CHINA AND ITS PURSUIT OF RESOURCES IN AFRICA
China says its trade with Africa jumped from little more than $10 billion in 2000 to $166.3 billion in 2011, driven by Chinese hunger for resources and African demand for cheap Chinese products. Africa is an important source for China of natural resources such has oil, iron ore, timber, cotton and minerals. China pumped almost $10 billion dollars in investment into Africa in 2009 and has also seen trade soar as Beijing buys oil and other raw materials to fuel its booming economy. On top of that China has canceled $1.2 billion in debt owed to Africa. The African nations like to do business with China because the Chinese do not lecture them about human rights, corruption and governance as Western nations often do.
The Chinese arrived in large numbers in the early 2000s on the coattails of giant state-run enterprises that bought into mining industry to feed China’s insatiable appetite for raw materials. Initially, the new arrivals, catered for Chinese compatriots, creating the largest Chinatown in sub-Saharan Africa, but they are now visible in almost every sector. At first the Chinese were welcomed but, slowly, they have become resented, From Namibia in the south to Tanzania in the east and Nigeria in the west, the same complaints are heard, of poor wages, bad working conditions, shoddy products and low quality workmanship.
China has its hands in projects all over Africa, including some places that don’t seem to have an immediate economic pay off. The Chinese are particularly keen on getting their hands on Angolan oil and have demined rural eras, built roads and upgraded ports there. China spent $500 million building an ambitious railway from the copper mines in Zambia to the Tanzanian port of Dar es Salaam.
Many of the projects are places with oil and other resources China wants. China has long term oil contracts with Nigeria and Angola — which supply it with as much oil as Saudi Arabia (2004) — and has a 40 percent stake in oil an project on Sudan and is setting up to look for oil in Niger. China also gets phosphates from Morocco, copper and cobalt from the Congo and Zambia; platinum and iron ore from South Africa; timber from Cameroon and cotton from Egypt.
In some cases very big money is involved. In October 2007, the Commercial bank of China (ICBC) made a move to buy a 20 percent stake of South Africa’s Standard Bank for $5.5 billion, the biggest Chinese financial acquisition offer ever at that time. A month before China made a deal to loan the Democratic Republic of Congo $5 billion to develop infrastructure and mining.
Nigeria in particular has benefitted from Chinese capital. China has invested more than $7 billion in energy, communications and infrastructure in the country, which exports some $4.7 billion in crude oil to China each year, according to China’s minister of industry and information technology. [Source: New York Times]
African leaders have said they welcome Chinese investments as it comes with less conditions and strings attached that American, Europe and Western aid, In addition Europe and the United States seems to be more preoccupied with their own problems these day and less in devoting their attention and resources to Africa.
China, African Dictators and Exploitative Economic Practices
David Smith wrote in The Guardian, Western critics say China supports governments with dubious human rights records. The Asian country's biggest African trading partners in 2010 were Angola, ruled by one man for 33 years, South Africa and Sudan, whose president is wanted by the international criminal court. China is also accused of importing labour to build roads and hospitals and extracting raw materials for processing at home, leaving little for local economies. During a visit to Zambia last year, the US secretary of state, Hillary Clinton, warned against a "new colonialism".[Source: David Smith, The Guardian, July 19, 2012]
China has made deals and supported pariah nations like Sudan and Zimbabwe in its pursuit for resources. David Smith wrote in The Guardian, China has also “struck up friendly relatitions with South Africa's Jacob Zuma and Equatorial Guinea's Teodoro Obiang Nguema, widely condemned by western activists as a brutal and corrupt dictator.” [Source: David Smith, The Guardian, July 19, 2012]
"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies," the South African president Zuma said. "We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain. This gathering indicates commitment to mutual respect and benefit. "We certainly are convinced that China's intention is different to that of Europe, which to date continue to attempt to influence African countries for their sole benefit."
