- China Three Gorges is a state-owned company preparing to make a bid on the 8,040 megawatt São Luiz de Tapajós hydropower plant in the Amazon’s Tapajós Basin. The company has a track record of human rights violations.
- The seven major planned Tapajós Basin dams wouldn’t just supply electricity. They could also reduce the cost of food exports from Brazil to China via the Tapajós-Teles Pires waterway by linking remote industrial farms in Mato Grosso state with the Amazon River, the seaport of Belem, and the proposed Nicaraguan Canal, which China plans to build in order to shorten shipping distances to Asia.
- Chinese companies are increasingly involved in Brazil’s effort to rapidly expand Amazon infrastructure, including dams, transmission lines, canals, roads, and port projects to open the forested interior to exploitation. The poor social and environmental record of both China and Brazil doesn’t bode well for the region’s indigenous people, ecosystems and wildlife, say critics.
Chinese construction companies are trying to gain a larger foothold on infrastructure projects — especially hydroelectric dams — in the Amazon, a region and sector in which large Brazilian construction companies have long dominated. That opportunity has been created by hard times for the Brazilian companies, due to the ongoing government/corporate Operação Lava Jato (Operation Car Wash) scandal, the devaluation of Brazil’s Real currency, along with pricey credit rates.
China Three Gorges — a state-owned company with a history of human rights violations — is currently preparing to make a bid on the São Luiz de Tapajós hydropower plant planned for the Amazon’s Tapajós Basin. This mega-dam located on the Tapajós River would have a maximum generating capacity of 8,040 megawatts, at an approximate total cost of R$ 23 billion (US$ 5.8 billion).
The dam, which is to be built in the next decade, would flood 72,225 hectares (278 square miles), including some lands belonging to the Munduruku indigenous group. The São Luiz de Tapajós project is in the midst of the most controversial environmental licensing process since the Amazon’s gigantic Belo Monte Dam, a project plagued since its inception by financial, environmental and cultural problems, including most recently charges of ethnocide against indigenous groups.
The most recent annual report for China Three Gorges (CTG) mentions preparations for a “competitive bid”. Li Yinsheng, the president of China Three Gorges Brazil, asserts that a decision to go forward with a bid will only be taken after the bidding conditions are known: “CTG chose Brazil as a priority country for its international expansion strategy. The company is looking at all of the country’s opportunities,” he wrote in an e-mail.
Chinese interest in the Brazilian electric sector is confirmed by Charles Tang, president of the Brazil-China Chamber of Commerce and Industry, an organization which aids Chinese companies interested in investing in Brazil. “With or without Operation Car Wash, China invests here for numerous reasons: market placement, profit, exporting excess capacity and ensuring strategic resources, and for international geopolitical reasons,” says Tang. Among the proposed China-Brazil energy projects he is assisting with are a hydropower plant, a wind farm, and two thermal power plants. He would not name the Chinese companies involved in the projects due to the Chamber’s privacy policy.
China has big interest in the Amazon
To understand why Chinese companies are so attracted to investment in the Brazilian hydropower sector, it is worth understanding hydropower in China, says Stephanie Jensen-Cormier, director of the NGO International Rivers in Beijing. According to her, China possesses more than half the large-scale hydroelectric plants on earth, more than Brazil, the U.S., and Canada combined. The Chinese are currently involved in more than 330 dam projects in 85 countries. The majority are currently in Southeast Asia, but the total number of projects is still growing, says Jensen-Cormier.
China’s desire to construct dams and power plants in the Amazon’s Tapajós Basin can be linked to other Chinese interests in the region. Low-cost energy would help support mining projects, another sector of Chinese interest, according to the book O Brasil Made in China, by sociologist Camila Moreno. The author points out that the Tapajós boasts mineral riches increasingly sought after by Asian countries. “In the past few years, the discovery of new mining fields has taken off, and currently the region is the great promising frontier for diamond mining,” writes the author.
The series of power plants and reservoirs slated for the Tapajós Basin would do more than produce electricity — they could also reduce the cost of food exports from Brazil to China and other nations. The Tapajós-Teles Pires (TTP) waterway — which is dependent on the many Tapajós dams — would create a canal system to link up remote soybean plantations in Mato Grosso state with the Amazon River, which in turn links to the international Brazilian port of Belem. The TTP waterway would also complement with the proposed Nicaraguan Canal project, which China plans to build in order to shorten shipping distances to Asia.
China isn’t only focused on river transportation in the Amazon, it is also moving forward with road, rail and harbor projects to move Brazilian exports more rapidly and cheaply from remote regions for export. Chinese state-owned companies Cheng Dong International and China Harbour are working on a project to link Suriname and Manaus (a distance of roughly 1,100 kilometers or 700 miles), including a deep-water port, a highway and railway, reducing the need for river navigation. Moreno contends that these multiple investments signal China’s definitive entrance into the Amazonian region.
