News / Asia

Cambodia's $11 Billion Mystery

A man rides a motorcycle past a signboard for the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.
A man rides a motorcycle past a signboard for the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.
Reuters
The remote district of Rovieng was once a battleground between Cambodian government troops and Pol Pot's genocidal Khmer Rouge. Unexploded bombs still lurk in its fields and forests.

So does something more desirable - iron ore - and supposedly in such huge quantities two Chinese companies have an $11 billion plan to extract it.

Their proposal - a steel plant and seaport linked by a 404-km (251-mile) railroad - has alarmed environmentalists, mystified mining and transport experts, and bolstered Cambodia's reputation as an agent for Chinese expansionism in a region where the United States is increasingly competing for influence.

It is the latest in a series of mega-projects underscoring China's growing economic clout in mainland Southeast Asia, while improving China's access to supplies of raw material and ports in the Indian Ocean and South China Sea.

Work will soon begin on a $7 billion railway through Laos to  link China's Yunnan province with northeast Thailand. And in Burma work is almost finished on a $3 billion twin pipeline project to carry oil and gas to Yunnan from Burma's Bay of Bengal coast.

The railway, port and steel project will be Cambodia's largest, with a price tag not far off the value of the country's $12.9 billion economy. The steel plant in Rovieng, in northern Cambodia, will be its first. The seaport on a Cambodian island in the Gulf of Thailand will be connected to the mainland by a 3-km (1.9-mile) bridge. The railroad will almost span Cambodia, although its exact route hasn't been revealed.

"This is 65 percent iron,'' says Sun Qi Cai, 58, 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.

Sun is a Chinese site manager for Cambodia Iron and Steel Mining Industry Group, which on Dec. 31 signed a deal to build the three-part project with China Major Bridge Engineering Co, a subsidiary of state-owned behemoth China Railways Group.

The iron ore is destined for the steel plant - by law, ore cannot be exported from Cambodia. Mining experts could not hazard a guess as to 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.

China's Clout

Speaking at the signing ceremony, Cambodia Iron and Steel General Manager Zhang Chuan You said work would begin in July and be finished within four years. But Cambodia's transport minister Tram Iv Tek, who also attended the ceremony, professed to know almost nothing about it. The conspicuous absence of authoritarian Prime Minister Hun Sen also left many wondering whether China's mystery train was going anywhere.

"There are a lot of real things happening here with Chinese money,'' says Daniel Mitchell, a long-time American resident who runs a Phnom Penh investment firm called 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. Transport experts wonder why the Chinese railroad will not connect with Cambodia's existing train system, which is already being refurbished at a cost of at least $141.6 million, or either of its 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 more than 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 chair of the Association of Southeast Asian Nations (ASEAN) to stymie discussion on the South China Sea, where China's territorial claims overlap those of five other countries. Cambodia emerged as a staunch China ally willing to put the interests of its giant neighbor over those of its ASEAN members.

The lesson for Washington was clear.

"For U.S. strategists, if you neglect certain ASEAN countries you hurt U.S. interests," says American scholar Carlyle Thayer, an Asia Pacific security expert at the Australian Defence Force Academy in Canberra. "There's a price to pay ... because China's economic dominance carries political influence, the U.S. has to compete across the board."

Amateurish Facade

Cambodia Iron and Steel doesn't look like a billion-dollar company or, as Chinese media reports describe it, a Cambodian one.

It is registered to three Chinese nationals who, says Rovieng site manager Sun, 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.

Despite its amateurish facade, other evidence suggests that Cambodia Iron and Steel is moving ahead with its project, and Cambodian officials know more than they publicly state.

On July 15 last year, telecoms and electricity officials were summoned to the Ministry of Public Works and Transport to explain to a Chinese representative from Cambodia Iron and 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 a Cambodian who attended the meeting.

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.

Catalysts for Protest

In Burma, where a quasi-civilian government replaced a military dictatorship in March 2011, Chinese mega-projects have been catalysts for protest. China armed and supported Burma's hated military during decades of Western sanctions, and is still resented by many people.