Africa nations are concerned that a flood of Chinese imports will slow the development of manufacturing and industry in China. In Guinea, China began negotiating a $7 billion oil and mineral rights deals with a military regime only weeks after it was seized power and massacred 150 unarmed opposition protesters. Guinea is the world largest exporter of bauxite and has large deposits of diamonds, uranium, iron ore as well offshore oil.
In Zimbabwe, Chinese miners have been accused of ignoring the country’s mining environmental protection laws and threatening endangered animals in their quest for chrome, coal, diamonds and other minerals. Francis Nhema, Zimbabwe’s Environmental Minister, has accused the China of using bulldozers and diggers to strip mine in nation parks. There are also reports the Chinese are supplying weapons and money used to poach endangered species such as the black rhinoceros.
Supporters of China in Africa
According to the BBC: African leaders have welcomed the Chinese approach and have embraced investment from Beijing. China is interested in Africa's natural resources and in return is investing huge sums in African infrastructure. Roads are being built by Chinese firms at a staggering rate, says the BBC's Will Ross in Addis Ababa. While other rich nations impose conditions before aid is given, China's relationship with African countries is strictly a business one, he says.
China has been praised for investing money in Africa rather than providing aid for programs that often don’t work. In October 2009, the leader of Rwanda said, “the Chinese bring what Africa needs: investment and money for government and companies. I would prefer the Western world would invest in Africa rather than hand out development aid.”
President of Gabon Ali Bongo Ondimba told the Times of London: “When the Chinese come to us, they do not lecture. You American come to see us and you come with a nice menu, two or three pages long. I look at the menu and say: “I’m going to have a fine meal today.” [Then I am told] that in order for you to order a meal exactly as you want there are conditions. I see the menu and I am told I cannot have access to it...The Chinese have a one course set, but they say you can have plenty of it. You have to realize you are talking to someone who is very very hungry and not willing to wait.”
David Smith wrote in The Guardian, China's non-judgmental approach to business continues to gain traction with African governments, who say they will no longer tolerate being lectured by a hypocritical west that includes their former colonial masters. Criticism that Africa is allowing its natural resources to be exploited, and that China is content to bolster dictators and ignore human rights abuses, merely feeds the partners' anti-western sentiment.[Source: David Smith, The Guardian, July 19, 2012]
Zimbabwe’s unpopular dictator Robert Mugabe had the called the Chinese “unselfish allies” in his battle against Western imperialism and neo-colonialism. In a recent speech at South Africa's Institute of International Affairs in Johannesburg, the Chinese ambassador, Xian Xuejun, said: "Chinese and African people harbour simple but friendly sentiments towards each other. But there is a lack of in-depth understanding. Some western politicians and media also tend to make irresponsible remarks on China-Africa relations, attempting to mess up our co-operation." Xian insisted that China has a "non-interference policy" with "no political conditions attached" because Africans know their own situation best. "We have never pointed fingers to African countries concerning their independent and own choice of political system because we have never drawn lines according to ideological differences."
Critics of China in Africa
Critics have accused China of taking up an interest to Africa solely to gain access to its resources, while turning its back to human rights, corruption and dictators in countries like Sudan and Zimbabwe. China has been particularly generous with aid to Angola, which surpassed Saudi Arabia as China’s No 1. supplier of oil. China strategy in sub-Saharan Africa is part of a broader strategy to increase its energy supplies and reduce its dependence on Middle Eastern oil. In diplomatic cables revealed by Wikileaks, U.S. Asst. Secretary of State for Africa Johnnie Carson said, “China is very a aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa primarily for China.”
Human rights groups have criticised China for undermining efforts by western countries to link aid to improvements in governance. In June 2011 U.S. Secretary of State Hillary Clinton on Friday warned Africa that China does not always have its interests at heart as economic ties expand, and offered the United States as an alternative. “The United States does not see these Chinese interests as inherently incompatible with our own," Clinton told reporters in Lusaka, Zambia adding that Washington believed everyone benefited as Beijing assumes "a greater and more responsible role" in world affairs. "We are however concerned that China's foreign assistance and investment practices in Africa have not always been consistent with generally accepted international norms of transparency and good governance, and that it has not always utilized the talents of the African people in pursuing its business interests," she said.
