Burma update

Burma Update

26th October 2006

It seems that the military junta in Burma is penalising one of the "cease fire" groups for its refusal to condemn the UN's discusssion of the "Burma question", by blocking supplies to gold miners in Kachin state. At the same time it's trying to attract more private companies to exploit the country's gold.

Regime Seals Off Kachin Gold-mining Areas

By Khun Sam, The Irrawaddy

26th October 2006

Burmese troops have reportedly blocked routes into two gold mining areas of Kachin State, disrupting major sources of revenue for the Kachin Independence Organization.

The military action, sealing off the mining areas of Mali Hku and N’Mai Hku, is apparently in response to the refusal by the KIO to join a regime-instigated protest against the inclusion of the Burma question on the agenda of the UN Security Council.

Sources in the Kachin State capital, Myitkyina, told The Irrawaddy on Thursday that government troops had been preventing the transport of essential supplies such as rice and fuel into the gold-mining areas since the end of September. The areas are some 80 km (50 miles) from Myitkyina.

“The gold mining business has been on hold due to the Burmese (soldiers) prohibiting supplies being transported there,” a pastor from the Mali Hku area told The Irrawaddy. He said rice was in short supply and the price had risen threefold.

One source said about half the 30 or so gold-mining operations in the N’Mai Hku area had been forced to close because of the disruption of supplies. Soldiers there were demanding high taxes from local businesspeople, the source said.

Mali Hka and N’Mai Hka are two main tributaries of the Irrawaddy River and the surrounding areas are controlled by the KIO, one of Burma’s major former insurgent groups.

Although the blockades are thought to be in retaliation for the KIO refusal to join in condemnation of UN Security Council discussion of Burma, the head of Northern Command, Maj-Gen Ohn Myint, said the problems had been caused by the mismanagement of a low-ranking official, according to KIO Myitkyina liaison officer Kumhtat Gam.

Justifying its refusal to condemn the inclusion of Burma on the UN Security Council agenda, the KIO told the regime in late September that it wanted to remain neutral. A number of other ethnic ceasefire group have fallen in line with the regime-led condemnation.

Shortly after the KIO refusal, the government blocked one of the group’s trade routes on the China-Burma border, a major source of revenue. Some unlicensed vehicles belonging to KIO members were also confiscated.

Myanmar encourages private sector to mine gold

Xinhua Press, China

20th October 2006

Myanmar has been encouraging the country's private sector to mine gold, allowing more such engagement by them at many prospective small gold mining blocks across the country, said local media.

Currently, there are 380 small blocks for gold mining already granted to the private entrepreneurs, and most of the gold are produced from those blocks in Sagaing and Mandalay divisions, according to the state-run Myanmar Mining Enterprise (MME)-2 under the Ministry of Mines.

Besides the two divisions, there are also other small blocks under exploration in Kachin, Mon and Bago states and divisions, the MME disclosed.

As set by the state, private enterprises are allowed to conduct gold exploration activities on 8-hectare blocks under a lease term with the MME for at least three years for the undertaking.

A security deposit of 400,000 Kyats (about 300 US dollars) is to be pre-paid and on approval another 1.1 million Kyats are to be settled again for rental charge, the MME said, adding that 35 percent of the gold output from the blocks is to be shared by the state, while the rest can be sold by the private investor freely in domestic market.

Meanwhile, the MME is also making arrangement to privatize the largest state-run gold mine in Kawlin, northwestern Sagaing division, in a bid to transform it from a poor operating status to a better and effective one.

The 2.66-square-kilometer Kyaukpahtoe Gold Mine currently operating under the MME will be the first of its kind to be transferred to the local private sector, an official with the MME said.

According to the official and some local entrepreneurs, local private companies or Myanmar enterprises backed by foreigners intending to take over the gold mine are required to show money of 2 million U.S. dollars and a security deposit of at least 100 million Kyats (about 76,923 U.S. dollars) is fixed for at least 10- year operation on competitive basis with the closing date of tender set on Nov. 10.

Tender winner is to initially pay to the state as monthly rental charges for the mine operation with a bar of pure gold weighing 12.5 kilograms (kg) from production and 10 percent of rest of the production are also to be shared by the state, the official stated.

The Kyaukpahtoe gold mine, which started operation in 1980, currently produces two bars of gold or less than that as compared with four bars previously, it was revealed.

Confirming that there is not yet foreign investment in the sector, the MME official disclosed that although the Ivanhoe Company of Canada was once engaged in gold exploration in Yameithin in joint venture with the government but due to failure in negotiating a profit sharing ratio, the project came to a standstill.

According to the ministry, there is also a copper mine project in Monywa being undertaken by the Myanmar-Ivanhoe Copper Company Ltd of Canada and the MME-1 under a 50-50 joint venture basis.

The Monywa mine is currently yielding 39,000 tons of copper annually and it sees an increased annual production of up to 50, 000 tons in 2006 from the mine.

The 90 million-US-dollar joint venture project began in 1998. It also foresees a rise in its annual total output of up to 200, 000 tons in the next four years from three major copper deposits in Monywa.

The overall Monywa mine would become the largest copper output area in Asia, it is predicted.

Official statistics show that foreign contracted investment in Myanmar's mining sector has so far amounted to about 534.19 million dollars since the country opened to such investment in late 1988, accounting for 7 percent of the total foreign investment and standing as the fifth largest sector.

Other foreign firms engaged in mineral exploration in Myanmar include those from Australia, China, Japan, Malaysia, Singapore, Thailand and the United States.

Observers here said Myanmar's first opening of its state- operated largest gold mine to the private sector signifies a breakthrough in the country's privatization program for its state- owned economic enterprises and the liberalization would further contribute to the development of the mining sector.