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Isolated Golmud Looks to Cash in on Tibet Railway

[WTN-L World Tibet Network News. Published by The Canada Tibet Committee. Issue ID: 05/09/26; September 26, 2005.]

GOLMUD, CHINA Sept 25, 2005 (AFP) -- It's unlikely to ever be New York or even Shanghai, but if the Golmud city government has its way this small impoverished city on the edge of Qinghai province could be China's next boom town.

Except for a few honorific titles and some spectacular snow-capped mountains, Golmud, a garrison city stranded in the inhospitable Tibetan plateau of China's far west, has little going for it on the surface.

The Mongolian-named city, meaning "where rivers meet", has immense boundaries measuring 124,500 square kilometres (49,800 square miles), improbably making it the world's third largest city despite its township-sized populace of 270,000 people.

At 2,780 metres (9,1174 feet) above sea level, it is also the earth's third highest city behind La Paz in Bolivia and Lhasa in Tibet.

Yet deep beneath the brown peaks and the expansive deserts surrounding Golmud lie immense natural resources. Qinghai's resources, many within striking distance of the city, hold abundant deposits of oil, natural gas, coal, salt, potassium, magnesium, lead, zinc and gold, estimated at a total worth of some 15 trillion yuan (1.84 trillion dollars).

With so much at stake it is no wonder that Golmud's owl-faced mayor Du Jie is obsessed with the city's economic potential.

Du believes that his city can exploit its mineral wealth to transform this poky urban backwater into a model of economic development, giving a much needed boost to China's stuttering "Go West" campaign.

His scheme is based on Beijing's five-year old plan meant to ensure that the country's western regions share in China's economic miracle, which remains worryingly concentrated on its eastern coast.

To jumpstart an economy that last year recorded a mere 4.4 billion yuan (540 million dollars) in GDP, officials plan to firmly hitch the city to the economic fortunes of the Qinghai-Tibet railroad set to open in 2007. "The railway will bring new opportunities to resources development in the Tibet autonomous region and Golmud," Du says. It could indeed be the city's ticket to economic success, a plan that if it were to pan out would reduce Beijing's fiduciary burdens to Golmud by two-thirds of the current revenue.

Central to the prescription would be the exploitation of natural resources in Tibet, a country that China has controlled since 1951.

"The train will speed up the transportation of the resources in and out of Tibet," Du says. "This will turn Golmud into a resources logistics centre." Officials decry the possibility that the 30-billion yuan (3.6-billion dollar) railroad may have the unintended effect of making Golmud obsolete. In theory, travellers, immigrants and goods would no longer need to stop here.

"That would be impossible because Beijing has identified it as key city for economic development," insisted Wang Zeshan, deputy director- general of Qinghai's foreign affairs office.

Indeed there are signs that despite its bad infrastructure, poorly skilled work force, and ultra conservative officials, Golmud will not be allowed to fail by the central government.

For one, a new double-track railroad will replace the one running between the capital Xining and Golmud, while another track will reach Dunhuang in neighbouring Gansu province.

Officials say that this extension of the Tibet railway, due for completion in the next 10 years, will solve current transportation bottlenecks, allowing for greater exploitation of Qinghai's largely untouched resources.

The Qaidam basin-to name one-north of Golmud is believed to hold 2.1 billion tonnes of oil reserves and 2,500 billion cubic metres (87,800 cubic feet) of natural gas reserves.

Yet last year China extracted only some 4.5 million tonnes of crude and natural gas combined.

One profitable mineral that has been tapped is sodium chloride. Known as potash, the key fertiliser is used in the rice growing provinces of Hubei, Hunan, Gaungxi and Guangdong.

The salt grounds of Chaerhan Salt Lake, some 100 kilometres (62 miles) north of Golmud, yielded two million tonnes or one-third of the country's total demand of potash last year, said Xie Kangming, general manager of state-run Qinghai Salt Lake Industry Group Co.

As home to China's largest sodium deposits, production totalled a stunningly unbalanced one-third of Golmud's GDP. Yet even huge profits could be at stake, with few foreign investors willing to risk their money in Qinghai.

The World Bank backed away from a cooperation with Qinghai Salt Lake in the 1980s, as did Israel's Dead Sea Works group in 2000, after years of negotiations.

Xie said that the World Bank feared the project would be unprofitable, while a management change in the Israeli group extinguished chances of a deal.

At the same time human rights groups have provoked corporate concerns about forced resettlements of Tibetan and Mongolian nomads in the area. The province also struggles to shake its reputation as the country's largest gulag.

Hobbling foreign investment even further is that Golmud, Qinghai, Beijing and the military, which owns sizeable tranches of Qinghai, remain at loggerheads over how to open up these strategic resources.

"Areas that are presently of particular concern to the foreign mining community and are impeding investment include uncertainties about overlaps in administrative authority between central, provincial, municipal," says Philippe Rheault, a Canadian diplomat and mining expert.

"Further uncertainties surrounding the awarding and auctioning off of mining rights and the lack of clarity regarding the procedures related to obtaining rights to mine and then retaining those rights are major concerns," says Rheault.

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