GUEST COLUMN — Journey to China’s nickel heartland

On Oct. 16, along with four colleagues from the mining and brokerage communities, I left for China on a 16-day fact-finding mission. Our visit was divided into four areas: Beijing, where the centre of power in China resides; Jinchuan, on the edge of the Gobi Desert, which produces 90% of China’s nickel, platinum and cobalt; Jinchangyu in Hebei province to the southeast of Beijing where we visited a typical Chinese underground gold mine; and finally, Shenzhen in the Pearl River Delta near Hong Kong.

Our arrival at the China World Hotel in Beijing was a real shocker. It was a true 5-star hotel if I’ve seen one, at US$135 per night. Gleaming marble floors. Splendid rooms with modern facilities (direct dial telephone and CNN on television). A 10-alley bowling centre in the basement adjacent to a health spa with the latest torture machines.

Beijing itself is a giant construction site with luxury hotels going up at a furious pace, one more extravagant than the other. Highrise office buildings are not far behind with large modern apartment complexes to accommodate local residents with a growing appetite for the finer things in life as well as employees of foreign companies.

We then visited Jinchuan in Ganzhou province, the main productive centre of nickel, copper, platinum, palladium and cobalt. Of the 130,000 residents here, 30,000 are employed by Jinchuan Nickel.

The Jinchuan nickel-copper orebody was discovered in outcrop in the late 1950s in an area inhabited by less than 100 people. Construction of the mining complex started in the early 1960s and was completed and operational three years later. Over the past 30 years, production has increased fivefold to 25,000 tonnes of nickel metal per year from 5,000 tonnes. With 500 million tonnes of reserve, the mine is undergoing another expansion that will increase its capacity by 80% over the next 3-4 years.

The Jinchuan mining district covers an area about 6.5×1 km. Current production comes from the No. 1 and 2 areas which are served by no less than 11 shafts. As with most Russian mines, the complex is overmanned. With productivity so low, the amount of time and space required to do everything increases the demand for hoisting and, therefore, the number of required shafts.

The No. 1 area open pit, the sole producing area for the first 20 years of operation, came to an end in the late 1980s and now all of the production is coming from underground. The No. 1 area produces some 600,000 tonnes of ore per year while the No. 2 area, which is being increased in capacity, currently produces 150,000 tonnes of ore per year grading about 1.5% nickel and 0.7% copper along with some platinum group metals and cobalt. When we walked into the No. 2 mill currently running at 4,000 tonnes per day, two things struck me. First, every piece of equipment was working. Second, the place was clean. Most of the mill equipment was Chinese-made with design apparently borrowed from Russia. The technology is old but tried and sensibly applied.

As with most Communist countries, the salary scale at the mine seems backward to us. The chief engineer at Jinchuan, for example, makes 650 yuan (US$120) per month while an underground miner makes 700-1,500 yuan (US$130-270) per month. Anyone who makes less than 700 yuan a month does not have to pay any income taxes. The state and/or the company heavily subsidize the consumption part. For example, the chief engineer, who lives in a 400-sq.-ft. apartment, pays only 10 yuan (US$2) a month for rent.

We had the opportunity to visit one of Jinchuan’s three hospitals, and I can assure all Canadians that the legend of Dr. Norman Bethune is alive and well in China. We were told repeatedly that Bethune is considered the model of the perfect Chinese doctor. With only 500 beds, the hospital had a staff of 300 doctors and about 500 nurses plus service personnel. The Chinese take their health seriously.

Hospital care is totally free to employees of the mining community, but costs an outside patient 30 yuan per day.

— Pierre Lassonde is president of Franco-Nevada Mining and Euro-Nevada Mining.