The China Signal - April 15
Accusations of labour violations in Bolivia; $60mm and $40mm housing and hospital financing in Ecuador; Brazil's commodity exports to China 📉
G’day, and welcome to The China Signal. This week, Chinese firm Vicstar Union Engineering is accused of violating miners’ working rights in Bolivia; oil extraction from Ecuador’s Ishpingo field begins, supported by the China National Petrolium Corporation (CNPC); Ecuador signs financing agreements with China worth $60 million and $40 million for housing and a hospital in a reciprocal act for Beijing’s vaccine supplies to the country; Brazil’s commodity exports to China slide, plus more. Read on.
Critical Minerals, Worker Rights ⚖️
Bolivia 🇧🇴
Empresa china Vicstar vulnera derechos laborales de mineros en Huanuni | EJU.tv | April 9, 2022
~Above for the full Spanish article~
Chinese contractor Vicstar Union Engineering is the subject of developing legal action for the supposed violation of 138 workers’ labour rights at their mining complex in Huanuni in Bolivia’s Oruro province. The Jefatura Departamental de Trabajo de Oruro (Departmental Labor Office of Oruro) plans to initiate legal action, claiming Vicstar’s practice of fixed contracts evaded the payment of worker benefits.
Danitza Villaroel, head of the local labour office, detailed that employers are not granted benefits for their years of service, nor do they receive bonuses, vacations or severance pay. According to Villaroel, workers also haven’t received higher wages for overtime and night hours. The mine’s labourers were also allegedly not provided with personal protective equipment, despite the toxic gasses and contaminated water they’re exposed to.
Huanuni is believed to hold the world’s richest cassiterite deposit, and is Bolivia's largest underground tin mine. Cassiterite is the primary ore for deriving tin.
Vicstar Union Engineering is a joint-venture by Shenzhen Vicstar Imp. & Exp. Co., Ltd. and state-owned Shandong Gold Group’s Yantai Design and Research Engineering Co., Ltd. It was first awarded a US$50 million contract to start operating on the Huanuni complex in 2011. (RP)
Oil 🛢️ + ESG 🌳
Ecuador 🇪🇨
~Above for the full Spanish article~
On Wednesday April 13, Ecuador began the extraction of some 3,600 barrels of oil per day from the Ishpingo field, informed the country’s Secretaría de Presidencía (Secretariat of the Presidency). Together with the nearby fields of Tiputini and Tambococha, Ishpingo forms the so-called ITT block. Located in the Amazon Yasuni National Park (Napo, Orellana, Pastaza provinces), the ITT block holds more than 40% of the South American country’s proven crude reserves. The official statement also detailed that:
According to the current production trend, US$60 million will be generated per year, and will be invested by the government in improvements for the education, health and security system.
In the coming months, it is expected that the Chinese company CNPC Chuanqing Drilling Engineering Company Limited will drill another 36 wells for the extraction of heavy crude oil in Ishpingo. Ecuador as a whole currently extracts around 500,000 barrels of oil per day.
Extraction at Tiputini and Tambococha started in 2016 after years of fraught debate over whether to drill inside the park. The ITT block was part of a failed environmental initiative of former president Rafael Correa (2007-2017) that sought to keep the crude underground in exchange for international compensation of US$3.6 billion. Amongst the most biodiverse areas on earth, Yasuni park is home to two of the world’s last uncontacted indigenous populations. (RP)
Background: CNPC Chuanqing Drilling Engineering Company Limited 🔍
CNPC Chuanqing Drilling Engineering Company Limited (“CCDC”) is a subsidiary of state-owned China National Petroleum Corporation (CNPC), China's largest oil and gas producer. It is headquartered in Chengdu (Sichuan province).
Founded in February 2008 from the merger by the former Sichuan Petroleum Administration Bureau, Changqing Petroleum Exploration Bureau and engineering & technical units of Tarim Oilfield, CCDC is one of the world's major oilfield services providers and a global contractor in engineering construction.
Counting on more than 27,000 employees and 600 major operation teams, CCDC has established branches in 8 countries: Afghanistan, Ecuador, Indonesia, Iran, Kazakhstan, New Zealand, Pakistan and Turkmenistan.
Public Diplomacy
Ecuador 🇪🇨
~Above for the full Spanish article~
On Monday April 11, the Government of China and Ecuador’s Ministerio de Desarrollo Urbano y Vivienda (Ministry of Urban Development and Housing, MIDUVI) signed a financing agreement worth US$60 million for the construction of 2,932 houses in the contiguous provinces of Esmeraldas and Manabi, President Guillermo Lasso announced during his visit to the city of Esmeraldas. Both provinces were affected by the April 16, 2016 earthquake.
Lasso noted that Beijing’s financing arose in reciprocity because of the two countries’ deep COVID-19 vaccine relationship.
