In Search of Aluminum: China's Role in the Mekong Region

By Kate M. Lazarus on August 10, 2009

In Cambodia, Laos and Vietnam, bauxite mining - the chief material used in the production of aluminum - has been identified as an emerging area of exploration and foreign investment is actively being promoted by the national governments. China is playing an increasingly important role in investing in bauxite mining and regional infrastructure to strategically position the country as the main market for bauxite, alumina and aluminum from these three countries. This study provides an overview of bauxite mining in three key locations in Cambodia, Laos and Vietnam and takes a deeper look at China's role in this context. The study also examines the regional linkages behind bauxite mining decision-making in the three Mekong countries and unpacks the degree to which environmental and social considerations have been taken into account in the decision-making process.

Key findings:

  • Cambodia, Laos and Vietnam are rich in mineral resources; however, the exploitation of these resources has typically been on a small scale and long delayed due to conflict, lack of foreign investment, and limited capital and capacity to establish extensive mining operations. The regulatory framework in the three countries has also hindered investment because of bureaucratic inefficiency and lack of implementation.

  • The Mekong region is becoming a strategic partner for China in terms of mineral investments; however, the full extent of the potential output for and demand by China is difficult to estimate. Chinese bauxite investors are present in two of the three study countries. They dominate in Laos by partnering with Lao and Australian companies to form various consortia. In Vietnam, Chinese companies are largely involved in engineering procurement construction bids to build alumina factories, while in Cambodia there are no Chinese bauxite investors.

  • Bauxite does not come without side effects, and transboundary impacts are expected to be significant, including loss of fisheries and changes to the hydrology of the rivers and water quality. Given the close proximity of the bauxite mining operations in Laos, concerns have already been raised in neighbouring Cambodia, where industrial waste discharge and increased water use of the transboundary Sekong River (part of the 3-S river basins) may cause significant impacts downstream.

  • One of the main prohibiting factors of maintaining a full value chain of bauxite mining is the availability of reliable and cheap power. Since Laos and Cambodia will exploit their vast rivers for the development of hydropower to be exported to neighbouring countries, it would seem cost effective for China to use an alumina refinery and aluminum smelter in one (or all) of the three countries provided that electricity costs can be brought down.

  • In all three countries, public disclosure of information is severely lacking, making it difficult to fully assess how companies plan to mitigate the environmental and social impacts of their activities. And where there is a plan, government capacity and will to regulate the industry and ensure compliance by the companies are minimal.

Report details

Heinrich Böll Stiftung, WWF, IISD
Heinrich Böll Stiftung, WWF, IISD, 2009