Nicaragua gives Chinese firm contract to build alternative to Panama Canal

[Edward Campbell]

I think this is related to your discussion?

http://www.washingtontimes.com/news/2013/jun/7/china-encircles-us-arming-western-hemisphere-state/

An extract from that Washington Times article that relates, specifically, to Canada:

    "North of the U.S. border, Canada this week concluded a military cooperation agreement with China during the visit to Beijing by Canadian Defense Minister Peter G. Mackay. The agreement calls for
      closer cooperation between the two militaries, including bilateral military exchanges.

      Chinese ambassador to Canada Zhang Junsai said China is deepening ties to Canada for infrastructure development, in Calgary last month. Chinese state-run companies have spent $30 billion for
      Canadian oil sands and natural gas, he said."

One can see that between then encirclement of America and the Chinese "naval incursions into the 200-mile U.S. Economic Exclusion Zone around U.S. territory," the US has good reason to be concerned about China's probes.

 

[Brad Sallows]

>American can't outspend China when China is using America's money.

Ultimately, it is China that can not afford a spending war with the US, irrespective of the US's promises to itself.

 

[Oldgateboatdriver]

Could not agree more Brad.

Ultimately the US could simply "forgive" itself for its own debt to China, if they found it to be in their interest.

I know it is a terrible thing to say but ultimately, the US will always do what is best for itself and its citizen (read its rich 0.1 percent) rather than take the road that is best for the world.

Just MHO.

 

[CougarKing]

An update: here we go. Btw, isn't there an active volcano (Concepion Volcano) in the proposed Nicaragua Canal route?  :blotto:

link

Nicaraguan assembly OKs $40 billion Chinese canal to rival Panama's

By Ivan Castro

MANAGUA (Reuters) - Nicaraguan lawmakers granted a 50-year concession to a Chinese company on Thursday for it to design, build and manage a shipping channel across the Central American nation that would compete with the Panama Canal.

The $40 billion proposal by HK Nicaragua Canal Development Investment Co Ltd's (HKND Group) calls for linking Nicaragua's Caribbean and Pacific coasts and includes plans for two free-trade zones, a railway, an oil pipeline and airports.

The government says the canal, which has been discussed for decades, could boost the country's gross domestic product by up to 15 percent.

"Today is a day of hope for the poor of this country," said Edwin Castro, a lawmaker in President Daniel Ortega's ruling party, before the vote marking final legislative approval of the deal.

The Hong Kong-based HKND group is headed by Chinese lawyer Wang Jing. He also leads Chinese company Xinwei Telecom Enterprise Group, which last year received a cellphone concession in Nicaragua.

"Central America is at the center of North-South and East-West global trade flows, and we believe Nicaragua provides the perfect location for a new international shipping and logistics hub," Jing said in a statement after the plan's approval.

"We have a lot of work ahead, but we want to be clear that we intend this to be a world-class effort that creates economic opportunity, serves the global trade community, and also protects the local environment, heritage, and culture of Nicaragua."

Critics of the plan have railed against selling out state assets to the Chinese. After Thursday's vote, a group of opposition lawmakers left the chamber singing Nicaragua's national anthem before unfurling a banner that read, "Ortega: traitor."

About 100 people gathered outside the assembly to protest the decision, but there were no reported incidents.

TIMING RIGHT?

Last week Ortega said the government was going ahead with feasibility studies that should be done by 2015, when work on the canal could begin.

Those studies will define what route the canal will cut through the country. Any design would almost certainly bisect Lake Nicaragua, which at 3,191 square miles (8,265 sq km) is Central America's largest lake.

Advocates say the proposal plays to Nicaragua's natural strengths, which include low-lying land and the lake.

Still, the channel would likely be three times longer than the 48-mile (77-km) Panama Canal, which took the United States a decade to build at the narrowest part of the isthmus. It was completed in 1914.

The idea of a Nicaraguan shipping canal is almost as old as the country itself. The United States has eyed a trade route there since the 19th century, around the same time work began on the Panama Canal.

But for the project's Chinese backers, the timing appears right. China is the world's second-largest economy and one of the region's top consumers, snapping up Latin American commodities to drive domestic growth.

"We believe that by 2030 - just over 16 years from now - the volume of trade addressable by the Nicaragua Canal will have grown by 240 percent from today," the company said in a statement.