There is a very alarmist tone to Western reports about Chinese activities in Africa. Matthew Parris wrote in the Times of London,” Nowhere was that undertone of alarm more noticeable than in the first episode of the BBC’s “The Chinese are Coming”. It was about Africa, and took us across Angola and Zambia. We saw how China is investing heavily in mining, construction and railway building in sub-Saharan Africa, including Zimbabwe and Congo — and exporting large numbers of Chinese workers (even self-employed chicken farmers) too. The documentary suggested that Chinese muscle may still be popular among Angolan Africans...It mentioned a new glint in Beijing’s eye: cobalt — and said there was resentment in Zambia at alleged exploitation of black workers at Chinese-owned copper mines and ruthless competition from Chinese settlers. “
David Smith wrote in The Guardian, China bridles at such attacks and argues that China-Africa economic co-operation and trade now drives around a fifth of the continent's economic growth, while China has aided 600 infrastructure projects across the continent. Chinese officials claim it is all about business. Gao Xiqing, the vice-chairman and president of the China Investment Corporation, the country's sovereign wealth fund that invests in more than 100 countries, said: "We grew up studying Karl Marx, Lenin, Chairman Mao. Karl Marx said the workers have no motherland and in fact today capital knows no boundaries of state. Wherever there's profit to be made, capital will go there. There's not that much difference for Chinese capital, as compared to any capital in the world."[Source: David Smith, The Guardian, July 19, 2012]
Brazil Versus China in Africa
China and Brazil are competing with one another in Africa, with some people call Brazil “the anti China.” David Lewis of Reuters wrote: Former president Luiz Inacio Lula da Silva, who stepped down in 2012, spent a good part of his eight years in power selling Brazil as Africa's partner and highlighting the ways in which Brazil is built on the "work, sweat and blood of Africans" shipped across the Atlantic during the slave trade. Lula visited 25 African nations, doubled the number of Brazilian embassies in Africa and boosted trade to $26 billion in 2008 from $3.1 billion in 2000. [Source: David Lewis, Reuters, February 23, 2011]
Adriana de Queiroz, Executive Coordinator at the Brazilian Center for International Relations, a think tank, says that attitude helps. "We are going there to form partnerships and to build up our companies," de Queiroz says. "Petrobras, for example, is not going to Africa to bring back oil to Brazil. It is to grow the company in other markets. China is not there for this reason. They are there to extract resources."
While China is increasingly keen to emphasize non-resource related projects, like helping countries set up special economic zones to boost local industries, the differences have not gone unnoticed in Africa. Mthuli Ncube, chief economist and vice president of the African Development Bank (AfDB) Group says conditions that some African nations agreed with China have, in effect, created "a barrier to employment creation" as China imports its own labor. Brazil, on the other hand, has gone beyond commercial ties to include social programs and alliances with African countries. "Brazil's value of accountability when engaging with African nations is bearing importance, especially when compared to China and its 'no strings attached policy' that some African governments are increasingly finding offensive."
Brazil Versus China in Africa on the Issue of Hiring Local Labor
Reporting from the Nimba-Buchanan Railway in Liberia, David Lewis of Reuters wrote: “In the muggy forest of central Liberia, a gang of workers is inching its way along a railway track, cut long and straight through an otherwise impenetrable mesh of trees and vines. The drone of insects is interrupted by a high-pitched drill and the clang of hammers as workers put the finishing touches to the perfectly aligned steel tracks. The gang of Liberian railway workers is a small sign things may finally be improving. Some of the men have only recently swapped their weapons for blue overalls and yellow hard hats. "We have a few young boys coming out of high school," Dogar says. "I am happy that I am around to train people." [Source: David Lewis, Reuters, February 23, 2011]
Hiring locals might seem unremarkable on a continent with an oversupply of cheap labor. But the issue of who works on Africa's big infrastructure projects has come into sharp focus in recent years. At building sites from Angola to Zambia, teams of Chinese workers often do the work instead of Africans. Where locals are employed, their rough treatment by Chinese managers has stirred bitterness. In Zambia last October, the Chinese managers of Collum Mine shot and wounded 11 local coal miners protesting over pay and working conditions.
