Canadian firms operate in China’s Xinjiang region

At least three publicly traded Canadian resource companies have active projects and plans in China’s western Xinjiang region, where authorities have locked up large numbers of Muslims in centres for skills training and political indoctrination.

Canadian companies have invested hundreds of millions of dollars in the region in the past two decades, according to a foreign government analysis obtained by The Globe and Mail. The government is a member of the Five Eyes security alliance, which includes Australia, Canada, Britain, the United States and New Zealand. The document came from a source whom The Globe agreed not to identify because they were not authorized to release the analysis publicly.

Investments by Canadian companies in energy and mining projects have made Canada one of the top five foreign investors in Xinjiang, according to the document, which tracks 20 years of spending. Renewable energy giant Canadian Solar Inc. and a pair of smaller junior mining companies, Dynasty Gold Corp. and GobiMin Inc., continue to operate in the region.

The Chinese government has said it is fighting religious extremism in Xinjiang by guiding wayward souls toward modern thinking. Critics accuse the Chinese government of committing cultural genocide toward the region’s largely Muslim Uyghur population.

The U.S. has blacklisted, on human-rights grounds, local leaders as well as companies involved in building China’s imposing surveillance regime and employing forced labour. And multinational companies have attempted to distance themselves from the region, including Adidas, which has sought to purge yarn made from Xinjiang cotton. Ottawa has been much more reluctant to place sanctions on China or Chinese officials.

The federal government, however, took new steps this week to discourage any company from using forced labour in Xinjiang, asking those operating in the region to review their employment practices and threatening to block diplomatic help and export loans to violators. It is illegal in Canada to imports products made with forced labour.

“Canada is deeply concerned regarding the mass arbitrary detention and mistreatment of Uyghurs and other ethnic minorities by Chinese authorities,” former foreign affairs minister François-Philippe Champagne said earlier this month.

Human-rights groups say the treatment of people in the region has been so egregious that Western companies have an obligation to take a hard look at their operations.

“They shouldn’t be out there right now,” said Alex Gladstein, chief strategy officer at the Human Rights Foundation. “The UN has said that the Chinese Communist Party is imprisoning millions of Uyghurs,” he said. It is now years “beyond the time that it would be acceptable.”

Canadian Solar operates a 30-megawatt solar farm near Tumxuk, a small centre on the fringes of the Taklamakan Desert, 175 kilometres from the border with Kyrgyzstan. The project, financed by a loan from the China Development Bank, involved the installation of 129,600 solar modules on 100 hectares of land, roughly a quarter the size of Vancouver’s Stanley Park.

Tumxuk is home to a growing textile industry and a vocational training centre, which is situated some five kilometres from the solar park. According to a local government document, the centre’s course of study includes skills instruction as well as 126 hours a year of “moral and practical” classes in subjects such as history and religious policy.

“We periodically do religious unity education, legal education and ‘two prohibition’ education,” the school says. The latter appears to be a reference to a ban on driving electric vehicles and motorcycles without a licence.

“Legal education” formed a key element of instruction in political-indoctrination centres, former detainees have said.

Not far away – 45 kilometres across a patchwork of agricultural fields – satellite imagery and procurement documents show two additional large “legal education conversion” centres, including one in a complex of five-storey apartment-style buildings. Evidence for those centres, gathered by University of British Columbia student Shawn Zhang, also includes a government tender notice for factory buildings.

Elsewhere in China, former Muslim detainees have described being forced to work in factories for minimal wages. The Chinese government has denied the existence of forced labour; the U.S. National Security Council has accused Xinjiang of employing “modern day slavery.”

Canadian Solar did not respond to multiple and detailed requests for comment, which included reporters visiting their headquarters in Guelph, Ont., and Suzhou, in eastern China. Attempts to call and e-mail the U.S. office failed and the U.S. e-mail box returned an automated “mailbox is full” message.

In Suzhou, Canadian Solar occupies a large industrial property in an area dotted with factories that manufacture packaging, plastics and electronic parts. A sign inside the fence points the way to a headquarters office building, workshops, a wastewater treatment area, infrastructure projects department and research and development centre.

