Chinese Plan to Invest in Cambodia Is Big, but Vague
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Version 0 of 1. ROVIENG, CAMBODIA — The remote district of Rovieng was once a battleground between Cambodian government troops and Pol Pot’s genocidal Khmer Rouge. There are still unexploded bombs in the fields and forests. But there is also something more desirable: iron ore. And two Chinese companies have an $11 billion plan to extract it. Their proposal — which calls for construction of a steel plant and seaport to be linked by a new 400-kilometer, or 250-mile, railroad — has alarmed environmentalists, perplexed mining and transportation experts and bolstered Cambodia’s reputation as an agent for Chinese expansionism in a region where the United States is increasingly competing for influence. The Rovieng plan is the latest in a series of large projects that underscore China’s growing economic clout in Southeast Asia, while at the same time improving China’s access to ports and supplies of raw materials in the Indian Ocean and the South China Sea. Work will soon begin on a $7 billion railroad through Laos to link Yunnan Province in southwest China with northeast Thailand. In Myanmar, work is almost finished on a $3 billion twin pipeline project to carry oil and natural gas to Yunnan from the Bay of Bengal. The railroad, port and steel plant project in Cambodia will be the country’s largest, with a price tag not far from the $12.9 billion value of its annual gross domestic product. The steel plant in Rovieng, in northern Cambodia, will be the country’s first. The seaport, on an island in the Gulf of Thailand, will be connected to the mainland by a three-kilometer bridge. The railroad will cross a large part of Cambodia, although its exact route has not been disclosed. “This is 65 percent iron,” said Sun Qicai, caressing a heavy, gleaming lump of Rovieng rock. “Not many places have such high-quality ore.” That includes China, the world’s largest steel maker, where most ore has an iron content of less than 40 percent. Mr. Sun is a Chinese site manager for Cambodia Iron & Steel Mining Industry Group, a Chinese company based in Phnom Penh that on Dec. 31 signed a deal to build the three-part project with China Major Bridge Engineering, a subsidiary of China Railway Group, a state-owned behemoth. The iron ore is destined for the steel plant — by law, ore cannot be exported from Cambodia. Mining experts would not hazard a guess on how much ore is recoverable in Rovieng and there was no indication of how much steel it would produce and where the products would go. Those are just some of the unanswered questions about the project. Speaking at the signing ceremony, Zhang Chuanyou, the general manager of Cambodia Iron & Steel, said work would begin in July and be finished within four years. But Tram Iv Tek, the Cambodian transportation minister, who also attended the ceremony, professed to know almost nothing about the project. The conspicuous absence of the authoritarian prime minister, Hun Sen, from the ceremony also left many wondering whether the plan was going anywhere. “There are a lot of real things happening here with Chinese money,” said Daniel Mitchell, an American who runs the Phnom Penh investment firm SRP International. “I don’t think this railroad is one of them.” Mining experts question whether northern Cambodia has enough mineral wealth to justify the project’s costs. Transportation experts wonder why the Chinese-built railroad would not connect with Cambodia’s existing train system, which is being refurbished at a cost of $141.6 million, or link with either of the country’s two established ports. The ambitious project could be as much strategic as economic. Chinese investment pledged in Cambodia has totaled $9.1 billion since 1994, including almost $1.2 billion in 2011 — eight times as much as was pledged from the United States, according to the Cambodia Investment Board. China is also Cambodia’s largest aid donor. That money carries political clout. Last year, Cambodia used its powers as leader of the Association of Southeast Asian Nations, or Asean, to stifle discussion on the South China Sea, where Chinese territorial claims overlap those of five other countries. The lesson for Washington was clear. “For U.S. strategists, if you neglect certain Asean countries, you hurt U.S. interests,” said the American scholar Carlyle Thayer, an Asia-Pacific security expert at the Australian Defense Force Academy in Canberra. “There’s a price to pay,” he added, “because China’s economic dominance carries political influence, the U.S. has to compete across the board.” Cambodia Iron & Steel looks neither like a billion-dollar company nor, as reports in the Chinese news media describe it, a Cambodian one. It is registered to three Chinese nationals who, according to Mr. Sun, the Rovieng site manager, are brothers. The only Cambodian found working at its Phnom Penh headquarters, a five-story building flanked by a paint shop and a Korean restaurant, was the cleaner. There was some evidence suggesting that Cambodia Iron & Steel was moving ahead with its project and that Cambodian officials knew more than they publicly stated. On July 15 last year, telecommunications and electricity officials were summoned to the Ministry of Public Works and Transport to explain to a Chinese representative from Cambodia Iron & Steel where the country’s fiber-optic and electrical cables were buried. “He wanted to know so that the train track didn’t cut through them,” said one Cambodian employee who attended the meeting and was not authorized to talk to the media. An official at the company’s Shanghai-based partner, China Major Bridge Engineering, said it would begin construction this year but gave no specific date. In Myanmar, where a quasi-civilian government replaced a military dictatorship in March 2011, large Chinese projects have been catalysts for protest. China armed and supported Myanmar’s military regime during decades of Western sanctions and is still resented by many people there because of this. Li Junhua, the Chinese ambassador to Myanmar, has promised greater transparency from Chinese companies doing business in the country. In Cambodia, however, Chinese companies remain tight-lipped and closely allied with an authoritarian government that jailed record numbers of land-rights activists last year . In one token of their close collaboration with the government, Chinese projects in Cambodia are often guarded by soldiers or military police. Chinese workers often dress in military fatigues. No sign marks the entrance to Cambodia Iron & Steel’s large site near the village of Rovieng, only a ramshackle house occupied by armed Cambodian soldiers who initially stopped reporters from entering. “I’m scared the Chinese will get angry,” one soldier said. Som Soeun, a community leader, was among hundreds of villagers who attended a 2011 ceremony in Rovieng to announce the building of the steel plant. Also present was Suy Sem, the Cambodian minister of mines and energy, who told villagers not to protest against a plant “needed for the country’s development,” Mr. Som Soeun recalled. With the help of local people, Reuters reporters entered the Cambodia Iron & Steel site and found no sign of construction. Trucks and other heavy machinery were idle. Lumps of iron ore littered the deserted access roads. The Cambodia Iron & Steel depot in the village occupies what used to be community ground: the local soccer field. The depot also was dormant. A villager who had befriended its few Chinese workers said they had complained of being broke, bored and homesick. The prospect of a railroad’s cutting a swath through homes and land is unsettling, Mr. Som Soeun said. So is the continued silence from government and company officials. “I am worrying every day now,” he said. |