Nicaraguan assembly OKs $40 bln Chinese canal to rival Panama's

[Judi Lynn]

Nicaraguan assembly OKs $40 bln Chinese canal to rival Panama's
MANAGUA, June 13 | Thu Jun 13, 2013 5:06pm EDT

(Reuters) - Nicaragua's national assembly on Thursday approved a 50-year concession to a Hong Kong-based Chinese company to design, build and manage at an estimated cost of $40 billion a shipping canal across the central American nation that would compete with the Panama Canal.

The proposal by HK Nicaragua Canal Development Investment Co Ltd's (HKND Group) envisages linking Nicaragua's Caribbean and Pacific coasts and includes plans for two free trade zones, a railway, an oil pipeline and airports.

The government says the proposed canal, which has been mooted for years by Nicaraguan lawmakers, could add up to 15 percent to the country's gross domestic product.

"Today is a day of hope for the poor of this country," said Edwin Castro, a lawmaker in President Daniel Ortega's ruling Sandinista National Liberation Front party, before the vote that marked final legislative approval of the deal.

More:
http://www.reuters.com/article/2013/06/13/nicaragua-canal-idUSL2N0EP1S020130613?rpc=401&feedType=RSS&feedName=rbssEnergyNews&rpc=401

[flamingdem]

1. Fascinating development

They'll take business from Panama and keep prices down.

[Judi Lynn]

2. Nicaragua waterway to dwarf Panama canal

Nicaragua waterway to dwarf Panama canal

Chinese firm to build and run $40bn trans-oceanic plan as opponents demand proper scrutiny of environmental impacts

Jonathan Watts, Latin America correspondent
The Guardian, Wednesday 12 June 2013 14.42 EDT

Nicaragua's parliament is due to vote on Thursday on one of the biggest infrastructure projects in Latin America's history – a trans-oceanic canal that is to be built and run by a Chinese company.

If it goes ahead, the $40bn (£26bn) scheme, which is twice as expensive as Brazil's Belo Monte dam and likely to be three times longer than the Panama canal, looks set to transform global shipping and jump start the economy of this Central American nation.

As well as the waterway, the draft agreement between Nicaragua and a Hong Kong registered firm — Nicaraguan Canal Development Investment Co Limited – includes provisions for two free trade zones, an airport and a "dry canal" freight railway.

"This will be the largest project in Latin America in 100 years," Ronald Maclean, the executive fronting the operation in Managua told the Guardian. "If Nicaragua gets to do this, it is going to be a transformational project not only for Nicaragua but for the region."

More:
http://www.guardian.co.uk/world/2013/jun/12/nicaragua-canal-waterway-panama

[on point]

3. Incredibly stupid idea and waste of resources

The world does not need this. Better to invest the resources in something it does need that would benefit people and trade if that is the goal. Perhaps a complete high speed net for South America, or perhaps a region wide modern all weather road system to connect all the countries, or ?

But an expensive duplicate of an existing capability? Sheer stupidity!

[msongs]

4. it will run by China for china. what could possibly go wrong lol nt

[Judi Lynn]

6. The US has considered using both canals:

From post #5:

~snip~
— 1887: U.S. companies form to build a Nicaragua canal. They start construction, but project collapses in 1893.

— 1897: U.S. President William McKinley appoints Nicaragua Canal Commission, which carries out a 20-month survey across the country and recommends a route.

— 1904: U.S. begins construction on Panama Canal after buying French concession.

— 1914: Panama Canal opens, giving ships an eight to 10 hour journey, 50 miles (80 kilometers) from Atlantic to Pacific. At the same time, the U.S. pays Nicaragua $3 million for an option to build and operate a canal there as well.

— 1928: US Congress authorizes new survey of Nicaragua canal route. Survey continues into 1931.

— 1989: Nicaragua government forms committee to study feasibility of a canal. Japanese experts come for consultations on the idea.

— 1995: American, Asian and European investors plan 250-mile (400-kilometer), $1.4 billion high speed rail link — a "dry canal." Nicaraguan President Arnoldo Aleman drops that plan two years later, citing likely negative environmental effects.

Perhaps you should dash off a scorching letter to the U.S. Gov't.