Rapid expansion of China Three Gorges in Brazil
China Three Gorges is presently the sixth largest energy operator in Brazil, with an installed electrical capacity of 6,895MW — enough to power a city of 9 million people. Its expansion in the South American nation grew tremendously in November 2015 when it won the concession for operating the Jupiá and Ilha Solteira hydropower stations, which belong to São Paulo-based company Companhia Energética de São Paulo. The Chinese company paid the minimum amount for the concession, R$ 13.8 billion (US$ 3.47 billion).
CTG’s Brazilian expansion happened quickly. It was largely initiated in 2011 when the company bought out the Portuguese government’s share in Energias de Portugal (EDP), becoming that company’s largest shareholder with 21.35% of shares. In the process, CTG inherited the construction of seven Brazilian hydropower stations.
China Three Gorge’s presence was strengthened greatly in 2014, during Chinese president Xi Jinping’s visit to Brazil. In that meeting, the Chinese government signed a technical cooperation agreement with Eletrobras-Furnas, a public/private company whose majority shareholder is the Brazilian government. Eletrobras-Furnas is a regional utility with a generating capacity of 10,050 megawatts that transmits electricity to more than 50 percent of Brazilian households.
During that time, CTG also announced its interest in building the São Luiz do Tapajós hydroelectric plant. When questioned, Eletrobras-Furnas only confirmed that the CTG agreement includes the building of a hydropower plant in São Manoel (700 megawatts), situated along the Teles Pires River between Pará and Mato Grosso.
In an email, Electrobras-Furnas further said that the agreement portends “development of new hydroelectric projects in Brazil, as well as technical cooperation and exchange of new technologies.” The Brazilian company states that there is even a “possibility of participating in Furnas and new alternative energy source projects, especially wind farms, in Brazil and China.”
Repórter Brasil / Mongabay asked for details concerning cooperation between the two companies, along with access to the full agreement, but that request was denied. The company said that, since our request dealt with company information, this would be an exception allowed for under the Brazilian Freedom of Information Act.
After the agreement with Furnas, China Three Gorges acquired three Brazilian companies in 2015 that had belonged to Triunfo Participações e Investimentos, in a deal worth R$ 1.72 billion (US$430 million). Among the assets purchased were the operation of the Salto hydroelectric plant (192 Megawatts), in Goiás; and the Garibaldi hydroelectric plant (192 Megawatts), in Santa Catarina.
China Three Gorges also operates five wind farms (328 maximum megawatts), with one still under construction. Additionally, the company is responsible for fifty percent of the Santo Antônio do Jari (373.4 megawatts) and Cachoeira Caldeirão (219 megawatts) hydroelectric dams, both in the state of Amapá.
CTG has grown so fast in Brazil, it has now taken the lead there over another Chinese government-owned company — State Grid, the largest electric utility in the world. State Grid has been investing in Brazil since 2010, and had already gone through a significant expansion in the country. In only a few years, it acquired local Brazilian companies and the concession for several transmission lines.
One of State Grid’s most important contracts is for the building of the Belo Monte transmission line, the country’s largest. The Chinese-owned company will partner with Brazilian companies Furnas and Eletronorte to build a portion of that line. The second part of the transmission line will be the exclusive project of State Grid, and financed by the Brazil’s National Development Bank (BNDES).
CTG’s record of violations in other nations
The China Three Gorges company arrived in Brazil almost twenty years after being founded for the purpose of building the largest hydropower plant in the world, the Three Gorges Dam, on the Yangtze river, in China. That hydropower dam only went into operation at the end of the last decade, after more than 15 years of construction. Today CTG has dealings in more than 40 countries, with 89 projects underway, according to its most recent report, referencing the period 2014.
In the 1990s, human rights organizations began to point out social problems with China Three Gorges’ construction activities. In a 1995 report, Human Rights Watch criticized the Three Gorges Dam project as “a model of how the lack of transparency and debate, authoritarian decision-making and underlying unfair labor conditions can taint an ambitious enterprise.”
Two decades later, the company still has such problems. Human rights violations were committed during the building of the Murum hydropower plant in Malaysia, according to a report by NGO International Rivers (IR), which monitored construction there in 2013. China Three Gorges was involved in this project as a contractor and supervised the dam construction, made by a state-owned electricity generating company. According to IR, the populations of the areas impacted by the dam were never visited or consulted by representatives of the company.
CTG’s history has set off alarm bells among critics in Brazil, given that one of the biggest debates currently raging around the licensing of the São Luiz do Tapajós dam revolves around the violation of the rights of native populations. The Federal Public Ministry of Pará has already filed suit to suspend the licensing process until the communities to be impacted are consulted about the process, in accordance with International Labor Organization Convention 169, to which Brazil is a signatory.
Labor issues involving immigrants were another of the problems for which CTG was cited while working in Malaysia, according to the IR report. This too causes concern in the Amazon, where large power plant construction projects are likely to attract Haitian, African and other international and domestic migrant workers.
