Beijing has announced that it is going ahead with the development of a copper mine in Tibet which has the PRC’s largest copper reserves and is the only known deposit in the region with world-class potential. Copper is vital to China’s development and industrialization, but as a raw material is in very short supply.
Investors signed an agreement yesterday (6 April) to set up the Yulong Copper Industry Joint-Stock Company for tapping the copper mine located in Chunyido (Chinese: Qingnitong) village, Jomda (Ch: Jiangda) county, Chamdo, in the eastern area of traditional Tibet known as Kham. Xinhua reported yesterday that the mine has 6.5 million tonnes of proven copper reserves – according to Chinese statistics, this would represent more than one-tenth of China’s estimated total copper resources of 62.74 million tonnes (‘Mining Tibet: Mineral exploitation in Tibetan areas of the PRC’ by Jane Caple, Tibet information Network, 2002). Jin Shixun, deputy director of the Tibet Development and Reform Commission, was reported by Xinhua as saying that construction of the mine is scheduled to start at the end of September, and that the mine expected to go into operation within three years.
The exploitation of Yulong was delayed during the 1990s due to its remoteness and a weak supporting infrastructure, but local infrastructure development has been underway in the past few years. Construction of housing for mine workers was reported to have commenced in summer 2001, and construction work also began in 2001 on a major new power station on the Mekong River to enable development of the Yulong copper deposit, and a 60,000 kW capacity generating set for the mine. Financing for these infrastructure projects under China’s drive to develop the western regions, including Tibet, is generally from the state or bank loans, although foreign investment is often sought.
Xinhua reports that five Chinese companies will be involved in the development of the mine, including Qinghai West Mining Co., Ltd., Tibet Mining Development Corporation and Zijin Mining Group based in Fujian Province. The involvement of five different companies from Qinghai, the Tibet Autonomous Region and Fujian is an indication of the importance of the mine; only one company from Qinghai won the initial contract.
The Yulong copper deposits attracted the interest of foreign mining companies in the mid-1990s, notably the US-based Cyprus Amax (now taken over and incorporated into the Phelps Dodge Corporation), which considered it to be the only mineral deposit in Tibet large enough to be of potential interest. Consultants from Cyprus Amax who visited the site later said that the authorities were ‘blowing hot and cold’ about the possibilities of their investment, and reliable sources in the industry reported that: “They [the Chinese authorities] like to attract foreign investment but don’t seem to take the next step, which is to approve equity and interest in a project. The security of an investment depends on the security of title, which means rights to the mine based on a contractual arrangement.”
The plans for Yulong to produce electrolytic (refined, almost pure) copper rather than copper concentrate, significantly adds to the value of the mine. A portion of the electrolytic copper will also be directly processed into copper products, further boosting the mine’s profitability. The Tibet Autonomous Region Specialist Plan 1996-2020 (an internal document obtained by Tibet Information Network) forecasts that the Yulong mine should have a life of 28 years.
Copper ore is one of the metal minerals in seriously short supply in China. China needs to increase domestic copper mine production, as mines that opened in the 1950s and 1960s are now nearing depletion. Beijing is looking to the western regions, including Tibet, to make up at least some of the shortfall through opening up known deposits that have not yet been developed.
A major proportion of the world’s commercially produced copper is used by the electrical industries in building construction, telecommunications, electronics and electronic products. Copper is particularly valuable to China as it aims to establish high-tech industry bases.