Ghana’s Crackdown on Chinese Gold Miners Hits One Rural Area Hard

For nearly a decade, thousands of peasants from this rural speck in southern China’s Guangxi Autonomous Region borrowed heavily before boarding flights for Ghana, Africa’s second-largest gold producer, with glinting ambitions and no backup plan.

The Chinese found their gold, though trouble soon found them, in the form of crooked police officers and armed bandits who prowled the mining camps. Then, this month, the Ghanaian authorities declared the mines illegal and arrested more than 200 Chinese miners, accusing them of polluting the land and abusing local workers. Countless others fled as local residents armed with guns and machetes attacked the camps, robbing miners of their possessions and killing some who fought back.

After the crackdown, images of violent deaths and vandalized mining camps blazed across Chinese social media, fueling national anger and soul searching. But here in Shanglin, a mountainous county of 470,000 in one of China’s poorest regions, it is despair over financial ruin that is most pronounced.

“My son might be killed in Ghana, but if he comes back he’s dead anyway,” said Shen Aiquan, 65, whose family borrowed 3 million renminbi, or $489,000, to build a mining operation, though from whom exactly she did not know. All she could do was wait for her son, and the debt collectors who would surely follow.

The crisis in Ghana has revealed the perils of a high-stakes economic gamble, in which countless people have taken part in overseas investment projects endorsed by the Chinese government but have been left to fend for themselves when things go wrong.

Some of the problems facing residents here stem from the informal lending practices common among the rural poor. Lacking the hard assets banks usually require, many people leverage “guanxi” — the social collateral binding business and personal relationships in China — to secure loans from relatives and friends.

Based on trust and often little else, guanxi financing has devastated the villages and townships of Shanglin, whose residents are now bound not just by blood and sweat but by bankruptcy as well.

And the trust is sometimes misplaced. Early this month, a Chinese man in Ghana disappeared with millions of dollars that miners had given him to wire home. Ms. Shen’s son was one of the victims. Another was one of her neighbors, Yang Baofa, 52, who returned from Ghana two weeks ago with barely enough money to travel to his village. “We trusted him because he was Chinese,” he said of the missing man.

On the day Mr. Yang arrived, several of the men who had accompanied him back to China were stuck in the southern city of Guangzhou working construction jobs to earn the $40 needed to buy a long-distance bus ticket home.

The miners who have been trickling back to Shanglin since the violence began insist that they broke no Ghanaian laws. Taking a break from playing basketball across from his concrete house, Wu Jian, 34, a former mine owner, said he had made sure to get all the necessary paperwork in Ghana, including land deeds and a mining license. “The local people said as long as we had money we could do anything we want,” he said.

Last month, he fled, leaving behind an operation that he said was worth about $326,000. The money, he said glumly, was borrowed from friends, relatives and loan sharks.

“I went there because that’s what everyone else did,” he said. Despite his debts, he had no regrets about leaving Ghana. “Coming back wasn’t the right decision; it was the only option.”

Shanglin’s connection to the African gold mining project is widespread. “Everyone has a relative or friend in Ghana,” said Lan Xiongwen, 45, as he slurped some fish stew at a restaurant in the county seat.

When relatives took his son to the Ghanaian mines two years ago, Mr. Lan’s family invested $489,000 in excavating machines, paid for by plundering savings and getting bank loans. Back then it seemed like a smart move. With 980 tons of gold being exported to Shanglin annually, he said, residents figured it would be only a matter of time before they realized their dream: after paying off the loans, they would build a house and buy a car.

Mia Li contributed research.

Article source: http://www.nytimes.com/2013/06/30/world/asia/ghanas-crackdown-on-chinese-gold-miners-hits-one-rural-area-hard.html?partner=rss&emc=rss