Dear CIMG Members,

Welcome to the 6th html e-news that we hope will be a useful platform to share news to you and others interested in China's mining sector. We hope that you are all in full swing after a restful May break.

In this edition we have included some interesting news, events, information and articles.

Please be reminded that the Secretariat of the CIMG is now located within the AustCham Beijing Office. We welcome all members to come and visit. As well, the office has three workstations and a meeting room for CIMG mambers that may need a space to work or meet from time to time. If you do need a workstation please book the required times with the Secretariat by sending an email to Mary.

News from the last CIMG meeting

The last CIMG meeting with 34 attendees was held at the Swissotel on 25 May.

Auslan opened the meeting and welcomed all the attendees. He then went onto welcoming special guests that included a Mr Boa Qiang – Director: All China Environmental Federation and a delegation from HeChi County, Guangxi Province.

New members to the CIMG were then introduced:

ANZ Bank
Ausenco
The Beijing Axis
ERM
ESS China
MWH
Long Term Group
Mallesons Stephen Jaques

Auslan then introduced, Luka from Capital Associates, who presented the topic on the proposed draft Labour Law that was released recently in China. She noted that the proposed changes would seriously affect the all companies in China. The changes to provisions in regards to non-complete agreements, training and trade unions would add greatly to the costs of mining operations and gives employers little scope of protection. A copy of the presentation is posted here. Luka urged those interested to lobby before the law is promulgated after which chances of revision are minimal.

Auslan opened the floor to discuss the law pertaining to mining rights and if members had comments. He also asked for comments on the recent “profit windfall tax� that was introduced in Mongolia. There was no comment on either of these items and Auslan mentioned that he would forward comments from members by email for further discussion at a later date.

Mr Bao Qiang a director from the All-China Environment Federation (ACEF) was introduced. He is also a Director of the Science and Technology Department of SEPA. Mr Bao mentioned that ACEF a non-governmental organization was founded in 2004 and with the most extensive variety of members is designed to protect the environment. The federation, which includes government officials, other environmentalist social organizations, enterprises and ecologists serves as a bridge linking the public and the government and to rally all possible social forces to fight China's worsening pollution. He noted as well that second the First China Forum on the Environment and Development will be held in mid June. Details of this event will be emailed to CIMG members shortly.

Mr Jing XianFa (Deputy Director General – Guangxi Investment Promotion Agency/CCPIT), followed on from his presentation last month and mentioned that dates had been set for the end of June for an international conference on mining opportunities in HeChi province. As previously noted deposits in HeiChi and in other areas of Guangxi. Guangxi are known for having various mineral deposits, and it serves as one of the 10 important production bases of nonferrous metals in China. He invited CIMG members to attend this and view mining properties in He Chi. For more information please contact either Mr Jing at jfjing.wshj@peopledaily.com.cn or Mr Zhan on Mob: (0)13977800608.

Auslan provided a quick update on activities of the CIMG that included; China Coal Law Review and the upcoming visit from the ICMM that will be on July 5. For more details on this please contact Auslan.

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Member Update

Meeting with NDRC:
As noted above this initiative is moving ahead and the CCII will be our partner in producing a working paper in relation the providing a review on China Coal Law. As well the Secretariat had a successful meeting the CCII, NDRC and NIOS prior to the May Holiday. We will be meeting with the CCII next week. If you are interested in contributing please contact Mary.

Media Engagement
The CIMG is now contributing regularly to the MINING JOURNAL CHINA and WORLD NON FERROUS METALS. The Secretariat is seeking content related to Environment, Community, Safety and Technology. Articles should be case studies, in Chinese and 2 pages long. This is a unique chance to share information and promote the international mining community in China. If you are interested in submitting an article, please send your article as a word document to admin@austcham.org by the first week of the month to be published the following month.

