A multi-metal mine in the birthplace of Tibetan King Songtsen Gampo has the potential to be among the world's 50 biggest mines of its kind by deposits and may generate an annual product value of 4.5 billion yuan (about 712 million U.S. dollars) by the end of 2015, Chinese prospectors have announced.
Medrogungkar county, home to the Jiama Copper Gold Polymetallic Mine, about 68 kilometers from Lhasa, may dethrone Dexing in east China's Jiangxi province to become the country's biggest copper town in 10 years, said Jiang Liangyou, board chairman and Party secretary of the owner of the mine, Tibet Huatailong Mining Development.
The projections were based upon the initial prospecting finished by Huatailong in 2010 within a land area of nine square kilometers, Jiang said. The company's mining permit covers a total area of 144 square kilometers at an altitude of 4,000 to 5,407 meters.
"The prospecting results are subject to independent third-party verification overseas," he said. "If verified, it would propel the mine into its second-phase expansion."
According to the expansion feasibility report that has already been completed, the subsidiary of the China Gold International Resources Corp. Ltd. (TSX:CGG; HK:2099) would expand its daily processing capacity from the current 6,000 tonnes of ore to 40,000 tonnes since the end of 2015 for 70 years.
"Phenomenal changes will be brought to Tibet's economic and social development, because, after the expansion, Jiama Mine may generate tax revenue equivalent to one-sixth of the current fiscal revenue of the government of Tibet autonomous region," said Jiang.
Official statistics show that Tibet took in record-high tax revenue of 9.663 billion yuan in 2011, up 91 percent year on year. Last year, Medrogungkar became the first Tibetan county to rake in tax revenue of more than 200 million yuan. Also last year, Huatailong posted revenues of about 660 million yuan from its main business and 140 million yuan in profits, and the company paid 118 million yuan in taxes.
First-phase production started in July 2010 with a total investment of 3.5 billion yuan, and the largest copper gold polymetallic mine in Tibet specializes in the exploitation and processing of six metals -- namely, copper, lead, zinc, gold, silver and molybdenum.
Located within the Gangdise Copper Metallogeny Belt in central Tibet, the Jiama project has been developing amid disputes. Before the mining area was taken over by Huatailong under the state-owned China National Gold Group Corporation (CNGG) in late 2009, a dozen private miners were caught up in a rat race for the rich ore supplies, ignoring their responsibilities to the local community and environment.
Ensuing public complaints forced the regional government to suspend the operations of the private miners, re-examine the local mining industry and seek a proper way to develop Tibet into "a reserve base of strategic resources" as the central government had required in January 2010.
Although nine key mining zones, including Jiama, had been officially designated as such years before, the local mining industry contributed to less than 3 percent of the region's total gross domestic product and was heavily criticized for jeopardizing the ecology and environment of the "roof of the world."
"As the only mining company parented by a centrally-administered enterprise in Tibet, Huatailong has been challenged to lead the industry by the regional government, blazing an appropriate trail to honor its social responsibility in Tibet and bring local residents long-lasting benefits through environmental protection and community-building efforts," said Sun Zhaoxue, general manager of CNGG.
"The answer, in our mind, is to build Jiama into a large,environmentally-friendly mine equipped with leading technologies," he said.
People have traditionally associated mineral exploitation with pollution and environmental degradation. How far Tibet could go with its mining industry would depend on whether mining companies could strike a balance between instant wealth and sustainable development, corporate profits and benefits for local residents, said Teng Yongqing, general manager of Huatailong.
"If these balances were not achieved, regardless of the rich mineral resources Tibet may boast, turning this region into a reserve base of strategic resources would be just a pipe dream," said Teng.
What Huatailong has been doing in Jiama over the past two years has been summarized as the "Jiama Model" by the Ministry of Land and Resources, and many of its domestic industry peers have visited the place in hopes of learning from Huatailong's experiences.
"The golden rule we have been following here is to always be responsibility-aware and harmony-aware. You can never be careful enough with these issues. We have had bitter lessons," said Teng.
To ease the hostility among local residents, Huatailong spent more than 32 million yuan on land compensations and another 3.5 million yuan to make up for herders' livestock losses at the hands of the former irresponsible miners.
It also invested 19 million yuan to install the Jiama Industry and Trade Company (JITC), a platform specializing in the transportation, green and labor services within the mine, but held only a 51-percent stake. The remaining stake advanced by Huatailong was equally distributed among the 665 local households of Jiama Township who received an aggregate cash bonus of 330,000 yuan the day the platform was put into operation.
In the following two years, these shareholders have shared in year-end dividends of 1 million yuan and 1.18 million yuan, respectively. Moreover, locals enlisted by the JITC can earn 4,000 yuan to 10,000 yuan a month. By contrast, the average per capita annual net income of Tibetan herders was 4,700 yuan in 2011.
Huatailong has also dedicated itself to boosting local employment. About 35 percent of its total employees, or 294 people, are from ethnic minorities, including 253 Tibetans. Jiama Township has become the most wealthy place in Medrogungkar to date.
"Working with Huatailong is an admirable job here. As far as I understand, people admire us for not just the relatively high salaries we earn, but also out of respect because many of them think the company is trustworthy," said Tsering Dekyi, one of the nine locals who graduated from Northeast University with a major in geological surveying and exploitation through Huangtailong's sponsorship.
CHANGING FOR THE PEOPLE
For Han employees, Huatailong has established a number of behavioral taboos. For instance, they are banned from speaking disrespectfully to locals, not fulfilling a promise, shirking their duties, littering and feeling self-important.
Employees are also given regular lessons on local customs and the Tibetan language so they can befriend local residents and offer a hand when the latter is in need.
Knowing the public fears its production might raise dust and damage grasslands, Huatailong modified its infrastructure construction plan and invested 200 million yuan on a 5.5-km-long tunnel to transport minerals through mountains instead of on the ground.
To date, the company has spent 180 million yuan on various environmental protection projects, including water recycling, land reclamation and tailings disposal. This investment is roughly 11.7 percent of its total investment on the Jiama project -- much higher than the national benchmark of 3 percent.
To conserve water and avoid pollution, the project is a zero-discharge site, as flotation tailings are de-hydrated in a press filter facility above the plant and the filtered water is re-circulated into the processing cycle.
To help local residents and livestock tide through dry seasons, the company spent 1.65 million yuan on building a stand-by water cell that draws water from the Lhasa River, and it invested another 3.3 million yuan on water-saving irrigation facilities for farmers.
"Not everyone in the management can speak Tibetan, but we are open to communicating with every resident. They just come and see. If they crack a smile, we see what we value," said Teng Yongqing.