July 09th, 2012 | China Daily Mining to become key to Tibet’s economy
Autonomous region has massive reserves of high-value minerals
Having bought a house in Lhasa and a brand-new car, Ngawang Tsering, 59, a Tibet resident, said he is grateful for what he owns.
“I don’t have any special skills but I earn 2,000 yuan ($317) a month by being an entrance guard at the mine,” said the employee of Huatailong Mining Development Co, a subsidiary company of China National Gold Group Corp. “My life has changed so much for the better since the mining company arrived.”
He said there are seven people in his family and they all had a nomadic life before with an annual income of a mere 20,000 yuan. Now his son earns 5,000 yuan a month as a truck driver at Huatailong’s mining project in Jiama town, Metrorkongka county, 68 kilometers from the center of Lhasa, the capital city of the Tibet autonomous region
Many local people like Ngawang Tsering see the exploration and development of the region’s resources benefiting not only themselves but their family members, including the local post-1980 and post-1990 generations.
Tsering Dekyi, 24, said she feels lucky to be working at Huatailong Mining after graduating.
“There are five people in my family and only my dad made money before I got the job at the company,” she said. “I went to Jiangsu province to go to middle school and Tianjin for my high school. Because we were poor, my brother and I could not both go to college.”
She decided to let her younger brother go to college instead of her.
However, after she worked as an intern at Huatailong Mining, the company decided to send her to Shenyang in Liaoning province to study at the Northeastern University, majoring in mining engineering.
“State-owned companies have brought not only economic growth for Tibet, but also the opportunities for local young people to benefit economically and academically,” said Tsering Dekyi. “This is a great contribution.”
She said that the mining industry in Tibet is essential for national economic growth and she is keen to see every single ore mined here fully used for the economy.
So far, Huatailong Mining has financed nine local young people to go to college in inland areas. It also donated 740,000 yuan to improve local people’s daily lives and 550,000 yuan to local students in the autonomous region.
To counter poverty and improve local employment, the company hired 191 locals in Tibet. There are 214 staff employees from non-Han ethnic groups, which account for 35 percent of the company’s staff, the highest percentage among mining companies in China.
Before China Gold came to Jiama, there used to be many small-scale private miners. Some locals made a living by driving trucks for a transport business but because they were not well managed disputes often broke out.
In December 2009, China Gold invested 16 million yuan in purchasing the transport team and formed Jiama Industrial and Trading Co, composed of all 655 families with 3,850 local people in Jiama. Everyone has received a year-end bonus since 2009.
Apart from two people, all the managers, drivers and staff members in the trading company are locals. Their average salaries can reach as high as 4,000 yuan a month.
Lukhang Yeshe, a 29-year-old local who works at the company, told China Daily that many employees at the company had bought their own cars after one or two years of working.
“At the beginning, many people were against the mining projects in Jiama, believing exploring the mines was not respectful to the spirits,” he said. “The situation has changed now. Most graduates in Lhasa want to work at the mine, considering it to be a good job.”
However, Jiama area has an average altitude of 3,900 meters above sea level with the highest place at 5,300 meters, which makes both the mining operation and environmental protection difficult.
“Equipment that operates at high altitudes is more expensive. The cost of social security is more than other projects inland, too,” said Chai Liwei, who has worked for Huatailong Mining’s safety department for three years in Tibet.
He said the company has spent a lot on environment protection including keeping the water clean and conserving the grass and sparing no effort on minimizing the impact on nature.
In order to protect the grass, the company spent 200 million yuan on an underground ore-delivering tunnel, which is 5.5 kilometers long and varies in height by 397 meters.
The tunnel, the first of its kind in China, can deliver products from the mining area directly to the ore treatment plants. It has an annual delivery capacity of 2 million tons, said Teng Yongqing, general manager of Huatailong.
He said the company spent 15 million yuan on greening projects around the mine in 2011 and a total investment of 200 million yuan since 2007 on road greening, planting projects and drip irrigation facilities.
“National standards require that the environmental protection costs should take up at least 3 percent of the total project investment for mining companies,” he said. “Huatailong has spent more than 11 percent, which is much higher than the national requirements.”
Since its establishment in 2007, the company has been working on environmental improvements in the Jiama area in order to build the trust of local people and not inconvenience their lives.
The company spent 26.55 million yuan on building a road from the national highway to Jiama and 6 million yuan on planting on both sides of it about 4,000 willow trees that can survive in the plateau area.
It is hard to believe when driving along the road that it is a mining area on the Qinghai-Tibet Plateau because there are more trees than in some parts of Beijing.
The total plantation area covers 155,000 square meters, according to the company, which made records of the survival rate of different species of tree they planted. The survival percentage of some trees such as the willow and redleaf cherry plum was raised from 50 percent to 80 percent in 2012 after professional care.
In April, the company started planting up to 2,000 aspens in the area to create more shade.
To help the local Tibet residents to have better living standards and earn more, the company decided to hire them to help with the planting. Each of them can get paid 50 to 70 yuan a day. According to the company, during April to September, the company can help 60 to 80 local people to earn 7,500 yuan each.
“I used to be snubbed by my fellow villagers because I helped people from the inland to explore the mining resources in the region,” said Lukhang Yeshe when being asked about the difficulties of his job.