Vocational Training
The CIMG is assessing the possibility of providing or facilitating vocational training for the mining sector in China. The Secretariat is seeking input from its members on assessing this idea. For more information or ideas please email Auslan at admin@austcham.org

ICMM
The CIMG is preparing to translate some of the key documents on Sustainabililty that have been published by the ICMM for distibution in China. This it is hoped this will be the start of contintued work with the ICMM. The ICMM (International Council of Mining and Metals is the leading global organisation in regards to promoting sustainability for the mining and metals sector)

As well, we are happy to annouce a function that will be held on the July 5 with the ICMM in Beijing, This will be great chance for members to meet the leading global organisation in relation to sustainable mining. Details of the event will be emailed shortly

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Feature Article

Caterpillar has signed an agreement with a Chinese company to provide 60 methane-gas-powered generator sets for use at a coal mine in the Shanxi Province. The generator sets will be built at Caterpillar's Large Engine Center in Lafayette.The sets will be used to produce 120 megawatts of power at the Sihe Coal Mine. The methane gas power project is expected to be the largest of its kind in the world when it is fully operational in 2007. Source: Inside INdiana Business

Press Release

BEIJING, People's Republic of China (PRC) - Caterpillar Inc. (NYSE: CAT) has been selected to provide 60 methane-gas-powered generator sets to produce 120 megawatts of power at the Sihe Coal Mine in Jincheng City, Shanxi Province, China. The Shanxi Jincheng Anthracite Coal Mining Group Co., Ltd. is the project developer for the methane gas power project, which is expected to be the largest of its kind in the world when it is fully operational.

"The residents of Shanxi Province will benefit from this power plant, which is a great example of the progress that is possible when companies like Caterpillar and its dealers work closely with industry and government," said Stu Levenick, Caterpillar group president with responsibility for China." "This project will improve environmental and economic conditions and mine safety while increasing trade between the United States and China."

Methane gas is found in coal seams and can be hazardous if not properly managed and ventilated from mines. The power plant project is expected to improve methane gas ventilation at the mine site, improving safety while providing an environmentally friendly fuel source to generate electricity.

Historically, the methane has been vented into the atmosphere, generating greenhouse gas emissions. By capturing the previously vented methane gas and converting it into electricity, the Caterpillar generator sets will significantly reduce greenhouse gas emissions while also improving the capacity of the local power grid.

It's estimated the project will reduce greenhouse gas emissions by 4.5 million tons over a 20-year period.

"Caterpillar has a strong commitment to safety and environmental stewardship, and we are honored to be a partner in this important project supporting China's efforts to pursue sustainable economic development," Levenick added.

It is anticipated the planned power generation plant at the Sihe Coal Mine will use 60 Caterpillar G3520 generator sets, paralleling switchgear and four steam turbines driven by recovered exhaust heat to produce 120 megawatts of power. Project partner Shanghai Electric Group Co., Ltd. will provide the steam turbines.

The entire methane-fired power plant is expected to be fully operational in 2007. Caterpillar will work closely with dealer WesTrac China Limited on product commissioning and ongoing support for this project.

"For more than 20 years, our Lafayette, Indiana, Large Engine Center has produced the 3500 series of engines for use in electric power projects all over the world," said Bill Rohner, Caterpillar vice president with responsibility for the Electric Power Division. "The engines that will be the heart of this coal methane power plant have a proven track record and will provide years of dependable electricity for the people of Shanxi Province," Rohner said.

Caterpillar has a long history in China. The company sold its first products there in 1975 and opened an office in Beijing in 1978. Beijing is home to Caterpillar's marketing headquarters for China, and it is also the headquarters for Cat China Financial Leasing.

In the 1980s, Caterpillar launched technology transfer agreements with Chinese manufacturers who began building Caterpillar licensed products. Caterpillar's expansion in China accelerated in the early 1990s with the establishment of a more significant local production strategy. Today, Caterpillar operates 13 facilities both joint-venture and wholly-owned businesses which, together with its network of independent Caterpillar dealers, offer customers in China the best-in-class products, services and support that have made it a global leader.

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Regulatory Update

Environmentally Damaging Projects to Be Blocked
China's top environmental protection official has pledged to block construction projects that fail to pass stringent environmental impact assessments.

Zhou Shengxian, director of the State Environmental Protection Administration (SEPA), said on Friday that environmental impact assessments will set standard and no development project which damages the environment will get approval.

Zhou told a national meeting on the management of environmental impact evaluation in Guangzhou, capital of Guangdong Province, that environmentally-damaging activities were occurring nationwide.

"Some areas have disregard the public's living environment and launched development projects in a blind and chaotic way," said Zhou. "A number of projects that have produced serious pollution and damaged the ecology have even been cited as image projects."

Environmental degradation continued and environmental problems had become a problem in China's social and economic development, he said.