China's ambassador to Burma, Li Junhua, 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 last year jailed record numbers of land-rights activists.

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 and Steel's vast site near Rovieng village, only a ramshackle house occupied by armed Cambodian soldiers who stopped Reuters from entering.

"I'm scared the Chinese will get angry," one soldier said.

Som Soeun, 64, a community leader, was among hundreds of villagers who attended a 2011 ceremony in Rovieng to announce the building of a steel plant. Also present was Suy Sem, Cambodia's Minister of Mines and Energy, who told villagers not to protest against a plant "needed for the country's development," Som Soeun recalled.

Trucks are seen in the compound of the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.Trucks are seen in the compound of the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.
x
Trucks are seen in the compound of the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.
Trucks are seen in the compound of the Cambodia Iron Group at the Rovieng District in Preah Vihear province, February 10, 2013.
With the help of local people, Reuters reporters entered the same area and found no sign of construction. Trucks and other heavy machinery lay idle. Lumps of iron ore littered the deserted access roads.

The Cambodia Iron and Steel's depot in Rovieng village already occupies what used to be community ground: the local soccer field. The depot also lay dormant. A villager who had befriended its few Chinese workers said they complained of being broke, bored and homesick.

The prospect of a railroad cutting a swath through homes and land is unsettling, says Som Soeun. So is the continued silence from government and company officials.

"I am worrying every day now," he says.

You May Like

Video Analysts: Beijing Parade a 'Bazaar' of Stolen Technology

Show commemorating victory over Japan in World War II involved long, medium and short range missiles, a range of tanks and 200 fighter aircraft More

Bernie Sanders Surge Reflects US Shift on Socialism

Although most analysts say it is unlikely he will get the Democratic nomination, Sanders' campaign opens up questions and issues that are otherwise marginalized More

Video On IS Frontline, Kurdish Fighters Ready for Offensive

Peshmerga soldiers say although they need more heavy artillery, they are poised to take the fight to the Islamic State extremists on their turf More

This forum has been closed.
Comment Sorting
Comments
     
by: Davis K. Thanjan from: New York
February 14, 2013 10:44 AM
Don't cry for Cambodia and don't cry for Burma. The US do not have the capability to start mega projects in foreign countries by the private sector or public sector. China captured the world raw material market by the interface of Chinese private companies used as front for the expansion of industrial growth by the Chinese government. The Chinese captured raw materials from Latin America, Africa and the South East Asia leaving the rest of the world at the mercy of China. But crying foul, citing environment reasons, is not a satisfactory reason for the inability of the US.. The US is too late to realize the dominance of China in procuring natural resouces used in industrial production. The rest of the world is begging for industrial products from China, because no other country can supply cheap products.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Drowned Migrant Toddler Photo Triggers European Outragei
X
Henry Ridgwell
September 04, 2015 11:36 AM
The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Drowned Migrant Toddler Photo Triggers European Outrage

The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Russians Observe 11th Anniversary of Beslan School Attack

This week, Russians have been observing the 11th anniversary of the attack by Islamic militants on a school in Russia's North Caucasus region that killed more than 330 hostages, including 186 children. The three-day siege and massacre that started on September 1, 2004 took place in Beslan, a town in the republic of North Ossetia, and is one of the bloodiest terrorist acts ever in Russia. VOA's Mike Richman reports.
Video

Video Native Americans Debate: Father Serra, Saint or Sinner?

Pope Francis will canonize an 18th century missionary to Spanish California during a papal visit to the United States this month.  But some Native Americans have criticized the elevation to sainthood of the missionary priest, Junipero Serra. VOA's Mike O’Sullivan has more from Los Angeles.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video China Announces Troop Cuts at WWII Parade

Chinese President Xi Jinping Thursday announced plans to cut the world’s largest military force by 300,000 troops. The announcement was made during a massive military parade to commemorate victory over Japan in World War II. The event was shunned by most Western leaders and for some is raising fresh concerns about China’s military ambitions. VOA’s Bill Ide has more from Beijing.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.

VOA Blogs