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Chinese gold rush: 13 concessions in Nicaragua in 190 days. Find out how dictator Ortega's policies favor Chinese companies in the exploration of gold and other minerals

Written by Noel Budeguer
Published 28/05/2024 às 20:44
Mining - gold - China - Nicaragua
Chinese investment in Nicaragua: 13 mining concessions for gold and other minerals in six months. Discover the companies involved, the municipalities affected and the role of dictator Ortega in the rapid approval of mining projects

Chinese investment in Nicaragua: 13 mining concessions for gold and other minerals in six months. Discover the companies involved, the municipalities affected and the role of dictator Ortega in the rapid approval of mining projects

China is rapidly gaining vast areas for metallic mineral exploration in Nicaragua, with the “blessing” of the dictatorship of Daniel Ortega and Rosario Murillo. In six months, between October 2023 and April 2024, three Chinese companies received thirteen mineral concessions. The sum of these thirteen lots granted is equivalent to 11,66% of the total hectares granted for metallic mineral exploration in Nicaragua, according to official data from the Ministry of Energy and Mines (MEM).

Concessions for Chinese mining companies were also quickly issued. All were approved between two and eight months after being requested.

The thirteen lots granted to Chinese companies are distributed across nine municipalities in Nicaragua. Eight are located in the North Caribbean Coast Autonomous Region (RACCN) and part of a municipality in Jinotega. Another four lots are in the department of Chinandega and one more in the Autonomous Region of the South Caribbean Coast (RACCS). In addition, there are three other requests pending: two in the Northern Caribbean and a third in the department of Estelí.

Three Chinese companies head thirteen mineral concessions

The thirteen metallic mineral exploration lots in Nicaragua, granted to China, are in the hands of three companies: Zhong Fu Development SA, Thomas Metal SA and Nicaragua XinXin Linze Minera Group SA

Each mineral concession is valid for 25 years, and the three companies have exclusive rights to explore, extract and establish processing plants for the processing of mineral materials.

Zhong Fu Development, the “lifeline” of the sanctioned Comintsa

Zhong Fu Development, SA is the Chinese company with the most metallic mineral concessions in Nicaragua. On February 28, 2023, this company requested eight lots located in the Northern Caribbean and in the departments of Chinandega and Jinotega from the Ministry of Energy and Mines.

On October 10, the Santo Tomás concession was approved, located between the municipalities of Cinco Pinos and Santo Tomás do Norte, in Chinandega. Twenty-one days later, on October 31, another six of the eight requested concessions were authorized: Columbus I, Kuikuinita I, Mulukukú, Puerto Cabezas, Siuna and Waslala. In other words, seven of the eight concessions were approved in less than eight months, although the certifications were only published on November 11 and December 20 in the Official Gazette La Gaceta.

Part of the certification of the mineral concession for the Kuikuinita I lot, for the Chinese company Zhong Fu Development SA // Photo: Taken from La Gaceta

Zhong Fu Development, SA also stands out among Chinese mining companies for having obtained the transfer of a concession from Compañía Minera Internacional, SA (Comintsa), less than a month before it was sanctioned by the United States Treasury Department.

On April 17, 2024, the MEM authorized the transfer of the Tutuwaka lot, located in the municipality of El Rama, in the Southern Caribbean of Nicaragua, granted in May 2022 to Comintsa. Less than a month after this transfer, on May 15, Comintsa was sanctioned by the United States.

According to the Treasury Department, Comintsa “is owned and managed” by Salvador Mansell Castrillo, head of the Ministry of Energy and Mines, sanctioned by the Treasury Department in November 2021.

“Gold is Nicaragua’s main raw material export, and this action (the sanction) aims to degrade the Ortega-Murillo regime’s ability to manipulate the sector and benefit from Comintsa’s corrupt operations,” assured the Treasury Department, which also sanctioned the company Capital Mining, accused of being “an intermediary in the gold sector controlled by Laureano Ortega Murillo and Mansell Castrillo”.

The meteoric rise of Zhong Fu Development

With the transfer of the 6.000 hectares of the Tutuwaka lot that previously belonged to Comintsa, Zhong Fu Development, SA adds eight lots for metallic mineral exploration in Nicaragua, with a total area of ​​181.206 hectares. The lots are located in the municipalities of Siuna, Mulukukú, Waslala, Waspam and Puerto Cabezas, in the Northern Caribbean; El Rama, in the South Caribbean; and Villanueva, Cinco Pinos and Santo Tomás do Norte, in Chinandega.