[naaman fletcher]

8. It's not a duplicate

It will significantly cut shipping costs for many routes.

[on point]

9. The capability is to cut out a trip all the way around Argentina. This is CLEARLY a duplicate

capability. The few miles it may or may not cut out is an insignificant percent off the total trip.

The time to build this would have been before the Panama canal was done as all the studies cited by others here demonstrate the desire.

The world has many problems and very limited resources. This absolutely a wasteful stupid use of those resources - not to factor in even the environmental costs which makes it EVEN worse.

Spend the 40 billion on something else!

A Spaceport near the equator over water for instance would be a useful addition t world infrastructure.
Roads, high speed internet, high speed transit trains net north south. Practically anything would be a better use of resources.

This is obviously a greed and power play motivated project and is NOT a sensible plan.

[naaman fletcher]

10. Exept you are rong,

It is not insignificant at all.

The 40 billion is being spent to make a profit from. The people spending the $40 billion believe that shipping companies will pay them a premium over the Panama Canal in order to have a shorter and quicker trip to, say, Texas.
It i was insignificant, no companies would pay them a premium over the Panama Canal.

So let me ask you:

Who do you think understands the economics of this better? The people putting up the money and the companies that own the ships, or you?

[Socialistlemur]

13. Wait to see if they do build it

I think the idea is fairly lame because the Panama Canal is being expanded with new larger locks. The current expansion should take care of the traffic until 2025 ... And it may be forever if the Arctic ice melts and ships can use the Arctic route. We also need to consider that china may not be so competitive in 20 years...and their export flood will slow down because they can't keep exploiting the working class the way they are now. And I haven't even discussed sea level rising due to global warming. Nicaragua may want to be extremely careful allowing a sea entry across the country, they may be left hanging from the trees.

[Bacchus4.0]

11. A region wide road network would have more environmental impacts than the canal

Although the environmental costs in Nicaragua will be large. I assume they will connect through Lake Granada but I could be wrong.
Post Panamax vessels already take the long trip around Tierra de Fuego so if they design to accomodate the largest ships they'll have an advantage over the Panama canal which will still be used of course. Panama is currently widening the channel. Not sure if that work has been completed.

Its hard to argue against it from a development and economics standpoint for Nicaragua especially since China will fund.

Increased population and living standards in Latin America will mean more environmental destruction. Thats the downside.

[naaman fletcher]

12. Canal widening is not completed yet, fyi. nt.

[Judi Lynn]

5. A glance at the history of plans to build a canal across Nicaragua

A glance at the history of plans to build a canal across Nicaragua
Article by: THE ASSOCIATED PRESS
Updated: June 13, 2013 - 4:25 PM

For hundreds of years, explorers and governments have dreamed of a waterway linking the Atlantic and Pacific. Proposed routes have ranged from Mexico to Colombia, but many have focused on Nicaragua. A few key moments:

— 1524: Spanish conquistador Hernan Cortes writes that a canal across Central America would "be worth more than the conquest of Mexico."

— 1825: The Republic of Central America asks U.S. help in building a canal across Nicaragua and signs a deal with a New York businessman. The project soon fails.

— 1849 : Nicaragua gives Cornelius Vanderbilt's Accessory Transit Company the right to build a canal within 12 years. It builds a land transit route, but abandons it after years of local political turmoil.

— 1872: U.S. government begins another survey of Nicaragua canal route.

More:
http://www.startribune.com/politics/national/211443671.html

[Socialistlemur]

7. Corporate background of Chinese involved in canal construction

The company receiving the award is incorporated in Hong Kong. The president is the CEO of Xinwei Telecom. Xinwei is a Beijing based Chinese corporation quoted in the local stock market, but it seems to have roots in the state research incubators. It's first forays outside China were in Cambodia, Nicaagua, and possibly Myanmar. Their technical strength is wireless telephony.

So what are these guys doing in a deal to build a canal? I think they parlayed their contacts in Nicaragua to make a deal. They'll now try to flip the contract to a real Chinese construction company and will have to get Chinese bank funding. But I have a hunch this is mostly vapor ware, and they will use the concession for a more limited project. A full canal doesn't really make sense long term, and the banks won't lend unless they get good cash flow projections.

