bauxite from countries such as Australia, Mongolia and Indonesia which are of superior grade,” she said.

“According to the quarter one update of 2017 from the Bauxite Index, the Chinese domestic alumina prices have fallen from recent highs in January, as supply was ramped up to take advantage of the higher prices.

“Subsequently, it assumed that the bauxite export would be very similar to 2016 unless the price improves.”

However, announcements, she said indicated that bauxite import would remain weak as China had suspended spot import for three months because of ample cheaper DOM (Days on Market) supply.

She said Beijing also announced plans for winter cuts

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Indigenous women speak out against extractive industries in the Amazon

amazon indigenous women

Land is Life

Yesterday at United Nations Headquarters, Alicia Cahuiya (Vice President of NAWE, the Waorani Nation of Ecuador) and Gloria Ushigua (President of Ashiñwaka, the Sápara Women’s association) from the Ecuadorian Amazon spoke out against the threats to Indigenous rights due to extractive industries in their lands and territories.

With support from Land is Life and Acción Ecológica, the two leaders traveled to New York for the 15th Session of the United Nations Permanent Forum on Indigenous Issues. They are here to request a meeting with the Permanent Mission of China to the UN following the signing of two new oil projects between the Ecuadorian government and Chinese oil companies to explore oil reserves in their ancestral territories without their free, prior and informed consent (FPIC).

“We are here to defend our rights because they are contaminating our lands and rivers… and the Ecuadorian government is not defending the rights of the Indigenous Peoples living in voluntary isolation, the Taromenane”
– Alicia Cahuiya, Vice President of NAWE

The Amazonian women were also joined in solidarity by Indigenous leaders from North America and Asia. “Our strength is the unity of the communities affected by extractive actions,” declared Beverly Longid of Indigenous Peoples Movement for Self-Determination and Liberation.

Ms. Cahuiya and Ms. Ushigua read the letter to the Chinese Mission to the UN and are hoping to arrange a meeting in the coming days. They expect that United Nations system will listen to their voices and fully respect their rights.

The Amazonian women launched an emergency appeal from within the UN to seek international solidarity of all Indigenous Peoples, citizens and governments around the world to defend their traditional cultures and territories.

The letter to the Chinese Mission

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Offshore nuclear power plants next step for seabed mining?

china nuclear power

China’s Daya Bay nuclear power plant is land-based, but future plants may be offshore

Platforms at sea to house nuclear power plants to provide electricity for seabed mining…

CHINA MULLS OCEAN-BASED NUCLEAR POWER PLANTS

Breakbulk | 29 Feb 2016

Heavy lift professionals could face dramatically different and unique challenges if China’s nuclear power industry follows through with a top official’s proposal to build the world’s first nuclear power plant at sea.

Xu Dazhe, director of the China Atomic Energy Authority, who also serves as head of the nation’s space agency, proposed the ocean-based power plant idea Jan. 27, according to state media.

The plan calls for building platforms at sea that can support relatively small nuclear power plants to provide electricity for seabed mining operations in deep waters and desalination plants near the nation’s shoreline.

Shipbuilding industry officials say they support the plan, which is already the subject of major research initiatives by science institutes linked to China National Offshore Oil Corp. and the state-run nuclear industry.

Under the plan, according to media reports, the project would include building floating as well as submersible power plant platforms. The latter would be deployed in areas where stormy seas are prevalent.

The report gave no timetable for launching the project. China is building dozens of land-based nuclear power plants and marketing its technology overseas.

U.S.-based nuclear power plant builder Westinghouse proposed building offshore nuclear power stations in the 1970s, including a plant near the beaches of Atlantic City, New Jersey. But the plan was scrapped after the Three Mile Island plant disaster in 1979.

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China tries to lure India with deep sea mining deal in Indian Ocean

Saibal Dasgupta | Times of India

China has come up with a sweetheart deal to break through India’s resistance to its attempt to access the Indian Ocean. It is offering India an opportunity to participate in joint seabed mining in the ocean, which has strong potential of yielding expensive minerals.

“China and India are both developing countries and contractors with the International Seabed Authority, so we have a lot in common and plenty of opportunities for further cooperation,” said He Zongyu, deputy director of the China Ocean Mineral Resource R&D Association.

The offer comes ahead of Prime Minister Narendra Modi’s three-day visit to China starting May 14. The issue is likely to figure in the official level talks.

China is looking towards India for accessing the Indian Ocean because it feels that Sri Lanka cannot be fully relied upon for this task. The new government in Sri Lanka has suspended work on two Chinese funded projects including the construction of port city of Colombo, which had been contracted by the previous government.

The offer of joint seabed exploration was made recently by Chen Lianzeng, deputy director of China’s State Oceanic Administration, who visited India on April 20. He also suggested the two countries enhance cooperation on oceanic research and development.

India is an ideal partner because the two countries are almost at the same level in terms of the development of deep seabed mining, He said.

“If we cooperate, we could share the costs, the risks and the benefits,” He said.

Though called “association”, it is really an official body enthrusted with the task of exploration and development of ocean floor and subsoil.

India may have to consider not just the risks of allowing access to the Indian Ocean but the fact that deep seabed mining is an extremely expensive business. The cost for one mining site is upwards of $1.6 billion, according to He.

Besides accessing the Indian Ocean, China wants New Delhi to give up its plans for joint exploration for oil with Vietnam in a portion of the South China Sea, which China claims as its own territory. China has been opposing this part of India-Vietnam relationship for a long time.

China won a contract from the International Seabed Authority for a polymetallic sulfides exploration area of 10,000 square kilometers in the southwest Indian Ocean in 2011. It has also signed two contracts for exploration areas in the Pacific Ocean.

“But the rich findings in the Indian Ocean make this area a focus for China’s future work,” the official Xinhua news agency said.

Last March, a Chinese manned deepsea submersible Jiaolong finished a 118-day expedition in the Indian Ocean. It discovered several new hydrothermal vents-deep-sea fissures that emit hot water. The findings could help research into resources and environments of seafloor sulfide deposits that contain various metals, Xinhua said.

China also sent research vessel Dayang Yihao making it the first time that two major oceanic research facilities working in the Indian Ocean at the same time.

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