Nicaragua Canal Project is Gathering Momentum

This canal is an excellent way to export massive amounts of US dollars overseas in a way that clearly is beneficial to Chinese trading interests.  For that reason alone it is surely going ahead.  However it is important to remember that this is a Chinese state enterprise.  What we see is the façade over an investment much too risky for private capital to properly protect or enforce.

The USA is having kittens over this of course as it bypasses the Panama choke point once and for all.  However, I do not think that we will ever see a catastrophic price war here.  It is much too easy to go wink - wink.

After all the large ships cannot use Panama and that sets a premium which the smaller ships will not wish to pay.  In the meantime global volumes are climbing and both can have ample business.

Nicaragua canal project is gathering momentum to start construction in late 2014

 JANUARY 20, 2014

http://nextbigfuture.com/2014/01/nicaragua-canal-project-is-gathering.html#more

The Sydney Morning Herald reports that sometime later this year, President Daniel Ortega and Chinese telecom tycoon Wang Jing will decide whether to give the Nicaragua canal project a green light, possibly unleashing earthmovers on one of the largest engineering challenges the world has ever seen, comparable even to China's enormous Three Gorges Dam.

If the transoceanic canal gets the go-ahead, it might take a decade to build, gobble $60 billion and slice through vast stretches of tropical forest. At 180 miles, it would be more than three times the length of the US-built Panama Canal. It also would accommodate supertankers and giant container ships that are far bigger than those the Panama Canal will accept when its expansion is complete next year.

For China, the plan would mean easier access to crude oil from Venezuela and a greater foothold in the Western Hemisphere. Such geopolitical considerations may weigh more for China than the price tag.

"In the initial scenarios we looked at, you can see that up to a million people could be employed within the 10-year span of construction," said Manuel Coronel Kautz, an engineer who heads the Transoceanic Grand Canal Authority of Nicaragua.

Coronel said that 300 to 400 professionals - including teams of Chinese geologists, British environmental experts and other foreign technicians and trade experts - were working on a gamut of financial, environmental and commercial feasibility studies.

There are already 18,000 TEUs cargo ships being built, while container ships of the near future may well be as large as 30,000 TEUs. Built from scratch, a Nicaragua canal could be far better equipped to handle the new seaborne giants.

The Nicaragua canal could start construction late in 2014 and complete by 2019.

There's also anticipation, even euphoria, among some Nicaraguans.

"It is said that without the canal, we'll grow at 4.5 percent a year until 2020," said Kamilo Lara, an environmentalist and supporter of Ortega. "But with the canal, growth could be as high as 15 percent."

Awestruck by Wang's influence and the displays of pomp on the trip, several Nicaraguans said they'd concluded China that itself is interested in the Nicaraguan canal.

"It made us all think: It's a go," Vargas said.

Whether the canal is built may hinge on factors other than the difficulty of construction, the expense or the environmental impact. Rather, experts said it might depend on China's reaction to Washington's military "pivot" toward the Far East, and whether China sees an imperative to open a trade route to the Americas for Venezuelan crude and other raw materials that isn't dependent on access to the Panama Canal, which it sees as under Washington's domination.

China has never believed that the Panama Canal and the Panama Canal Authority are independent of US influence, said R. Evan Ellis, the author of the 2009 book China in Latin America. "There's a certain value to having their own canal," he said.

The upgrade project of the Panama Canal is experiencing some delays. The upgraded and enlarged Panama canal is now expected to open in July 2015.

Nicaragua, China forge ahead on canal to remake world trade

Date

January 21, 2014

The coasts of Nicaragua may one day be busy with ships passing through a canal. Photo: Reuters

http://www.smh.com.au/world/nicaragua-china-forge-ahead-on-canal-to-remake-world-trade-20140121-hv992.html#ixzz2rSWiZ8nV

Brito, Nicaragua: Fisherman Pedro Luis Gutierrez gazed from his porch on the Pacific Ocean and conjured up a vision: Someday, mammoth oceangoing vessels will sail in from afar and vanish into a canal piercing the jungle.

"The ships will cross over there in the middle of the beach," Mr Gutierrez said with the cocky assurance of someone who had heard a lot about a plan to build a rival to the Panama Canal in Nicaragua.

