Last August, the Nicaraguan government granted a new 483-hectare open-pit mining concession to China's Xinjiang Xinxin Mining Industry Company Limited.
This new permit adds to the 12 concessions granted by Daniel Ortega’s government to Chinese companies in the last two years, half of which have been awarded since April this year.
By the end of 2023, Nicaragua had granted a total of 299 mining concessions, of which 172 were for metallic mining and 127 for non-metallic mining.
Nicaragua and China launched a Free Trade Agreement in January.
In 2021, President Daniel Ortega established relations with China after breaking with Taiwan, considered by Beijing as its own territory whose control it seeks to retake, even by force if necessary.
The recent mining concession granted to China in San Juan del Limay, in Nicaragua’s Estelí department, underscores the growing consolidation of relations between Beijing and the Daniel Ortega-Rosario Murillo regime. This move is part of a broader trend in which China continues to acquire strategic resources in Latin America, with serious implications for the region.
Last August, the Nicaraguan government granted a new 483-hectare open-pit mining concession to China's Xinjiang Xinxin Mining Industry Company Limited.
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The concession, approved by the Ministry of Energy and Mines, has a duration of 25 years and was granted to the Chinese mining company through its local subsidiary Nicaragua Xinxin Linze Mining Group S.A., under the representation of Chinese executive Edward Xiang Liu.
The Chinese company will be allowed to extract metallic and non-metallic minerals in an area called Río Dorado Sur. The resolution stipulates that Nicaragua Xinxin Linze Mining must start operations within the next four years. In addition, the company will pay a 3% in royalties on the minerals extracted, although it is not specified which minerals are due to be extracted.
This new permit adds to the 12 concessions granted by Daniel Ortega’s government to Chinese companies in the last two years, half of which have been awarded since April this year.
The expansion of this company in Nicaragua has been rapid. In a few months it obtained three mining concessions. In June, it acquired 2,091 hectares in the North Caribbean, in addition to the 36.6 hectares granted in April in the same area. With this new acquisition in Estelí, Xinxin strengthens its presence in the country and is preparing to start large-scale operations in the next four years, France 24 reported on August 14.
The new mine will be developed in the municipality of San Juan de Limay, located in the northern department of Estelí. The Chinese company plans to explore and exploit mineral resources in Nicaragua’s Northern Caribbean Autonomous Region, an area predominantly inhabited by indigenous Miskitu and Mayagna communities.
Since April this year, more than 3,000 additional hectares have been granted to the Chinese company in areas close to the one tendered in this latest resolution. This brings the number of concessions granted to Nicaragua Xinxin Linze Mining Group S.A. for the exploitation of mineral resources in various regions of the country up to four. In total, these concessions cover 51,931.71 hectares of national territory across Nicaragua.
“Let’s not forget that the Chinese model of international investment and loans demands natural resources as a guarantee instead of accepting sovereign risks,” former Nicaraguan opposition lawmaker Eliseo Núñez told Diálogo on September 9, from exile in Costa Rica. “This strategy, which is also observed in Africa, allows China to increase its influence on governments that depend on its financing.”
In addition to Nicaragua Xinxin Linze Mining, two other Chinese companies, Zhong Fu Development and Thomas Metal, have received mining concessions in Nicaragua. These deals are part of the country’s recent push to attract foreign investment in the mining sector, especially following the establishment of diplomatic relations with the Peoples’ Republic of China in 2021, after Nicaragua broke off relations with Taiwan.
The mining concession has drawn criticism from environmentalists who have questioned the government for continuing to grant open-pit mining permits, arguing that this could have serious environmental and social impacts on local communities.
By the end of 2023, Nicaragua had granted a total of 299 mining concessions, of which 172 were for metallic mining and 127 for non-metallic mining. During that year, the mining industry generated exports worth US$1.2 billion, which represented an increase of 22.4 % compared to 2022, thanks to an increase in gold and silver exports. This growth was due to a rise in market prices and higher export volumes, according to the Central Bank of Nicaragua.
Nicaragua and China launched a Free Trade Agreement in January.
In 2021, President Daniel Ortega established relations with China after breaking with Taiwan, considered by Beijing as its own territory whose control it seeks to retake, even by force if necessary.