That growing resentment is one reason why Brazilian engineering group Odebrecht, contracted to get Liberia's railway rolling again, made a conscious decision to employ locals for the job — and treated them well. "It worked perfectly," says project manager Pedro Paulo Tosca, who decided to divide the 240 km (149 miles) of track into sections and assign dozens of separate villages along the way to clear them. "The majority of the heavy work was activities that we could perform with local manpower instead of bringing sophisticated equipment to the site."
Odebrecht's initiative is not solely altruistic, of course. The unlisted company sees big profits in Africa. But as it pushes into the continent, Odebrecht and other Brazilian firms are using every chance they have to keep up with their Chinese rivals, who often enjoy a massive financing advantage thanks to the deep pockets of Beijing, and who rarely pay much attention to factors like human rights.
As investment in Africa grows — foreign direct investment surged to just under $59 billion in 2009 from around $10 billion at the turn of the century, according to UNCTAD, the U.N.'s agency that monitors global trade — so too do the expectations of host nations, who want not just trade, roads and bridges, but also jobs and training. Ngozi Okonjo-Iweala, World Bank managing director and a former finance minister in Nigeria, told one of China's biggest mining conferences in November that investors in Africa need to work with local communities to avoid conflicts and start building the real economy rather than just stripping resources. If it can build a reputation for doing just that, Brazil thinks, it might help it stay in the game.
"If (Brazil) wants to distinguish itself from the other emerging powers, it needs to demonstrate what is different about its engagement with Africa based on the principles it espouses as a democratic country," says Sanusha Naidu, research director of the China/Emerging Powers in Africa Program at Fahamu, a Cape Town-based organization that promotes human rights and social justice. "It will also have to reconcile its economic ambitions in Africa with its posture of being a democracy, especially in cases where it does business with essentially corrupt and malevolent regimes in Africa."
Odebrecht's decision to employ people who live along the track is clearly popular. After seven years of peace, Liberia's economy is only slowly getting back on its feet. In Buchanan, the port, small businesses are feeding off the rebirth of the railway, winning contracts to clean offices, transport material or put food on the plates of workers. Though accurate figures are hard to come by, Liberia's unemployment rate is believed to top 80 percent. Such is the hunger for jobs that a number of the new railway workers have come from the capital, Monrovia, hundreds of miles away.
"We are happy with what we are earning. Something is better than nothing," says Abraham Browne, a village contractor, between scooping mountains of rice into his mouth during a lunch break. Browne has swapped subsistence farming for a daily wage of about $4.50 for hammering nails into the tracks: "It helps us send our brothers and sisters to school because some of our parents are dead, killed in the war. It helps us a lot."
Odebrecht asked each community along the track to select a leader, with whom the Brazilian firm then signed a contract. The company has completed more than 75 percent of the work with Liberian labor, says manager Tosca. It has also trained up teams of engineers, technicians and accountants to help run its offices. The first iron ore, from a mine run by Luxembourg-based ArcelorMittal, is due in mid-2011.
In terms of cost, the decision to hire locally "is cheaper because labor here is not expensive," says Tosca. "Of course, you have a learning curve. The risk of accidents is higher — therefore you have to invest more time in training. (But with machines), if you have a breakdown, to have a part here, to replace it, takes several weeks, if not months." Tosca says the company believes it has an obligation to help the local economy, which in turn helps the company. "You create loyalty. They wear the shirt of the company It is (a) kind of chemistry," he says. Former human rights activist Kofi Woods, now Liberia's minister for public works, says Brazil is an "important partner" in developing the country.
