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Yunnan Gold Prospecting Project Held Up
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Before the discovery of a huge gold mine in Boka, not many people had heard of this small village in Tuobuka Town, Dongchuan City, about 110 kilometers north of Kunming, capital of southwest China's Yunnan Province.


After some local villagers accidentally found gold here in 1996, Team 807 of the Yunnan Geology and Minerals Bureau, Team 209 of the Nuclear Industry of Yunnan Province, and the Canadian Southwestern Resources Corp (SWG) conducted successive prospecting operations, providing evidence that Boka was an area rich in high-grade gold.


With data collected from 67 drilling holes completed by SWG, Vancouver-based Hatch Ltd made a preliminary assessment of the Boka deposits in June 2005 and estimated that it had an existing gold resource of 150 tons of the 2-5g/t Au grade.


At the end of 2002, SWG and Team 209 set up a joint venture (JV), Yunnan Jinshan Mining Ltd Co (Jinshan). Under their agreement, SWG, with a 90-percent share in the JV, would contribute US$3.01 million in cash, and carry out initial explorations. According to Zhang Hui, manager of Jinshan's international department, with 200 holes completed so far, the actual gold reserves of Boka, which covers an area of 5.88 square kilometers, are almost sure to overtake the Hatch figure.


SWG began initial explorations three years ago. However, according to an Economic Information Daily report on August 24, the lucrative Boka Gold Project now runs the risk of being held up.


An official from Jinshan who didn't want to be named said that several tracts of land at the Boka gold mine are owned by three other enterprises, which makes further exploration difficult.


"We raised this with the Yunnan Provincial Department of Land and Resources last October," the official said. "But owing to the perfunctory attitude of local officials, it hasn't helped us resolve the problem even after so much delay. What's worse, unreasonable demands from local villagers have put added pressure on us."


According to an agreement, the township government of Tuobuka receives 600,000 yuan (US$75,405) a year from Jinshan to play a coordinating role. In spite of this, villagers continue to plant trees in the mining area, hoping to get large amounts of compensation.


"Other households have been compensated 300 yuan (US$37.7), but my family only received 200 yuan (US$25). So I must ask for an equitable judgment," villager Zhao Yuanbing complained.


Tang Jiangkun, head of Tuobuka Town, said that the total number of closely planted walnut and eucalyptus trees at the Boka mine has reached 400,000. The 600,000 yuan paid by Jinshan is distributed to affected residents of 13 natural villages each year. However, as the company enlarged its prospecting range, more villages began demanding compensation. When their demands aren't met, villagers have resorted to blocking drilling holes.


In mid-July, the bureau of land and resources in Dongchuan told Jinshan to stop drilling at Boka because their "substandard" operations "left behind a hidden danger" and would cause geological disasters in the region. As a result, three of the eight rigs have stopped drilling, resulting in a loss of 40,000-50,000 yuan (US$5,029-6,287) per day for the company.


In response to criticisms that Jinshan has given little consideration for the interests of local people, the Jinshan official said that his company does have a long-term plan for the construction of Tuobuka Town, such as assisting in the development of a breeding industry and building a processing factory for agricultural products. In addition, a large-scale mine construction project is scheduled to begin as soon as the feasibility study is completed. With an estimated investment of over 600 million yuan (US$75.4 million), the profits and taxes of the gold mine over the next five years are expected to hit 300 million yuan (US$37.7 million), which will be a big boost to the local economy.


"The problem is that at the moment, nobody knows when the first piece of gold will be found," the official said.


Since 1993, Yunnan has issued a series of regulations encouraging foreign enterprises to participate in the prospecting and exploitation of its rich mineral resources. However, what has happened in Boka has cast a shadow on the province's flourishing mining industry.


Moreover, Dongchuan's concerns are valid. The once well known "copper capital" was reduced to penury when its copper resources were exhausted. In addition, mining over an extended period of time has gravely damaged the local ecology. It now labors under the most severe soil erosion problem in the upper reaches of the Jinsha River. Learning from such a bitter lesson, people cannot help but ask: Can the newly discovered gold help Dongchuan out of poverty and become prosperous again? And, if so, how?


Tuobuka head Tang Jiangkun stressed that mineral resources are not renewable. Just selling gold is shortsighted; instead, a modernized gold production base featuring downstream processing should be established to promote the development of other industries including tourism, he said.


"The conflict between the conservation and exploitation of natural resources is coming to a head," said Ren Zhiji, a mineral prospecting expert. "Therefore, the relevant laws and regulations must be fine-tuned so that resources can be tapped in a more rational way to benefit the local people."


( by Shao Da, September 5, 2006)

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