China’s global mineral rush

China’s global mineral rush. Learning from experiences around controversial Chinese mining investments
Luis Scungio
Stichting Onderzoek Multinationale Ondernemingen, juin 2021

Key findings

Characteristics of Chinese mineral investments abroad

  • Chinese mineral companies do not operate in isolation from other corporate actors. Many of the reviewed controversial projects are controlled through joint ventures, in which Chinese companies work in partnership with companies from other countries, including multinational corporations. Consumer-facing corporations, or western banks, may also have a business relationship with the mineral operation, either as an upstream investor or downstream customer; ‡ Chinese corporate actors often rely on relationships with authorities in the host country and manage interactions with other stakeholders in that light. As a result, negotiations that take place at the early stages of a projects often lead to information asymmetries between the claimed benefits brought about by investments and the risks posed to local communities;
  • Chinese corporate actors tend to avoid interfering into local power structures when the interests of local elites are at odds with those of marginalised communities, even when there are serious human rights violations taking place. This non-interference approach towards local power dynamics prevents a conflict-sensitive approach being taken towards overseas investments; The hierarchical corporate culture of many Chinese firms often prevents overseas branches of a company from reacting to new situations on the ground in a timely way;
  • Chinese companies may have a stake in problematic mineral projects as part of a broader investment arrangement with the host government. In two deals reviewed, the extracted minerals are used as collateral for infrastructure development in the host country. Any concerns about mining operations are, therefore, connected to wider power arrangements underpinning bilateral agreements.

Responsiveness of Chinese actors to social and environmental concerns 

  • Because Chinese actors often do not perceive international civil society organisations as legitimate stakeholders in a conflictual context with local communities, they can misinterpret the motivations of such groups working on behalf of affected communities, and dismiss their grievances;
  • In three of the reviewed cases, Chinese companies did publicly respond to allegations which suggests that they do pay attention to their public reputation and that such criticism is taken seriously, especially if backed by scientific evidence;
  • In two of the reviewed cases, community resistance led forced Chinese companies to address outstanding issues through community development activities. These initiatives, however, failed to generate local ownership and exacerbated the risk of further injustices; ‡ Litigation strategies by community defenders have also targeted the failure of a host government to protect people’s rights against the social and environmental harms caused by Chinese-led mining operations. In two of the reviewed cases, this type of legal claim brought positive results for communities;
  • Civil society groups have strategically targeted Chinese regulators, academics, and other stakeholders with messages that quote China’s voluntary guidelines to overseas  nvestments. Such communication is intended to fill information gaps for Chinese regulators on the risks caused by the projects, and it has sometimes resulted in engagement with Chinese actors.

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