AN AUSTRALIAN mining company has been attacked on official Chinese television for the sorts of environmental, community and financial abuses sometimes associated with Chinese-owned mines in Africa, Papua New Guinea and South America.
China Central Television alleged that Sino Gold, the $1.3 billion company listed on the Australian and Hong Kong stock exchanges, paid virtually nothing for China's second-largest goldmine and proceeded to poison the water, disregard local communities and reap windfall profits in a cozy tax-free deal.
The 30-minute tirade, which advocated even tougher restrictions on foreign investment in Chinese mines, was broadcast nationally twice last week and the transcript reprinted on more than 500 Chinese internet news and blog sites.
Sino Gold chief executive Jake Klein said it was difficult to take the program seriously because it was riddled with so many "gross inaccuracies".
But other foreign mining companies said the program was "so biased" that it could reflect a broader campaign by powerful officials or Chinese mining interests to keep foreign mining companies out of China.
China is already a notoriously difficult investment destination for foreign mining companies, even as its own resources giants queue to invest in places like Australia.
One senior foreign mining executive said the Sino Gold program seemed to be "testing the water for a more conservative and restrictive policy" which, if successful, "has the potential to turn into a serious diplomatic issue about reciprocity".
The Chinese Government now prohibits foreigners from buying mining assets it deems to be "strategic". But the most serious barriers are less visible, including uncertainty of title and arbitrary implementation of laws by local officials.
China's national laws are often disregarded by under-funded and ferociously competitive local exploration brigades who sometimes see foreign-owned mining companies as threats or, alternatively, potential piggy banks.
"The big problem is the implementation of national laws at the local level," said Auslan Ishmael, who heads the China International Mining Group.
The lobby group, which represents 100 foreign mining companies, is so concerned about the impact of the Sino Gold program that it is planning a Beijing press conference and seminar series to set the record straight.
Sino Gold secured the exploration and mining rights to its Jinfeng mine in 2002, when gold prices were depressed, after Chinese companies had been unable to mine the technologically challenging deposit.
Sino Gold put up the capital, while 18% of the joint venture was given to various Chinese Government agencies.
The mine was given a tax-free holiday as part of the Government's "go west" strategy to develop poorer regions of China.
But, contrary to the CCTV allegations, the company says it agreed to forego all its tax breaks "after pressure from the local government".
The CCTV program quoted a local official who implied Sino Gold had massaged its books to contrive a loss, when the company's records showed it earned 45 million yuan ($A6.84 million) taxable profit in 2007.
The CCTV program also alleged Sino Gold had failed to contribute to the local economy or employ local workers, but the company says it has invested 46 million yuan in local community programs and paid more than 20 million yuan to local workers and contractors.
Similarly, the company says allegations that it poisoned the underground water supply and failed to gain environmental approval for its tailings dams are spurious.
"While we can't dismiss anything that is being said about Sino Gold or its operations, it is difficult to place any credibility on the report when there were so many gross inaccuracies," said Sino Gold chief executive, Jake Klein.
"We take our role as an industry leader in China very seriously and have been focused on ensuring our safety and environmental standards are of a very high standard and create new benchmarks in China," he said.
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