Furthermore, the company is in the process of approving a 20.150 hectare plot, located in Waspam, from the list presented in February 2023.

Zhong Fu Development, SA is registered in the Public Property Registry of Managua with the registration account MC-XFZRH1, and according to the MEM, it has the technical and financial capacity to develop mining activities in the country. The company is legally represented by Feiwu Bian, a foreign businessman with residence permit and domicile in Nicaragua, according to publications in the Official Gazette La Gaceta.

In less than a year, Zhong Fu Development became the Chinese company with the most mineral concessions in Nicaragua, and also stood out among the five largest mining companies in the country, behind only the “veteran” Caliber Mining Nicaragua, SA, with capital Canadian; Desarrollo Minero (Desminic), the Colombian Hemco – Nicaragua, SA and the British Condor, SA

Thomas Metal's Expedited Mineral Concessions

The company Thomas Metal, SA, represented by Chinese citizen Xiangming Gu, appeared for the first time in the Nicaraguan mining business on September 27, 2023. On that day, it requested the concession of the Wonderful Gold lot, located in the municipality of Villanueva, in Chinandega, in the west of the country. The MEM authorized the concession in less than two months, on November 24, demonstrating the speed of the regime for extractive projects.

Less than a month later, on December 1st and 20th, Thomas Metal, SA requested two other mineral concessions: the Carambola and Dragão Rojo lots, also in the department of Chinandega. Authorizations took three months. One was granted on March 15th and the other on March 20th.

The MEM only noted that, in the case of the Carambola concession, 0,32 hectares are located within the buffer zone of the Estero Real Delta Natural Reserve, which is why this area was excluded from the concession.

Thomas Metal's three metallic mineral concessions total 10.308 hectares, all in the municipality of Villanueva, Chinandega. According to the resolutions of the Ministry of Energy and Mines, the company must allow access and artisanal mining activities to people who were already established and carrying out this activity within the granted area.

In Villanueva, hundreds of residents have worked for decades as “güiriseros” in the hills of this municipality, where they abandoned agriculture and livestock to dedicate themselves to artisanal mining in search of gold. For more than five decades, they worked in small groups or cooperatives. Now, it remains to be seen how they will coexist with the Chinese mining company.

The most recent: Nicaragua Xinxin Linze Minería Group, SA

Nicaragua Xinxin Linze Minería Group, SA is the Chinese company that has been operating in Nicaragua for the shortest time. However, it received more than 37.000 hectares for mineral exploration and extraction.

On October 9, 2023, the Chinese mining company requested the following lots: Chinotega — located between San José de Bocay, Jinotega and Siuna, in the North Caribbean — and Caribe, located in the north of the region of the same name. Five months later, on March 15, 2024, MEM handed over the concession for the Chinotega lot, measuring 651 hectares. Although the certification was only published at the beginning of May in the Official Gazette La Gaceta.

While awaiting a response, on November 13, 2023, Nicaragua's Xinxin Linze Minería Group requested a third lot: Nuevo Bijagual, of 36.610,1 hectares, located between the municipalities of Siuna and Mulukukú, in the Northern Caribbean. The Nuevo Bijagual concession was approved three months later: on February 27, 2024, although the certification was only published at the end of April.

The two concessions approved to Nicaragua's Xinxin Linze Minería Group total 37.261 hectares. In addition, the Caribe lot, measuring 2.091 hectares, and a fourth lot measuring 3.628 hectares called El Guaylo, in the municipality of San Juan de Limay, in Estelí, are still pending approval.

Fifth part of Nicaragua in mineral concessions

As of May 2024, in Nicaragua, there are more than 1,96 million hectares granted for metallic mineral exploration.

A total of 11,66% of these areas were granted to the three Chinese mining companies between October 2023 and April 2024.

Another 758.776 hectares requested by various companies and people are pending approval, with which the area granted for metallic mineral exploration would total more than 2,72 million hectares. This total is equivalent to 20,88% of Nicaragua's surface, estimated at 13.037.300 hectares.

