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Russia building bridge to China
(Reuters)
Updated: 2007-05-28 10:47
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Located in the far southeast of Russia and closer to Beijing than to Moscow, the region is gearing up for construction by 2010 of a bridge across the Amur River, the first to link Russia and China.
The bridge will carry iron from largely untapped deposits in Russia's Far East to steel mills in China, a new front in Russia's push to develop the region and sell raw materials to China.
"Products from Moscow to Kamchatka will cross the border in our region," said Valery Gurevich, deputy governor of the region, referring to the volcanic Kamchatka peninsula thousands of kilometres (miles) to the north.
In his office overlooking a statue of Lenin in Birobidzhan, the province's administrative capital, Gurevich's telephone rings several times a day with business proposals from China.
The calls will only grow more frequent after the bridge is constructed, Gurevich, the son of Jewish settlers who arrived here in the 1930s, told Reuters.
Stalin carved the oblast, or region, out of the marshy fringes of Russia's Far East as a homeland for Soviet Jews, part of a policy in which each national group in the Soviet Union had its own territory. It received autonomous status in 1934.
Today, 185,000 people live here and only a minority is Jewish. Jews account for about 5 percent of the 75,000 residents of Birobidzhan, but more are returning after an exodus following the break-up of the Soviet Union.
A 540-kilometre (340-mile) stretch of the Amur River defines the border between the region and China's Heilongjiang province, where nearly 40 million live.
Pending approval from the Kremlin and Beijing, the river will be bridged at the town of Nizhneleninskoye. Much of the traffic will be iron ore mined at the Kimkan and Sutara deposits in an $800 million project run by London-listed miner Aricom Plc .
Aricom plans to ship over 3 million tonnes of iron from 2011 to steel furnaces in China, which produced nearly 420 million tonnes of steel last year -- a third of the world's total.
"The deposit is undoubtedly one of the largest unexploited iron ore projects in the world and benefits from both excellent infrastructure and close proximity to end market," Aricom Chief Executive Jay Hambro said.
The bridge would almost halve the cost of transporting iron to China, he says, to just below $5 a tonne from $9.15 using the current projected cross-border route.
The iron will further help Russia's trade balance with China. Last year, it exported $15.8 billion worth of goods to China and imported $12.9 billion.
But it is not just the trade in iron that will benefit.
"Business that isn't profitable now due to transport costs will suddenly become profitable," says Valery Shulyatikov, first deputy chairman of the regional government.
Ninety percent of the Jewish Autonomous Region's $30 million in external trade last year was with China, and cross-border trade rose 74 percent in 2006 and a further 70 percent in the first quarter of this year.
RUSSIAN RESOURCES
Timber is traditionally the region's main export product, but other new businesses are developing. Russia is quenching China's new-found thirst for mineral water, says Gurevich, and is starting to offer soybeans across the border.
Meanwhile, Chinese farmers are investing in co-operatives on Russian soil. The average wage in the Jewish Autonomous Region rose 30 percent last year to 10,700 roubles ($414) a month, although this is still 15 percent below the Russian average.
For the Chinese in Birobidzhan, however, a nationwide ban imposed in April on foreign vendors in Russian markets is making life tough.
Chinese-made clothes and electronic goods occupy much of the shelf-space in the town's central market. But Chinese traders, who used to sell their wares directly to customers, now smoke in huddles on the market's fringes.
One trader, who did not want to be named, said he and his colleagues sold imported products to Russian stall owners, who in turn sell the goods to local residents.
"Before, there were 300 to 400 Chinese here. Now, there are no more than 50," the trader said in accented Russian, crouching on an empty wooden trolley and drawing on a cigarette.
Business is likely to get even tougher for Chinese people in the region. Gurevich, whose responsibilities include small business, plans to move clothes, shoes and confectionery out of the central market and into stores, reserving the market for fruit and vegetables.
"We want a more civilised form of trade, both for Russians and for foreigners," Gurevich says.