"The total value of goods transiting the combined Nicaragua and Panama canals could exceed $1.4 trillion, making this one of the most important trade routes in the world," it said.

Panama Canal officials said it was too early to speculate on the viability of the Nicaraguan waterway or how it could affect trade.

"We get questions of hypotheticals every day, 'What happens if the Arctic melts, if manufacturing is moved from China to Mexico,'" said Rodolfo Sabonge, vice president of market research at the Panama Canal Authority.

"Until we really see the plans and understand the investment, all we know is that they talk about $40 billion," he said. "It's very, very early."

(Reporting by Ivan Castro; Additional reporting by Lomi Kriel in Panama City; Writing by Gabriel Stargardter; Editing by Simon Gardner and Xavier Briand)

 

[cupper]

I was discussing this with a coworker today, and he had mentioned that there was a proposal to build a canal in Nicaragua in competition to the proposal to build the Panama Canal.

http://en.wikipedia.org/wiki/Nicaragua_Canal

He recalled from David McCullough's "The Path Between the Seas" that the advantage of the Nicaraguan route was that excavation was much less as the change in elevation between east and west was much less than the Panama route. The route was also to follow the San Juan River for the majority of teh land crossing between Lake Nicaragua and the Atlantic, with a short canal run to the Atlantic.

The Pacific Lowlands has several young active volcanoes, including one in the middle of Lake Nicaragua. That portion of the country also sits on a rift.   

 

[Edward Campbell]

More, this time about the Chinese tycoon fronting the project, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Straits Times:

http://www.straitstimes.com/breaking-news/asia/story/chinese-businessman-behind-51b-nicaragua-canal-denies-special-ties-20130625

Chinese businessman behind $51b Nicaragua canal denies special ties

Published on Jun 25, 2013

BEIJING (Reuters) - The mysterious Chinese businessman behind a $40 billion plan to build a canal through Nicaragua pledged transparency on Tuesday -- but refused to reveal where he attended college.

Wang Jing, 40, who says his initial wealth came from a gold mine investment in Cambodia, is the only public face for a project that on paper would challenge the Panama Canal's monopoly on transporting oil, ore and containers between Atlantic and Gulf of Mexico ports and Asian markets.

Nicaragua's Congress last week granted Wang's Cayman Islands-registered HKND company a 50-year concession to develop the canal, following a September agreement with president Daniel Ortega. HKND in turn is a unit of HK Nicaragua Canal Development Investment Co., Ltd, a firm Wang had registered in Hong Kong just a month before the deal with Ortega.

Wang denied any family connection to the Chinese government, military or ruling Communist Party. Connections, or guanxi, are often the hidden ingredient behind sudden success in China.

"I always hoped people would pay attention to the project and not to me personally," he told a news conference at a luxury hotel in central Beijing.

"I am a very normal Chinese citizen. I couldn't be more normal."

The plan - which has generated a lot of skepticism from industry experts - is to build a 286-km (178-mile) canal connecting the Caribbean with the Pacific via Lake Nicaragua, Central America's largest freshwater lake.

It would cost about four years' worth of Nicaragua's annual gross domestic product, and would likely be three times longer than the Panama Canal, which took a decade to build.

Speaking later in an interview with Reuters, Wang said HKND would head a consortium of partners that would operate "fairly, impartially and openly" and might include international firms.

It would be financed by large Chinese and international banks that he declined to name, although he said financing negotiations were going smoothly.

A likely partner is China Railway Construction, one of the country's largest state-owned infrastructure developers, according to HKND materials promoting the project. Another of Wang's companies, the unlisted Xinwei Telecom Enterprise Group, signed a cooperation accord with China Railway earlier this year.

On one point, Wang was explicit - he would maintain at least a 5 percent stake in HKND, and he would remain in charge. He owns 100 percent of HKND.

"Any future partners or consortium will respect my views and opinions very much," he said.

Wang projected annual shipping revenues of $5.5 billion when the canal is at full capacity. The deal calls for construction to be completed in five years, but contains no penalties for delay. Once constructed, ownership of the concession would gradually return to Nicaragua.

The tall, round-faced Wang was unknown when he privatized loss-making state-owned Xinwei in 2010 and transformed it. Xinwei booked over 2 billion yuan ($325.46 million) in profits last year, Chinese media reported, mostly building wireless networks in other countries.

