A Vancouver-based gold mining company denies it used forced labour in its open-pit mine in China’s Xinjiang region and is accusing the Chinese government of attempting to confiscate the operation worth an estimated US$1-billion.
Ivy Chong, chief executive of Dynasty Gold Corp., said in an interview that the company employed about 150 workers from different ethnic backgrounds and paid “equitable compensation” at its Qi2 gold mine in Hatu, a mining district in northwest Xinjiang.
She said “all protocols and culture practices were followed including special holidays for religious practices” at the mine, where there are nearby “re-education” centres for political indoctrination and skills training.
The junior mining company is currently locked in a legal battle over ownership of the project with its state-owned Chinese partners, and says in investor documents that it is “actively pursuing a settlement.” The mine has an estimated resource of 536,000 ounces of gold worth US$1-billion at current prices.
However, Ms. Chong said Dynasty’s minority partners are trying to steal the company away from her with help from Chinese courts.
Dynasty, which has invested US$12-million in the Hatu gold mine, holds a 70-per-cent interest, while the remaining 30 per cent is held by Western Region Gold Co. Ltd., a wholly owned subsidiary of the state-owned enterprise, Xinjiang Nonferrous Metal Industry Group Co. Ltd. (XNF).
“They simply took our mine. Our partner is the Chinese government in Xinjiang and so we have been asking for Canadian government help for the last while but we have not got any,” Ms. Chong said.
She added that the Canadian embassy in Beijing dismissed her pleas for help, calling it “a commercial dispute.”
“I have been trying to tell them we are a small Canadian company that is up against a state-owned company, controlled by the Chinese government, and they have the backings of their courts that are not independent,” she said. “Our government needs to stand up and protect Canadian interests.”
The dispute began in 2016 when Western Gold listed the Hatu gold mine in an initial public offering on the Shanghai exchange without Dynasty’s consent, Ms. Chong said. Dynasty’s majority ownership was not acknowledged in the prospectus nor did it receive any proceeds from the public offering, she said.
In 2017, Dynasty initiated legal action against Western Gold and its parent company, XNF, for compensation and asked the courts to restore the joint venture. Ms. Chong said the local court in Xinjiang ruled against Dynasty, saying Western Gold and XNF were not obligated to form a joint enterprise under the memorandum of understanding they signed.
“The mine in today’s value is worth US$1-billion and we didn’t get a cent out of it … there is no legal system,” she said. “We are the only company in Canada, perhaps in the world, operating in Xinjiang in our situation.”
Dynasty executives plan to travel to China to pursue other unnamed alternatives once the COVID-19 travel restrictions are lifted, but in a statement provided to The Globe added: ”There is no assurance the company will receive any compensation from China.”
The Hatu project is located less than an hour’s drive from Karamay, where the Australian Strategic Policy Institute (ASPI) has identified six detention centres, two of which have been used as so-called “re-education” centres.
The Chinese government denies human-rights abuses in Xinjiang, including allegations of forced labour and forced sterilization and internment camps for Muslim minorities. Beijing says it is fighting religious extremism in Xinjiang and guiding wayward souls toward modern thinking.
Prime Minister Justin Trudeau has said he is “increasingly concerned” about reports of forced labour in Xinjiang. He asked federal officials to reach out to Canadian companies doing business there to warn them against engaging in human-rights abuses.
Canada recently took new steps to discourage any company from using forced labour in Xinjiang, asking those operating in the region to review their employment practices and threatening to block diplomatic help and export loans to violators. It is illegal in Canada to import products made with forced labour.
Mr. Trudeau said the outreach will include Dynasty and two other publicly traded Canadian resource companies: renewable energy giant Canadian Solar Inc. and junior mining company GobiMin Inc., a Canadian penny stock with offices in Montreal and Hong Kong.
Solar has denied the existence of forced labour at its large solar farm near Tumxuk, a region where there are five facilities for forced indoctrination and detention, according to ASPI.
GobiMin chief executive Felipe Tan recently told The Globe most of the company’s exploration work was “performed by local exploration teams under subcontract.” The work took place 200 kilometres north of Kashgar, one of the most heavily controlled cities in China.
Mr. Tan did not say whether the company had completed human-rights due diligence, nor did he address whether GobiMin had sought to ensure that Uyghurs, a minority Muslim group that the Chinese government has accused of harbouring extremism, made up a representative portion of its work force.
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