A group of people sat on chairs in the company’s front lobby, engaged in a meeting. But a receptionist who contacted the company’s marketing department said no one was available for an interview.

Canadian Solar’s website contains no commentary on Xinjiang, apart from updates on its operations. The Tumxuk project represents just 3 per cent of its total solar production holdings.

Mr. Gladstein criticized the company for staying silent.

“Why haven’t they made a public statement, and [moved] to sever ties with the government?”

Horizon Advisory, a consultancy, has found extensive evidence of the use of forced labour by solar companies in Xinjiang. Among the companies involved is GCL-Poly, one of the world’s largest producers of polysilicon, which has used “surplus labourers” in Xinjiang. That term is used to refer to people, many of them Muslim Uyghurs, deemed by the government to be in need of work.

The placement of such workers into factories and the working conditions there are considered by critics, including the U.S. government, to constitute forced labour.

In 2019, GCL said it had signed a major agreement to supply four photovoltaic companies, including Canadian Solar.

Xinjiang occupies one-sixth of China’s landmass, an area rich in resources that has drawn Canadian miners.

Vancouver-based Dynasty Gold, for example, lists its Qi2 Gold Mine in Hatu, a mining district in northwest Xinjiang, as one of its pillar assets. The company owns 70 per cent of the property, with a further 30 per cent held by a local state-owned enterprise, Xinjiang Non-Ferrous Metals Group.

Dynasty has spent more than US$12-million on the project, which contains an estimated resource of 536,000 ounces of gold – worth around US$1-billion at current prices. The company is currently locked in a legal battle over ownership of the project with its Chinese partner, and says in investor documents that it is “actively pursuing a settlement.”

The Hatu project is located less than an hour’s drive from Karamay, where the Australian Strategic Policy Institute has identified six detention centres, two of them that have been used as “re-education” centres for political indoctrination and skills training.

Dynasty did not respond to a detailed request for comment.

GobiMin is a Canadian penny stock company with offices in Montreal and Hong Kong. It, too, has a 70-per-cent interest in a proposed Xinjiang gold mine, called Sawayaerdun, which is located 200 kilometres north of Kashgar, one of the most heavily controlled cities in China.

GobiMin has also struggled with its investment in Xinjiang, but is attempting to prove the viability of the project. The company, in regulatory filings, has said it expects to receive the necessary licences to conduct widescale mining operations once local authorities clear an application backlog. It said it “has ongoing negotiation with a potential investor to develop the Gold Project.”

In an e-mail, GobiMin chief executive Felipe Tan said most of the company’s exploration work was “performed by local exploration teams under subcontract.”

“As to our own employments,” he answered, “the local government did recommend us a blend of different races, also our canteen was a Muslim kitchen as per recommendation of the local government.”

Mr. Tan did not answer questions about whether the company had completed human-rights due diligence, nor did he address whether GobiMin had sought to ensure that Uyghur employees made up a representative portion of its work force.

Mr. Tan suggested in the future that a geological consultancy could conduct a mining audit to ensure that subcontractors were not involved in forced labour or other human-rights violations.

Canada’s mining industry has pledged to respect human rights in its work. In 2017, the Mining Association of Canada said its members had committed to the Voluntary Principles on Security and Human Rights.

Neither Dynasty nor GobiMin is a member of the Mining Association.

Any company working in Xinjiang must think seriously about human-rights due diligence, said Maya Wang, senior China researcher for Human Rights Watch, who has extensively studied developments in Xinjiang.

Ms. Wang said that meeting human-rights standards is not simple and should involve examining difficult questions, such as “how do different ethnic groups interact? It’s common for the government to encourage spying on each other.”

In Xinjiang, Uyghurs and other Muslims have said even mild criticism of Chinese rule can be seen as an expression of extremist thought, and provide grounds for detention without charges in indoctrination centres.

https://www.theglobeandmail.com/world/article-canadian-firms-operate-in-chinas-xinjiang-region/