Xinwei's website carries photographs of Xi Jinping, now China's president, and Li Keqiang, now premier, visiting Xinwei.

Wang told journalists he studied traditional Chinese medicine, but added it was "inconvenient" to say at which university. He then took an interest in mining in Southeast Asia, including the Cambodian gold mine, he said.

Wang said he lived in his native Beijing with his mother, younger brother and daughter. Corporate records show a hotel management company registered to Wang and his brother, Wang Peng, as well as other small entertainment and telecommunications companies under their names.

Reuters was not able to locate the hotel management company at its registered address.

Wang's nearly 40 percent stake in Xinwei is worth about $1 billion, based on the asking price for a minority share in the firm currently on sale by state-owned Datang Telecommunications.
($1 = 6.1451 Chinese yuan)

A bit more about Mr Wang:

Reuters/Reuters - Wang Jing, HKND Group chairman, listens to a
question at a news conference in Beijing, June 25, 2013.
REUTERS/Jason Lee

His bio, from the HKND Group web site:

    Mr. Wang Jing was born in December 1972 in Beijing, China. An eminent businessman, Mr. Wang Jing founded or invested in businesses across major infrastructure, mining, aviation and telecommunications sectors.
    Currently, Mr. Wang Jing controls and serves as board chairman of more than 20 enterprises which operate businesses in 35 countries around the world, including Xinwei Telecom Enterprise Group in China.

    Under Mr. Wang Jing’s leadership during the past three years, Xinwei Telecom Enterprise Group has become one of the fastest growing telecommunications companies in the world, owning three international and
    Chinese telecommunications industry standards. The company spirit of “Optimism, Diligence, Pragmatism and Innovation” initiated by Mr. Wang Jing has been widely acknowledged and praised in the industry.

    Mr. Wang Jing is the sponsor of the Nicaragua Canal and Development Project, the founder and owner of HKND Group and serves as its Chairman and Chief Executive Officer. HKND Group is a super scale
    international infrastructure development company which engages in the design, construction and operation of a new interoceanic canal and transportation hub in Nicaragua.

    Mr. Wang Jing and his team will be fully devoted to the Nicaragua Canal and Development Project and work tirelessly towards its timely and successful completion.

 

[Kat Stevens]

See?  Communism does work, ".... to each according to his needs...".  He must be one needy comrade.

 

[CougarKing]

The question is: will there be enough shipping traffic taking that route to justify the building of the second canal?

It seems I just found the answer to the question above:

Grupo Mariana link

Ships currently must reserve passage through the Panama Canal up to several months in advance. Those lacking a reservation can be forced to wait as long as four days for an open slot to cross from the Pacific to the Caribbean.

For years, shipping lines have called for the Panama Canal to be enlarged so that it could accommodate bigger oil tankers and containerships larger than the so-called Panamax generation of vessels, which are specifically designed to allow them to transit the canal.

'We know that for every 100 ships that come to the Americas, only 7 use the Panama Canal,' he said, according to Nicaraguan media reports. 'There's a lot of business to share.'If a Nicaraguan canal were built, 'it would bring an economic effervescence never seen before in Central America,'Bolanos said.

 

[tomahawk6]

They will use chinese labor to build the canal.It wont be much of a boon to Nicaragua.

 

[UnwiseCritic]

They will use chinese labor to build the canal.It wont be much of a boon to Nicaragua.

Well, they want to get it done

 

[Edward Campbell]

More on the Nicaragua canal project in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the National Post, reprinted from the Telegraph:

http://news.nationalpost.com/2013/07/30/proposed-tanker-route-across-volatile-nicaragua-could-rival-panama-canals-shipping-monopoly/

Proposed tanker route across volatile Nicaragua could rival Panama Canal’s shipping monopoly

Malcolm Moore, The Telegraph

13/07/3

Beijing — For hundreds of years, men have dreamed of building a canal across Nicaragua, conquering this volatile land of volcanoes and rainforests and breaking Panama’s monopoly on global shipping.

On Tuesday that dream came a step closer to reality as a Chinese entrepreneur unveiled his route for a 274-kilometre, pounds 26-billion waterway from the Pacific to the Caribbean.

If Wang Jing pulls off the feat, it will rank as one of the greatest engineering marvels in history.