During the building of the Malaysian plant, Indonesian workers complained that their passports were held by CTG, and that working conditions were different from what was agreed upon. The foreign workers also claimed that they were forced to buy their own work helmets and rubber boots, and that they were given no accident insurance. They were also charged for onsite medical assistance.
In an email, Three Gorges responded to Repórter Brasil / Mongabay that: “Beyond the internal policies, CTG follows all the domestic laws of the countries where they are operating. The company has the core belief of respecting the communities surrounding its plants and a commitment to the development of the places where it operates.”
In spite of CTG’s history of violations, the director of International Rivers in China notes that “China Three Gorges has been active in the international market for more than nine years. They undertake projects with better social and environmental standards than other Chinese companies.”
“If the [Brazilian] government sets higher standards, [China] Three Gorges makes efforts to meet the higher standards, even if it is not easy,” says IR’s Jensen-Cormier. “If the government sets low standards, the company may take advantage of the situation. Similarly, local partners have big impacts on a company’s performance with regard to complying to local laws and regulations.”
As an example, she cites the construction of the Coca Codo Sinclair hydropower plant in Ecuador by the Chinese company Sinohydro. In a comparative study conducted by International Rivers between seven plants built by Chinese companies, this case presented the least number of violations. This happened thanks to strong, correctly enforced local laws.
Rules not being followed
The human rights and environmental performance of China Three Gorges in Brazil in future will not only depend on its past record, but also on Brazil’s laws and their enforcement, and the behavior of local subcontractors. Another important factor is the regulations of the project’s financial backer.
Paulina Garzón, Director of the China-Latin America Sustainable Investment Initiative (CLASII), a research center based in Washington, D.C., says that Chinese bank regulations are good, in theory. “On the books, the Chinese environmental framework is very good. There are aspects that are more advanced than other banks.”
Garzón offer up the example of Exim Bank, a Chinese development bank focused on promoting imports and exports, one of the possible financial backers of future dam construction in Brazil and the Amazon. The bank requires environmental impact studies for all investments backed with its credit. In addition, it maintains a registry of the social-environmental impact records of its borrowers.
Applying those regulations, however, may be a different story. “The problem with Chinese regulations is that they are not obligations,” says Garzón. “Not a lot of information is available. There is no communication with the communities so you [don’t] know what is happening.” She laments that making contact with the Chinese companies and with public bodies is difficult for the parties impacted by a project.
Garzón emphasizes that it falls on the Brazilian government to ensure that Chinese companies and their backers follow environmental regulations and maintain high standards for workers and protect the rights of indigenous and local communities.
The failure of Chinese companies to follow regulations has brought them into conflict with Latin American communities according to a 2015 report by Garzón. In Nicaragua, protestors asked that a canal concession given to the Chinese be revoked due to the expropriation of peasants lands during construction. In Argentina, agreements with China to create research bases in Patagonia and to do canal construction in Entre Rios province were brought into question for the supposedly illegal granting of credit for Chinese companies. In Peru, protests against Chinese mining company MMG resulted in the death of four people. Indigenous groups have also brought the mining activities of Chinese-owned company Ecuacorrientes before the Inter-American Court of Human Rights.
No matter who builds the São Luiz de Tapajós hydropower plant, controversy is almost certain to dog it. The project’s Environmental Impact Study (EIS), carried out by Eletrobras along with other national and international companies, was found to be inadequate by the Brazilian Environmental Institute (IBAMA) in August 2014.
Environmentalists have strongly criticized the EIS, saying that it fails to fully take into account numerous ecosystem impacts. Human rights organizations have also expressed their disapproval of the project and the studies, pointing out diverse risks not accounted for, such as the flooding of native peoples’ lands and the loss of fish, essential for life of riverine and native people in the region.
IBAMA requested that the corporate group redo the studies, but Brazil’s Minister of Mining and Energy, Eduardo Braga, stated that the environmental license should be issued within the first six months of this year, and the public auction of the concession itself should be held in the following quarter. The government’s rush to move the project forward without meeting IBAMA’s request, and without responding to critics, is a factor likely to escalate conflict.
The progress of the São Luiz de Tapajós dam, and the other 6 major dams proposed for the Tapajós River and its tributaries, will likely be fraught with delays, protests and problems, especially as the Lava Jato investigation moves forward. Federal investigators have already announced plans to look very closely at the record of the Brazilian government and of the construction companies that built the huge Belo Monte dam. If that investigation finds major corruption or indigenous violations there, that could influence unfolding events in the Tapajós Basin.
How Chinese infrastructure investments in Brazil, or a CTG bid on the São Luiz de Tapajós project, will ultimately impact Amazonian energy development is anyone’s guess. What is certain is that critics will be closely scrutinizing China Three Gorges’ social and environmental record and commitments if it is selected as a major player in the Tapajós Basin.