For now, it's a mirage. But while few outside Nicaragua took seriously the announcement last year that a Chinese company had won a 50-year renewable concession to build a canal, the plan is moving quickly. Scores of Chinese engineers have mapped the topography here, and deal-makers are scouring the globe for investors from an office in faraway Hong Kong.

Some time later this year, President Daniel Ortega and Chinese telecom tycoon Wang Jing will decide whether to give the project a green light, possibly unleashing earthmovers on one of the largest engineering challenges the world has ever seen, comparable even to China's enormous Three Gorges Dam.

The stakes are high. If the transoceanic canal gets the go-ahead, it might take a decade to build, gobble $60 billion and slice through vast stretches of tropical forest. At  290 kilometres, it would be more than three times the length of the US-built Panama Canal. It also would accommodate supertankers and giant container ships that are far bigger than those the Panama Canal will accept when its expansion is complete next year.

For Nicaragua, a poor nation of 5 million people, the project may punch its ticket out of poverty, creating jobs and prosperity.

For China, the plan would mean easier access to crude oil from Venezuela and a greater foothold in the western hemisphere. Such geopolitical considerations may weigh more for China than the price tag.

"In the initial scenarios we looked at, you can see that up to a million people could be employed within the 10-year span of construction," said Manuel Coronel Kautz, an engineer who heads the Transoceanic Grand Canal Authority of Nicaragua.

Mr Coronel said 300 to 400 professionals - including teams of Chinese geologists, British environmental experts and other foreign technicians and trade experts - were working on a gamut of financial, environmental and commercial feasibility studies.

Much of what they're finding is cloaked in secrecy. Questions include: who will finance the project? Is the Chinese government behind it? Will the public see an environmental impact study? Can natural rainfall and massive Lake Nicaragua sustain the water-operated locks of such a large canal?

The secrecy exasperates scientists, who warn that Mr Ortega may be making a devil's pact, swapping priceless environmental heritage and national sovereignty for speedy development.

But there is also anticipation, even euphoria, among some Nicaraguans.

"It is said that without the canal, we'll grow at 4.5 per cent a year until 2020," said Kamilo Lara, an environmentalist and supporter of Mr Ortega. "But with the canal, growth could be as high as 15 per cent."

Lara was among 21 Nicaraguan business people, academics and civil society leaders Wang invited on an all-expenses-paid trip to China in late October to learn more about the proposed canal. They remained at Mr Wang's side for much of the nine-day trip.

Mr Wang, a 41-year-old entrepreneur, is the chairman of both Xinwei Telecom and HKND Group, the Hong Kong-based firm that holds the canal concession.

While Mr Wang isn't widely known in the West, his Beijing-based Xinwei has drawn high-level attention. Past and current Chinese party chairmen, premiers and Politburo members have visited the company, an unusual honour.

As the Nicaraguans toured other enterprises with Mr Wang - most notably China Railway Construction Corp, the second largest construction firm in China - group members said the entrepreneur was treated, in the words of one, "as if he were Mao".

Mr Wang says in media interviews that his company is acting alone.

"It is a strictly commercial project. There was no order from the Chinese government," Mr Wang told Hong Kong's South China Morning Post in an interview published in October. McClatchy's efforts to reach him were unsuccessful.

Some Nicaraguans came away with a different impression. As they saw Mr Wang tootle about in a Rolls-Royce and receive red-carpet treatment from chief executives of companies far larger than his, they surmised invisible patrons.

"There is a relationship either with the government or with the military. That was obvious," said Diego Vargas Montealegre, the president of the Nicaraguan-American Chamber of Commerce and a participant on the trip.

Awestruck by Mr Wang's influence and the displays of pomp on the trip, several Nicaraguans said they had concluded that China itself is interested in the Nicaraguan canal.

"It made us all think: It's a go," Mr Vargas said.

Whether the canal is built may hinge on factors other than the difficulty of construction and the expense or the environmental impact. Rather, experts said it might depend on China's reaction to Washington's military "pivot" towards the Far East, and whether China sees an imperative to open a trade route to the Americas for Venezuelan crude and other raw materials that isn't dependent on access to the Panama Canal, which it sees as under Washington's domination.

China has never believed that the Panama Canal and the Panama Canal Authority are independent of US influence, said R. Evan Ellis, the author of the 2009 book China in Latin America. "There's a certain value to having their own canal," he said.