Sitting in the offices of his telecommunications company in an industrial park north of Beijing, Mr. Wang, 40, is clearly very serious and determined.

“I am 100% certain the construction will begin in December 2014 and we will finish in five years in 2019,” he said.

He added that while a feasibility report is unfinished, “the framework” of the project has been decided.

Beginning at the Pacific port of Brito, ships will cross Lake Nicaragua, pass the small airport at Morrito before snaking through the jungle towards the Caribbean lowlands and Bluefields, the port on the eastern Mosquito Coast. The news is likely to dismay environmentalists, who have complained that Lake Nicaragua, already heavily polluted with sewage, could be further harmed by some of the world’s largest tankers.

Mr. Wang said he would put environmental protection at the heart of the project.

“I take all responsibility for any environmental damage. I have told my employees that if we make a mistake on this front, we will be dishonoured in the history textbooks of Nicaragua,” he said.

The project has raised many eyebrows. Mr. Wang has no history of huge infrastructure projects and the engineering challenge is immense, with tides on the two coasts differing in height by as much as 20 feet. And Nicaragua is hardly an investment-grade country, making it difficult to raise the vast sums required.

Mr. Wang said he would name his investors in the next two months, but added that all the funds necessary had already been secured from China, Europe and the United States.

Wang Jing, chairman of Beijing Xinwei Telecom Technology Co Ltd. and chief executive officer and chairman of
HKND Group, speaks during a news briefing in Beijing, China, on Tuesday, June 25, 2013. Wang, the Chinese
billionaire behind a $40 billion plan to cut a canal through Nicaragua, said he’s successfully attracted global
investors for a project that has been on the drawing board for more than 150 years.
                                                                                                          Dieter Depypere / Bloomberg News

“Our investors are big banks and other large institutions,” he said. “They are first-class investors.”

China Development Bank, which is mandated by the Chinese government to lend to large infrastructure projects, granted Mr. Wang’s telecoms company, Xinwei, a 12-billion yuan credit line in 2011 to expand its business overseas. He declined to disclose if CDB would again be involved.

The walls of Mr. Wang’s company are hung with pictures of China’s leaders and his meeting room boasts an enormous mural of Chairman Mao. But he insisted that he has no government connections.

“The money we have spent so far, several millions, has come from me personally,” he added.

The Panamanian government has suggested that the U.S., which built the Panama Canal and controlled it until 1999, would hardly be “amenable” to the idea of a Chinese rival. A canal across Nicaragua was first suggested in 1567, when Felipe II of Spain ordered a survey. The project has been resuscitated now many of today’s tankers are too large for the Panama Canal.

Additional reporting by Adam Wu and Harriet Alexander

My assumption is that Mr Wang has the active support of the Chinese government so the project is financially feasible and he will be able to secure financing. As mentioned, America will not be thrilled, but there is a market - there are already ships which are, I think, bigger then the new, larger Panamax standard and a new canal will create markets for more of them.

 

[Colin Parkinson]

By the time the Chinese and Nicaraguans business and political types skim this project I expect it to fizzle with millions unaccounted for.

 

[Edward Campbell]

By the time the Chinese and Nicaraguans business and political types skim this project I expect it to fizzle with millions unaccounted for.

Oh, there'll be plenty of graft. but most of it will be paid TO Mr Wang's company and TO Nicaraguan officials by those wishing to build the canal - which I expect to include some giant American firms. Mr Wang will, of course, have to keep the denizens of the Zhongnanhai, the central HQ of the CCP, happy - that will cost him some millions, I expect. I think that, despite American and Canadian laws, most global firms regard bribery as a cost of doing business and that's why they all have overseas offices - in places where the laws are less strict. Of course, companies, like SNC Lavelin get caught, now and again despite their best efforts. But you can bet that companies like SNC Lavelin are interested and they are all willing to break bend and stretch our laws to win the contracts.

 

[GR66]

Five years to complete a 274km canal crossing an entire country.  The 13km Highway 404 extension here in Ontario will have taken longer (if) when it's finally completed in 2014. 

 

[Edward Campbell]

Five years to complete a 274km canal crossing an entire country.  The 13km Highway 404 extension here in Ontario will have taken longer (if) when it's finally completed in 2014. 

Lax to non-existent labour laws and construction standards explain the ambitious schedule ... things can happen fast in the 3rd world, and Nicaragua is in the 3rd world.