Chen Guoyong, China Ambassador to Ecuador, noted that providing help with the housing plan had already been included in China’s aid package to the country six years ago, but did not materialize due to imperfect timing with Ecuadorian presidential elections and ongoing COVID-19 health emergency. He also announced the financing of an additional US$40 million for a new hospital in Quinindé (Esmeraldas province).
No further details were provided on what Chinese entities will provide this financing. We will continue to monitor for updates. (RP, MH)
Russia 🇷🇺 + Critical Minerals
Argentina 🇦🇷 + Bolivia 🇧🇴 + Chile 🇨🇱
~Above for the full Spanish article~
Russia could suffer “severe consequences” due to the recent interruption of lithium deliveries from Argentina and Chile in response to war in Ukraine, said Vladislav Demidov, vice-president of the metallurgy department of the Ministry of Industry and Commerce during a meeting in the Russian Senate. In such circumstances, Bolivia is currently the only country sending the much-needed mineral supplies to Russia, he pointed out.
Demidov stressed that there is no lithium ore extraction in Russia, although lithium processing capacity exists in the Siberian regions of Krasnoyarsk and Novosibirsk, and in the European region of Tula, where local companies are waiting to obtain governmental licenses. In case of prolonged shortages of supplies, he also warned that “a major problem may arise in meeting internal needs of lithium-ion batteries”.
In recent years, Russia has shown interest in the exploration of Bolivian lithium deposits. The issue was discussed in the July 2019 meeting between President Evo Morales and Vladimir Putin in Moscow: however, as of October 2021, Bolivia denied having reached an agreement with Russia. The Andean country is known for being the location of some of the world's largest lithium reserves in the Uyuni, Potosí (Potosí province) and Coipasa (Oruro province) salt flats. (RP)
Agriculture
Brazil
Brazil meat cargos to Shanghai port disrupted amid indefinite lockdown | Nasdaq - April 14, 2022
Brazilian meat exports to the Chinese port of Shanghai have been disrupted by a lockdown there, a person with knowledge of the matter told Reuters, in one example of how China's aggressive steps to fight COVID-19 are hitting global commodity markets.
At least one shipping line operator has stopped sending Brazilian meat to Shanghai, the source said, instead offering clients the alternative of sending cargos to Xingang and Ningbo.
One big Brazilian meat exporter canceled the shipment of three containers, while another stopped booking new cargo, the source added.
Since the Shanghai lockdown began in late March, containers of frozen food have begun backing up at the port, with inspections for incoming meat halted, said the source, who was not authorized to speak publicly about the matter.
Shanghai is the main point of entry for Brazilian meat imports to mainland China, which is Brazil's top trade partner.
China imported 723,370 tonnes of beef and 640,469 tonnes of chicken from Brazil in 2021, according to industry data, the largest consumer of Brazilian meat by far.
China's March soybean imports fall 18% on year | Reuters - April 13, 2022
The world’s top importer of soybeans brought in 6.35 million tonnes of the oilseed in March, down 18% from 7.77 million tonnes in March 2021, General Administration of Customs data showed.
Chinese prices of soybean meal rose from the beginning of the year to record highs late in March, as supplies of beans tightened after drought hit the crop in top supplier Brazil, delaying its harvest, though prices later fell from the peak.
Crushers were also slow in making purchases as poor hog margins weighed on crush margins, said traders.
Board crush margins for soybeans for delivery in the period from May to July were around minus 200 yuan to minus 300 yuan (minus $31 to minus $47) per tonne, discouraging buying for future delivery.
The Brazilian Animal Protein Association (ABPA) has reported that pork exports (all products, raw and processed included) reached 91.4 thousand tons in March, which is 16.3% lower than the February 2021 record with 109,2 thousand tons.
Pork sales in March generated US$ 190.3 million, 27.3% lower than the US$ 261.7 million reached in March 2021. In the first quarter of 2022, pork shipments reached 237,500 tons, 6.3% lower than the 253,500 tons exported in the same period last year. As for revenue in the quarter, the result was US$ 498.5 million, 16.1% lower than in the first three months of 2021, with US$ 594 million.
“Pork sales in March led to a recovery, bringing us closer to the average levels of the first half of 2021. Compared to March last year, which recorded the second-best performance in the sector’s history, it may seem negative, but looking at previous months, data points to an improvement tendency in export levels, which eased the damage of historically high costs,” said Ricardo Santing, the president of ABPA.
“We expect China to keep buying Brazilian pork in the coming months. The expected improvement in the COVID situation there and the corresponding relaxation of the imposed restrictions will surely increase the demand for pork, as restaurants and local processors get moving again. Furthermore, the difficult labor situation in countries competing with Brazil should also allow the sector to increase its sales volume in the short and medium terms,” pointed out ABPA’s director of markets, Luís Rua.