Nexen: Canada Sells, China Protects

Canada Sells: China Protects

By N Oji Mzilikazi

(Originally published in the Montreal Community Contact Volume 22, Number 19)

October 4, 2012

Almost the same day shareholders of Calgary-based energy company, Nexen Inc. voted overwhelmingly in favour of its takeover by China National Offshore Oil Company (CNOOC), the Chinese state-controlled oil giant, to the tune of $15bn, China’s Ministry of Land and Resources cut the number of permits for rare earths mining by 40 per cent from 113 to 67.

Rare earths minerals are needed to manufacture mobile phones, electric cars and other high-tech goods. China has 30 per cent of world supplies of rare earths, but accounts for more than 90 per cent of production. The reduction of permits further tightens China’s controls over the minerals. Restriction on its production and exports are already in place.

Social stability, political stability, and economic prosperity of society are contingent upon people being able to eat bread and/or earn a dollar. The inability to do so will unleash unprecedented criminality, violence and social unrest. Draconian laws and repression by the police and army could only go so far.

China is a country of billions. Out of necessity – its social stability, its government must find ways to ensure its citizenry eat. Thus, we saw China instituting a one-child policy. She cannot afford uncontrolled population growth.

In its new march forward, ostensibly to be the world power, China cannot afford to suffer causalities like Mao Zedong. In 1935, Mao led 100,000 followers on a 9600-kilometre march. 6,000 made it.

In taking its entire population on a global march of dominance, China has to ensure it has access to resources. Accordingly, cash-rich China has been strategic and aggressive in its pursuit of oil and other commodities.

A leaked letter from the office of the President of Nigeria, published by the Financial Times in September 2009, and dated August 13, 2009, revealed CNOOC sought to buy a sixth of Nigeria’s crude oil reserves. According to the Telegraph, CNOOC’s initial offer was rumoured to be between $30bn – $50bn.

China became a “trading partner” with Africa and other developing and struggling economies of the world that Western Nations couldn’t be bothered with. Investments, financing to support sustainable development gave China access to develop, exploit the resources of those countries.

In the past decade, over a million Chinese have moved to work in Africa, building roads, bridges and other infrastructure across the continent, drastically changing the economic landscape, and getting rich in the process, and with China’s cheap goods in tow.

Never mind that China has had a significant role, enabling ethnic conflicts in Africa, China-Africa trade grew from $6bn in 1999 to $166.3bn U.S. in 2011, according to the July 18, 2012, People’s Daily online.

It’s one thing when a “private” company buys an enterprise and another when it’s a state-owned company that’s doing the buying.

China has been buying into and buying up energy resources worldwide. And Canada, for all its developed, “First World” status is more than happy to sell.

In 2005, CNOOC paid $122-million for a 16.7 per cent stake in MEG Energy Corp. In August 2009, PetroChina Co. agreed to buy 60 per cent in two Athabasca Oil Sands Corp. properties. In April 2010, China’s Sinopec agreed to pay $4.65bn (U.S.) for a 9 per cent stake in Syncrude Canada.

As revealed in the May 13, 2010, Globe and Mail, China Investment Corp. paid $817-million for “a 45 per cent stake in an oil sands-like project owned by Penn West Energy Trust. The Chinese firm has also agreed to pay $435-million for a 5 per cent interest in Penn West.”

Also, “China Investment Corp. is a major shareholder of mining company Teck Resources Ltd., and has holdings in gold producer Kinross Gold Corp. and Potash Corp.”

The Calgary Herald, July 20, 2011, pointed out that CNOOC “has agreed to buy struggling Opti Canada Inc. for $34 million and $2 billion in debt, bolstering its position in the Canadian oilsands.” The Nexen deal is the icing on the “awaken dragon’s” cake.

In the meanwhile, Canadians can’t wait for 2018, and the arrival of Er Shun and Ji Li, two giant pandas from China.

In February 2012, our erudite Prime Minister, the Honourable Stephen Harper, signed an agreement with China to borrow the two pandas for 10 years – at a lending fee of $1 million dollars annually.

Since they are a mating pair, it wouldn’t surprise me if the agreement is, should they breed, their offspring(s) belongs to China.

While the oilsands are perfect for growing bamboo, should Canada ever have to import bamboo from China for Shun and Li, that’s more profit going China’s way.

Canadians need not worry about China’s long history of protectionism (The Great Wall is a testament to its attempt to keep foreigners out.), its forays into our energy sector – ensuring future domestic supplies, and the concerns of CSIS in regards to foreign takeovers or control over strategic sectors of the Canadian economy.

Shareholders in firms like Nexen are going to get paid, and they and theirs are going live happily ever after. Our selling off wouldn’t come back and bite us in the arse. Alberta would not become a province of China.

Canadians need not worry about China’s long history of no respect for human life, and human rights abuse. It’s not as if they’ll convert their share and interest of oil extracted from Canada into goods, “Poorly Made In China” as is the title of manufacturing expert Paul Midler’s book.

With no abatement to outsourcing, employment scarcity, poor economic prospects, and the universally strong economic culture, Harper knows Shun and Li will be a viable industry, and a source of unceasing revenue – foreign exchange – a profitable commodity, and Canada’s biggest attraction. Visitors to the Zoo will fork out millions.

It’s not for nothing Harper received the World Statesman of the Year award last month in New York, and this past August received The Righteous Who Fight Antisemitism award.

Still, the Council of Canadians Media Release (September, 27, 2012), called upon “MPs to reject the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA).” They claimed the bilateral investment treaty between Canada and China “will put unacceptable constraints on Canadian energy and environmental policy.”

Canadians went to the polls and gave Harper a majority. And though governments are increasingly a front for corporate interests, and the clique of multinationals that control the world economy, Harper is of impeccable decency. His opening of Canada’s energy sector to Chinese investment is solely for the benefit of Canadians.

I for one do not intend to let the future catch me with my pants down. I learnt French to survive in Quebec; I’m going to learn Chinese and brush up on my Gung Fu. (I haven’t seen Martin Siu Choy, my sifu in some 30 plus years.) My only problem – would it be Mandarin or Cantonese?