China Versus Brazil Over Mining in Gabon
David Lewis of Reuters wrote: But as one experience in the tiny central African nation of Gabon seems to show, it's not just finance where China is more aggressive. The rich but technically challenging iron ore concession of Belinga had been ignored by the international mining community for years when it came under scrutiny about six years ago thanks to rocketing iron ore prices. Gabon's then-president Omar Bongo had long used the country's oil wealth to buy social peace, largely by allowing rampant corruption among his allies and co-opting and coercing the opposition. But Gabon's oil reserves were dwindling and Bongo saw a chance to cash in on another hot commodity. [Source: David Lewis, Reuters, February 23, 2011]
In March 2005, Brazilian miner Vale secured an exploration contract and began work on feasibility studies for an iron ore mine — a complex undertaking due to environmental concerns. Before Vale was done with its study, a Chinese joint venture called CMEC came in promising to complete the job more quickly and throw in a hydro-electric plant, a railway and deep water port. When the Brazilians said they were unable to complete the project as quickly, it was handed to the Chinese.
Local media swiftly reported that corruption had helped in the decision, though both Chinese and Gabonese officials denied the allegation. "There was never irrefutable proof that this happened but I heard that money had changed hands," says a western diplomat who was serving in Gabon at the time. The diplomat says a number of cabinet ministers had been seeking to take advantage of the aging president to cut deals behind his back on the project: "The problem was that Bongo had not been included in the deal."
In 2007, according to Brazil's Folha de S. Paulo newspaper, quoting leaked U.S. diplomatic cables, senior Vale officials pointed to the Gabon incident in warnings to the U.S. ambassador in Brazil that China's growing influence in Africa threatened international markets.
In the end, amid warnings from Chinese engineers that the project was indeed more complicated and expensive than they had previously claimed, a row broke out over plans to build a dam on a protected waterfall. The collapse of commodity prices during the global crisis, and Bongo's death in 2009 sealed the mining project's demise. Ali Bongo, the late president's son and successor, has called for a review and there is talk of bringing the Brazilians back onboard.
For listed companies like Vale "there are constraints on corporate misconduct. However, in the longer term, Brazilian companies may see this as a competitive advantage in terms of differentiating themselves from other emerging market players. Why compete with the Chinese on that level (of corruption)? It is better to keep their powder dry and wait for the Chinese to fall at the technical level," says Chris Melville, senior associate at political risk consultancy Menas Associates. "Unlike their Chinese competitors, Brazilian firms spend a lot of time and effort seeking to align their interests with those of their hosts — not just governments, but broader economic and social interests. They're still motivated by making profits, of course, but they recognize that aligned interests are the key to long-term and sustainable profit-making."
Greenland’s Minerals Behind China-Denmark Ties
John Acher and Mette Fraende of Reuters wrote: Chinese President Hu Jintao's three-day visit to Denmark may ostensibly have been about signing billions worth of business deals, but a stake in Greenland's huge mineral wealth may have been the elephant in the room. Greenland, a self-governing dependency of Denmark, has some of the world's biggest deposits of rare earth elements, strategically important metals in which China has a near monopoly. The north Atlantic island is also situated next to sea lanes that are increasingly important as the Arctic melts, and Washington has an air base in the northwest of the territory. That may explain why the leader of the world's most populous country decided to devote three days to visiting Denmark, a nation of just 5.6 million. [Source: John Acher and Mette Fraende, Reuters, July 16, 2012]
"He didn't come just to look at the Little Mermaid," said Damien Degeorges, an associate researcher with the University of Greenland, referring to the small bronze statue of the mermaid from the fairytale by Danish author Hans Christian Andersen. Hu and his wife Liu Yongqing viewed Copenhagen's most popular tourist draw on a sightseeing tour which also included the 17th-century Rosenborg castle and its China Room and a harbor trip on the royal yacht with Queen Margrethe II.