Of course after something is built it needs to be maintained - which gives local officials and the canal's managers (Mr Wang's people) more opportunities to collect bribes.

 

[Rifleman62]

Productivity old boy, productivity!

I have observed neighborhood highway/road and bypass construction in San Antonio TX, Phoenix AZ, Wpg MB and Kelowna BC. There is absolutely no comparison.

E.G.  reconstruction of a 100 meter stretch of road (without having to do the foundation) at the end of my complex driveway took three weeks. They paved, added a curb, and connected a water line in the middle of the road. A  beautification, major face lift nearby, consisting of  1 km of improved roadway including street lamps, landscaping, parking took 6 1/2 months. On both projects the workers would park their pickups, Timmies in hand around 0800. Sun up here in the summer is around 0500.

Winnipeg road construction is infamous for 8 to 5, Mon to Fri Summer and Fall construction, with traffic tickets Sat and Sun in construction zones.

Comparing that with the massive San Antonio 1604/281 interchange  six month progress which was probably 75% complete, and the 303 perimeter extension in Phoenix with overpasses ever mile. Six day week, dawn to dusk, night work with cranes and work lights. All the above was right outside my window except the San Antonio project which was a couple of miles away.

Cannot remember any news reports of accidents or injuries.

 

[Edward Campbell]

Productivity old boy, productivity!

I have observed neighborhood highway/road and bypass construction in San Antonio TX, Phoenix AZ, Wpg MB and Kelowna BC. There is absolutely no comparison.

E.G.  reconstruction of a 100 meter stretch of road (without having to do the foundation) at the end of my complex driveway took three weeks. They paved, added a curb, and connected a water line in the middle of the road. A  beautification, major face lift nearby, consisting of  1 km of improved roadway including street lamps, landscaping, parking took 6 1/2 months. On both projects the workers would park their pickups, Timmies in hand around 0800. Sun up here in the summer is around 0500.

Winnipeg road construction is infamous for 8 to 5, Mon to Fri Summer and Fall construction, with traffic tickets Sat and Sun in construction zones.

Comparing that with the massive San Antonio 1604/281 interchange  six month progress which was probably 75% complete, and the 303 perimeter extension in Phoenix with overpasses ever mile. Six day week, dawn to dusk, night work with cranes and work lights. All the above was right outside my window except the San Antonio project which was a couple of miles away.

Cannot remember any news reports of accidents or injuries.

Yes, that too ... I remain impressed with the reconstruction/expansion of Interstate 635 in Dallas, but I am equally impressed with the "overnight" bridge replacement projects we have had done, year after year, on Highway 417 here in Ottawa - the problem is that it takes so very long to plan and approve anything in Canada.

 

[Kirkhill]

....the problem is that it takes so very long to plan and approve anything in Canada.

So many information workers.  Not enough projects/dollars/decision-makers.

 

[PanaEng]

This project so far smells of a lot a vaporware... "the feasibility studies are not complete yet but I'm 100% confident we will complete it on time..." (or something to that effect) does not give me much confidence.
What does a company of wireless/telecom installers know about projects of this magnitude. This would rival the excavation volume for the Syncrude tailings dams but in a much more difficult environment; add the seismic activity and water issues affecting the lake and this is a damn complex project.

Have a look a this for reference:  http://en.wikipedia.org/wiki/History_of_the_Panama_Canal

 

[Colin Parkinson]

I reviewed a project here, design build, the contractor decided (without any consultation) to push a dirt berm across the river (rather productive and busy river) both ourselves and Fisheries said: "No" to that. The mayor of the town was on TV jumping up and down blaming us by name as the impediments to the project. Upon receiving a plan for a workbridge they were allowed to proceed. Driving the piles for the bridge quickly informed them that all their geotech data was wrong..... That required a full redesign of the project, costing them at least a year. Guess who was still being blamed for holding up the project? The fact that we had queried their rather light work on geotech made the irony even more interesting.

Just heard another project, contractor bought $5 million worth of bolts and steel foundation rods from India. Upon installation, it was found none of it was up to spec and was useless, it needed to be replaced, supplier took back the substandard stuff to resell to some other sucker buyer, likely outside of North America (as no one in the industry here will deal with them now).

Oh the joy of know what the MSM will never talk about.