He started by acting as an interpreter of the Tibetan language for Mandarin speakers in 2008 and is now the general manager’s assistant at Huatailong.
He said the area has a 15-year history of mining and there were mainly private companies in the area before China Gold came in 2008. The private mining companies were not well regulated and disputes often erupted among the local people over the deaths of yaks that drank polluted water and the reduction in grassland.
The regional government asked State-owned companies to begin mining and associated development there during the 11th Five-Year Plan (2006-10). The aim was to develop the mining resources scientifically with advanced technology and protect the fragile natural environment on the plateau at the same time.
Huatailong was officially established in December 2007 in Tibet by its parent company, China Gold, on such an understanding.
After 40 separate negotiations over six months between Huatailong and other companies in the Jiama area, the company succeeded in acquiring four mining rights, five exploration rights and eight mines in a total area of 144 square kilometers in July 2008.
“I believe that the participation of a State-owned company in the mining industry in Tibet is beneficial and meaningful to the place because the company has the responsibility and financial strength to protect the natural environment at such a high altitude, something that requires huge investment,” said Lukhang Yeshe.
After two years of construction, the first phrase of the Jiama project started production in July 2010 and realized revenues of 150 million yuan in the same year.
Over the past three years, the company has spent 252 million yuan in total on prospecting for minerals, discovering proven copper reserves in the area of 6.2 million tons from proven reserves in 2007 of 930,000 tons. Meanwhile, the company discovered 650,000 tons of molybdenum reserves, 140 tons of gold reserves, 8,624 tons of silver reserves and 560,000 tons of lead and zinc reserves.
At present, 40 drilling machines are being used to explore for more resources. Industry experts believe the overall mining resources in Jiama will together be equal to more than 20 million tons of copper in terms of value.
Located in the largest and highest plateau in the world, Tibet has rich mining resources with its unique natural geographic features. Analysts estimate that the mining industry will account for one third of the region’s gross domestic product and become the most important industry in the area.
According to the Land and Resources Office of the autonomous region, Tibet has 101 kinds of proven reserves, among which many resources such as copper, gold, chromium and boron are in short supply in China. The chromic iron ore reserve is the biggest in China and the copper reserve the second biggest.
The office said the potential value of the mining resources in Tibet is more than 600 billion yuan.
Huatailong is the only subsidiary company of China Gold in Tibet. Most products are sold to Jinchuan Group Co, the third largest copper producer in China, said Teng Yongqing of Huatailong.
Tibet Mineral Development Co, which was formed in 1994 and listed on Shenzhen Stock Exchange in 1997, has a longer history than Huatailong in Tibet’s mining industry. It is engaged in the exploration and collection of ferrous metal mines and involved in the exploration and sale of chromite, the processing and sale of ferrochrome and the exploration of copper, iron, lithium and boron.
Teng, who used to work for another gold mining company under China Gold in Sichuan province and has been working in Tibet for two years, told China Daily that the company plans to build its own smelting plant.
Asked about competition in the region, he said it is not “tough” now even though many mining companies are seeing the importance and opportunities in Tibet but the high technology requirements to operate at the high altitude deterred some.
“The mining industry is still in its infancy in Tibet and the priority is to help the region to develop it together for all the mining companies,” he said.
He estimated that the company will produce 12,000 tons of copper in 2012.
The world’s consumption of copper during the first four months was nearly 7 million tons, and China makes up 44 percent of the world’s use of it at 3 million tons, according to the World Bureau of Metal Statistics.
The bureau said there was a shortage of 277,000 tons of copper in the world market during the first four months.
The second phrase of the Jiama project with an investment of more than 5 billion yuan is now being prepared. According to the company, it will be completed by the end of 2013.
After the completion of the second phrase, the Jiama project will have a daily mining production capacity of 4,000 tons. When the company finishes the construction of the underground mining system by the end of 2014, the daily capacity will reach 20,000 tons.
The company said after completion, annual output will reach 50,000 tons of copper, 1.2 tons of gold and 50 tons of silver. At current prices, the yearly sales revenue of the company will reach 4.50 billion yuan with profits of 1.18 billion yuan.
According to the region’s 12th Five-Year Plan (2011-15), the Tibet mining industry will need governmental financial support of 16 billion yuan and social investment of 32 billion yuan. The newly added mineral reserves will reach 2,000 billion yuan by 2015.
The total output value of the industry in Tibet will reach 40 billion yuan by the end of 2015 and 80 billion by 2020.
Sun Zhaoxue, chairman of China Gold, the only central State-owned enterprise in the gold industry in the country, said it will accelerate development of the second phase of the Jiama project and, by 2014, the company will have an annual production capacity of 63,000 tons of copper, which is valued at 4 billion yuan according to the current price.
Plans also call for Jiama to be one of the top nonferrous metal production sites in the world in five years.
The company has invested 280 million yuan in exploration and estimates the area holds 8 million tons of proven copper ore reserves, 20 times more than in 2007 when the company began mining in the region.
According to public data, China Gold increased its total gold reserves from 275 tons in 2006 to 1,380 tons in 2011. Its overall copper reserves increased from 1.25 million tons to 9.9 million tons in the period.
Sun said the company envisages tripling both its total assets and revenues from 2011 to 2015 with the aim of joining top-tier global mining companies.
By Du Juan in Tibet