Furthermore, 54.664,72 hectares are approved for non-metallic mineral exploration, and there are 11.414,89 hectares pending approval for this same sector. This smaller amount brings to more than 2,78 million the total hectares requested for mineral exploration of any type in Nicaragua, of which more than 2,01 million are already approved, with more than 97% of these hectares destined for metallic mining.

In Nicaragua, exports from the mining industry, mainly gold, are on the rise. Between 2019 and 2023, the value of gold exports grew by more than 226,5%, according to official data from the Central Bank.

In China, the “hunger” for gold is also growing relentlessly. Through gold, Beijing is betting on the diversification of its reserve funds. The People's Bank of China was the largest buyer of gold in the official sector in 2023, with purchases of 7,23 million ounces, according to the World Gold Council, and the trend continues upward. In April 2024, the bank added 60.000 troy ounces to its reserves, leading gold purchases for eighteen consecutive months.

This demand also pushes the price of gold to historic levels. This year, the cost of each troy ounce has already broken the record of 2.330 dollars.

China also “buys gold” from other companies

The environmentalist and president of the illegal Fundación del Río, Amaru Ruiz, maintains that the management of mineral concessions in Nicaragua has been “quite discretionary”. He denounces that, in several cases, environmental studies are unknown and the affected communities were not consulted.

Furthermore, he warns that the companies that obtain the concessions are “not necessarily” the same ones that extract the metals. Therefore, he believes that there is an “under-registration” of Chinese mining companies operating in Nicaragua.

“We know that there are Asian intermediaries buying gold in concessions that are granted to other companies. Therefore, I say that there is a fog in the process of granting concessions”, comments the environmentalist.

However, he considers that the presence of Chinese businesspeople in the mining business in Nicaragua does not yet represent “a reconversion” of the market, although he emphasizes that their introduction is part of the dictatorship's strategy to evade the sanctions imposed by the United States.

Before the sanctions on Comintsa and Capital Mining, the United States had already sanctioned, in October 2022, the General Directorate of Mines, linked to the Ministry of Energy and Mines. Likewise, to the then president of the Board of Directors of the Nicaraguan Company of Mines (Eniminas), General Ramón Humberto Calderón Vindell, in January 2022, and to the Minister of Energy and Mines, Salvador Mansell Castrillo, in November 2021.

“We saw this phenomenon after the sanctions imposed on the mining sector”, assures Ruiz. “There is clearly an interest in increasing the gold trading markets, and from then on, there was interest from some companies, mainly Asian, to enter the sector to establish a level of commercialization and openness to the Asian market”, he estimates. .

Concerns about low environmental standards

In addition to the regime's speed in approving concessions to Chinese companies, the environmentalist is concerned about environmental and labor standards that are lower than those applied by other mining companies.

“In the case of China, it is historically known that its environmental and labor standards are very low. This increases concern about the impact they may have on the environment and also on the people who participate in this company”, highlights Ruiz.

Until the publication of this report, neither the Ministry of Energy and Mines, nor the Ministry of Environment and Natural Resources (Marena) or Chinese companies had published the environmental studies that they should carry out before executing the project, in accordance with the General Environmental Law.

Mining industry exported almost 1.160 million dollars in 2023

In 2023, the mining industry in Nicaragua recorded 1.158,6 million dollars, according to official figures from the Central Bank of Nicaragua (BCN). These exports are mainly of the gold metal. Gold became Nicaragua's main export in 2023 and the first to surpass the billion-dollar barrier in a single year.

With this total, the mining industry grew 22,4% compared to 2022, when it exceeded 946,6 million dollars.

The BCN itself details that this increase was driven by increases in exports of gold (+200,4 million dollars; 21,6%) and silver (+12,9 million dollars; 83,3%), as a result of increases in average contracted prices and exported volumes.

The gold “fever” in Nicaragua

Mineral concessions in the country grant exclusive rights to explore, extract and establish benefits over mineral deposits, for a period of 25 years, extendable for a similar period. All these attractive conditions did not go unnoticed by the Asian giant's mining companies, and their pace was accelerated and “blessed” by the Orteguista dictatorship in Nicaragua.

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Noel Budeguer

Of Argentine nationality, I am a news writer and specialist in the field. I cover topics such as science, oil, gas, technology, the automotive industry, renewable energy and all trends in the job market.

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