The first state visit to Denmark since the countries established diplomatic ties 62 years ago occurred less than two months after Chinese Premier Wen Jiabao went to Iceland, raising more questions about what China wants in the far north. Danish and Chinese firms signed roughly $3 billion worth of export and investment deals, including plans by Danish brewer Carlsberg to build a big brewery in China and by Maersk to expand the Chinese port of Ningbo. Danish and Chinese officials also signed 11 agreements in areas from health to climate, food and fisheries. "This shows the high level of attention we attach to our relationship with Denmark," Hu said before talks with Danish Prime Minister Helle Thorning-Schmidt.
China has been showing increased interest in the Arctic and its mining companies are already exploring for iron, copper and gold in Greenland. China has showed similar interest in Iceland, which has just 320,000 people but sparked suspicions of Beijing's hunger for natural resources.
Greenland, with a population of just 57,000, is dependent on exports of fish and shrimp and handouts from Denmark. It is keen to reduce that dependence by developing other industries. Martin Breum, author of a book on Denmark's role in the Arctic and Greenland's oil possibilities, said "Potential Chinese control of the rare earth elements in Greenland is scary to a lot of governments in the Western world," Breum said, noting that rare earth elements were used in products from telephones, televisions and hybrid cars to cruise missiles and night-vision goggles for soldiers. "Rare earth elements are of crucial importance to the industries of the Western world," Breum said, adding that China's de facto monopoly on rare earth elements was intolerable to the West in the long term.
Chinese Miner Builds High-Altitude Experiment in Peru
Reporting from Morococha, Peru, Caroline Stauffer of Reuters wrote: High in the Andes mountain range, a Chinese mining company is now in the housing construction and demolition business as it works to relocate a Peruvian town that sits in the way of its $2.2 billion Toromocho copper mine. By late July, state-owned miner Chinalco says it will finish building a new city of paved roads and multi-story homes for 5,000 people currently living on the side of a giant red mountain of copper 15,000 feet (4,500 meters) above sea level. [Source: Caroline Stauffer, Reuters, July 1, 2012]
Residents from the poor, ramshackle town of Morococha, where children attend school steps away from discarded mine tailings, will get access to amenities they currently lack, like modern water, sewage and electrical systems. They will all also own their homes and no one will need to pay rent. Chinalco calls the new $50 million town the biggest privately funded social project in Peru's mining history and it may help the company avoid community opposition that has stalled other major projects, like U.S. miner Newmont's $4.8 billion Conga project in the northern Andes.
Toromocho is biggest Chinese mine in Peru. If Chinalco persuades residents to move to Nueva Morococha, or "New Morococha," 15 minutes away by car - a feat that is still not certain - it could change ideas about corporate responsibility as President Ollanta Humala struggles to resolve hundreds of conflicts over natural resources that threaten $50 billion in pledged private investments. "A project of this size has generated very high hopes," said Pedro Salazar, Chinalco's representative in Nueva Morococha, standing in front of rows of homogenous homes with white walls and red roofs. "Other mining firms are looking at this as a point of reference."
Toromocho is expected to open in late 2013, operate for 35 years, and produce 250,000 tonnes of copper a year - nearly a quarter of Peru's 2011 output. A free-trade agreement with China will ease exports of the red metal to the world's No. 2 economy. The town of Nueva Morococha, if successful, could improve the reputation of Chinese companies operating far from home. Many have been accused of running roughshod over workers and residents in Peru and other developing countries in the past.
Chinalco says 75 percent of Morococha residents support the move. It says residents were consulted about the new town's layout - which will have a central plaza, a school, a hospital and churches. It looks a bit like a Peruvian version of Levittown, the suburban towns built in the United States in the 1940s and 1950s.