The advance
Gold is experiencing exponential growth in Nicaragua’s trade, becoming the country’s main export product. In 2023, the mining industry generated record revenues of $1.2 billion, an increase of 22.4 percent compared to 2022, driven by the increase in gold exports, Argentine news site Infobae reported. Despite this growth, China’s influence in Nicaraguan mining is still developing, it noted.
“Although Chinese companies are already establishing themselves in the country, their impact on exports has not yet fully materialized,” Núñez said. “Beijing, in addition to seeking political backing in the region, establishes economic agreements that most of the time turn out to be unfavorable for the countries that become indebted to them.”
“Nicaragua could follow a path like that of Venezuela, who signed an unfavorable agreement with China, committing more than $30 billion in oil at very low prices. This practice, common in Chinese negotiations, allows Beijing to obtain resources at low cost and increase its political influence in the region,” Núñez added. “In Nicaragua, given the critical economic situation, there is little resistance to the growing presence of China in natural resources.”
in May, the U.S. Treasury Department announced sanctions against two regime-affiliated gold companies in an effort to degrade the Ortega-Murillo regime’s ability to manipulate the sector and profit from it. Two years prior, in October 2022, the Treasury sanctioned Nicaragua’s General Directorate of Mines, which was accused of financing the repressive activities of the Ortega-Murillo regime and supporting actions that destabilize the region. According to Infobae, these latest sanctions have led the regime to seek to diversify its gold market and pursue new trade relations with major gold consumers.
Voracious mining
Extractive companies are China’s largest direct investments in Latin America. Initially concentrated in the Southern Cone, they are expanding to Central America, where Beijing supports the extraction of gold, copper, nickel, iron, lithium, and aluminum, even in protected natural areas, without environmental consideration, Central American investigative news site Expediente Público indicates in its report, Voracious Mining in Central America.
Xinxin Linze will carry out mining activities in the Northern Caribbean Autonomous Region, rich in biological and cultural diversity, inhabited mainly by the Miskitu and Mayagna indigenous peoples, Spanish news agency EFE reported. In addition, Xinxin Linze has two concessions pending approval, Confidencial reported.
Another case, according to Expediente Público, is that of Zhong Fu Development, which threatens 17 indigenous communities, particularly Sahsa community, by putting their drinking water source at risk. Despite this, Zhong Fu is seeking to expand its influence in the Autonomous Region of the Southern Caribbean Coast through a new concession request. Meanwhile, the Ortega-Murillo regime continues to favor Chinese companies by cancelling concessions with other firms, investigative news site Divergentes reported.
This pattern of expansion is not limited to Central America. In Peru, Chinese companies lead the mining investment portfolio with seven projects, according to Peruvian magazine ProActivo. In early July, the Huancuire community, Apurímac department, accused the Las Bambas copper mine, owned by Chinese company Minerals and Metals Group, of environmental violations and alteration of the rural habitat. Peru’s Attorney General’s Office has 120 days to investigate these crimes, Infobae reported. The Las Bambas mine has been in conflict for years with nearby communities, who claim that the company has not complied with its social and environmental commitments.
According to Expediente Público, China has also tapped into Bolivia’s natural resources, investing in minerals such as gold, iron, and lithium, since 2000. Beijing persuades cooperatives and unions to exploit these resources with Chinese technology, taking advantage of the clean energy boom that is increasing demand for lithium. However, the real cost of these investments for Bolivia remains uncertain.
“That’s why countries like Nicaragua, Venezuela, and Bolivia, are fundamental for China,” Núñez said. “Beijing always seeks contracts that are highly favorable to itself, taking advantage of the weaknesses of its counterparts. China expands its influence in Nicaragua to exploit the gold market and other resources, with enormous ease granted by the regime.”
Policy table
“The most significant impact in the region is the growing influence of China and Russia, which have established their presence in Nicaragua, Venezuela, and Bolivia,” Núñez said. “The economic dependence of these countries on China allows the Ortega-Murillo and Nicolás Maduro to stay in power.”
“This scenario underscores how China and Russia manage to sit at the table of Latin American politics, securing a place in decision making and in the exploitation of strategic natural resources, consolidating their control in key nations in the region,” Núñez concluded.
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