He said properly conducted environmental impact assessments were the key to change the appalling situation in the country's environmental protection.

Zhou had asked environmental protection workers to be strict in examining and approving construction projects and to be stringent in inspections, while maintaining efficiency, openness and transparency.

China has 68 organizations specializing in environmental impact assessments.

Environmental protection officials had evaluated 55,000 construction projects in the last two years, and had denied approval for 1,190 projects, with investments totaling 170 billion yuan (US$20.96 billion) for failing to meet environmental protection standards.

He cited, as an example, the 525 power projects evaluated, of which 32 were ordered to halt construction after failing to meet standards.

Stringent assessments could help curb the overheating investment in fixed assets and align construction supply more closely with demand, said Kuang Yaoqiu, a fellow researcher with the Guangzhou-based Institute of Geochemistry with the Chinese Academy of Sciences (CAS).

The three environmental protection goals SEPA hopes to reach by 2010 are improvement in the quality of the environment in major regions and cities, environmental degradation brought under control, and a 10 percent decrease in the discharge of major pollutants.

(China Daily May 27, 2006)

Draft Labor Contract Law Circulated
(Source: Morrison and Foerster Website)
On March 20, 2006, the National People’s Congress (the “NPCâ€�) released a draft "Labor Contract Law of the People’s Republic of China" (the “Draft Lawâ€�) inviting comments from the general public.   The Draft Law, which is intended to supplement the Labor Law of the People’s Republic of China (the “Labor Lawâ€�), has been scheduled for consideration under the NPC’s 2006 legislative plan.   If enacted as drafted, the Draft Law will increase employee rights in a number of areas.

Use of Fixed-Term Labor Contracts Discouraged:
Employers have often found it more advantageous to enter into fixed-term labor contracts with employees, given the many restrictions on terminating open-term labor contracts under the Labor Law.   The Draft Law would make the use of fixed-term labor contracts less attractive.   First, employers would have to pay severance compensation to fixed-term employees if their contracts were not renewed after expiration.   Such compensation would be at least one month’s salary for each year of service.   Second, the Draft Law would eliminate employee incompetence and several other reasons as legitimate grounds for early termination of fixed-term contracts.

Non-Competition Provisions Further Restricted Over Current Law and Practice:
The Draft Law would statutorily recognize post-employment non-competition obligations, but would limit their enforceability to:

(1)         the geographical area where actual competition may reasonably occur and

(2)         a maximum duration of two years.  

Current law and practice does not impose a geographic restriction and permits such obligations to last up to three years.

The Draft Law would further provide that non-competition obligations be enforceable only after the affected employee is fully compensated with an amount not less than his or her annual income, a significant increase from current law and practice.

Company Rules May Not be Adopted unless First Discussed with Employees or Their Representative:
Under the Draft Law, employers would not be allowed to implement company rules and policies that affect the “livelihood of employeesâ€� unless they are first discussed with a labor union, through an interim employee representative conference, or through “fairâ€� negotiations with employees.   The current Labor Law imposes no such requirement.

Representative Offices May Directly Contract with Employees; Limitation on Use of Labor Service Agencies:
Under the Labor Law, foreign representative offices (“ROsâ€�) are required to hire staff through labor service agencies such as the Beijing Foreign Enterprise Service Group Co., Ltd. (“FESCOâ€�).   Under the Draft Law, ROs and all other employer entities would be required to enter into direct employment agreements with their staff after their first year of service.   This requirement would lessen the ability of employers to reduce liability through the use of labor service agencies.

Action Points:
Given the potential impact this law could have if promulgated, FIEs are advised to consider taking the following proactive steps:

(1)         Reassess company rules, regulations and policies for legal compliance.

(2)         Reevaluate existing labor contracts and non-competition agreements.

(3)         Adjust human resource budgets in light of potential increases in severance payments.

 

Provisional Regulation on Disciplining Dereliction of Duty in Environmental Protection Activity -SEPA -issued date: 20030228

Notice of Further Regulating Exploration Licenses and Mining Licenses Granting/Transfer Process Management

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Classifieds

There are no classifieds as this time

NOTE: If you are interested in placing a classified-hiring, buy or sell (looking for staff, equipment, etc) please contact the Seccretariat. This service is FREE for CIMG members

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