Resistance in Peru to Relocation for Chinese Mine
Caroline Stauffer of Reuters wrote: Chinalco expects to persuade more residents to move by taking them on visits to the new town that broke ground two years ago. Nueva Morococha sits in a shallow valley near picturesque alpine lagoons but, because it is still under construction, lacks the organic feel of a living town. "Some want to move to the new city because now they live in rented rooms. Others don't want to go because the company hasn't taken account of all of our needs," said Rebeca Antonio. She sells trinkets and sodas from a stall and worries there won't be enough foot traffic in the new town for her to make a living. [Source: Caroline Stauffer, Reuters, July 1, 2012]
Residents in favor of the move said they would prefer to have homes with new kitchens and to live at a slightly lower altitude in a new place that isn't surrounded by mine tailings. They say Chinalco does more for them than their mayor in the town 92 miles east (149 km) of Lima, Peru's capital. But some villagers and local government officials are not sold on the idea, fearing they are losing control over their livelihoods without adequate compensation for their homes in a community with a tumultuous mining history. "Nothing is certain. We don't have any plans to move," said Vilma Pariona, general manager of the municipality of Morococha.
Morococha's mayor led protests two years ago against Chinalco that were attended by some 100 people. Protesters said Chinalco hadn't offered enough to buy existing properties and the location for the new town, chosen arbitrarily, was humid. Chinalco's Salazar said holdouts, along with people who weren't given houses because they arrived in Morococha after the company's 2006 enrollment deadline, will not delay the mine's opening next year. Residents could, in theory, stay put for five more years - if they can put up with the grit and noise. They do not have much legal recourse as the town sits inside the mining concession granted by the government - which also required the miner to relocate residents.
Despite a decade-long economic boom helped by China's voracious appetite for the metals that Peru exports, around 60 percent of rural Peruvians remain poor, fueling distrust and discontent. Critics say Humala's predecessor Alan Garcia, who approved the Chinalco deal, welcomed foreign mining investment almost unconditionally. Humala has asked some firms, including Newmont, to improve their social and environmental plans but has generally backed big companies since taking office a year ago. Humala says he needs revenue from mining to keep Peru's economy humming and fund initiatives to tackle poverty, which has fallen to around 30 percent at a national level.
In rugged areas like Morococha where government-run social programs are scarce and residents chew coca leaves to ward off hunger and altitude sickness, companies say they are forced to play the role of the state and build schools, roads and medical facilities, or face bouts of unrest. At least 10 people have died in disputes over natural resources since Humala took office a year ago, according to the government human rights office. Some 174 people died in clashes with police that often pit poor villagers against large multinational firms during Garcia's term.
The stalled Rio Blanco copper project in northern Peru was stymied by bouts of violence before and after it was bought in 2007 by Zijin of China. A Peruvian iron ore mine owned by China's Shougang Group has been dogged by labor and safety tensions since it was bought in 1992. Chinalco and other firms say they are trying to chart a different course, responding to pressure from the government and communities to be more socially responsible. "Companies that have recently entered Peru are taking note of the conflicts and are trying to have better relations with local populations," said Carlos Monge, regional coordinator of the NGO Revenue Watch.
Mining memories in towns like Morococha in Peru's central Andes go back centuries. Residents still talk of a mining accident that killed 27 people in 1928 and many have toiled in the mines that have helped make Peru a top producer of copper, zinc, silver and gold. Morococha also sits about 20 miles (34 km) away from La Oroya, often ranked as one of the world's most polluted places because of a polymetallic smelter that is now shuttered.People in Morococha live above abandoned tunnels and say that the mine tailings from earlier ventures were dumped into reservoirs surrounding them and cause respiratory and digestive problems. "We don't want to be a part of this nefarious history," said Chinalco's Salazar in the tidy streets of the still uninhabited city of Nueva Morococha.
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Last updated December 2012