[ocpagu]

14. Good news.

It will certainly have a positive impact for the entire region by adding competition to Panama Canal. Good luck to Nicaragua.

[Judi Lynn]

15. This canal will save very large ships the trouble of rounding Cape Horn,

as pointed out earlier in this thread by Bacchus, I think:

Chinese company plans to build Nicaraguan canal to compete with Panama
By Ryan Whitwam on June 14, 2013 at 11:40 am

It has been almost a century since the Panama Canal opened to shipping traffic, and it is still the only route ships can take to cut across the Central American isthmus. Even before the Panama Canal began construction, Nicaragua dreamed of building a similar shipping lane connecting the Pacific and Caribbean. Yesterday the Nicaraguan government approved legislation giving a little-known Chinese company exclusive rights to build that canal. The Great Nicaraguan Canal will be one of the most incredible engineering undertakings in history.

The project is estimated to cost upwards of $40 billion, and could balloon considerably as construction proceeds. The legislation, pushed through by the Nicaraguan president, permits HK Nicaragua Canal Development Investment (HKND Group) to plan and build the canal, but also a new rail line, an oil pipeline, two deep water ports, two international airports, and a series of free-trade zones along the canal.

~snip~
The Panama Canal was completed long before supertankers existed, and that continues to cause headaches for shipping. Many of today’s largest vessels are unable to fit in the canal, leaving them with little choice but to take the Cape Horn route around the tip of South America. The Great Nicaraguan Canal would be wide and deep enough to accommodate such ships.

Advanced global positioning technology and super-precise surveying will make the design of this canal much easier than it would have been over a century ago. The building process will also be completely mechanized, whereas the Panama Canal relied on huge numbers of laborers who could contract diseases or become injured. Satellite imagery could also play a crucial role in planning and monitoring the construction process. The world will be able to watch from space as the canal is carved out over the course of 10 years.

More:
http://www.extremetech.com/extreme/158700-chinese-company-plans-to-build-nicaraguan-canal-to-compete-with-panama?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ziffdavis%2Fextremetech+%28Extremetech%29

[Socialistlemur]

16. There's very little supertanker traffic around Cape Horn

I don't know who gave the information for that piece, but there's no supertanker traffic around Cape Horn. The only large tanker traffic would be from Venezuela and it doesn't go that way, the ships sail due East.

I can see eventually the construction of two loading ports and a pipeline to parallel the ones in Panama because the Chinese may want to control it, but digging a canal for one or two ships per day is way too expensive.

Such a canal won't have too much long term utility if we do confirm the global warming projections. I don't trust those computer models but neither would I build a new open Channel if sea level is rising 3 to 4 meters, and the Arctic ice melts all the way in summer time. I think they are going to study this ( they'll use a different Chinese company because the one which received the concession isn't really in this line if work).

[wayne_fontes]

17. I'm not convinced this makes economic sense but it's an interesting

proposal.

For any one who is interested in the history of the Panama Canal or huge engineering projects in general David Mccullough's "Path Between The Seas" is an excellent book. His first three books which all focused on large engineering projects were far superior to his later biographies for which he is better known.

http://www.amazon.com/Path-Between-Seas-Creation-1870-1914/dp/0671244094/ref=sr_1_1?s=books&ie=UTF8&qid=1371339445&sr=1-1&keywords=path+between+seas

[Socialistlemur]

18. I have worked planning mega projects, they tend to overspend

I have worked in teams planning very large projects such as this one. They usually don't get carried out, either financial or environmental reasons kill them. I'm surprised the Nicaraguans would give a concession to a company headed by a telecoms entrepreneur from China without having any idea of the financial aspects, environmental impacts, labor commitments, or other critical issues which have to be considered. This tells me the deal was done by the President or somebody close to him who has negligible education in the field. Knowing the Chinese, they signed a deal to get it locked, and will now spend years doing studies. In the end it's highly doubtful they will dig a canal, but whatever they do is almost guaranteed to bring tens of thousands of Chinese laborers, exploited by the inhuman savage capitalists who call themselves "Chinese communists". It's all a big joke.