Burma: Mining brewing more trouble for Arakan State?

Published by MAC on 2013-10-15
Source: Mizzima, Irrawaddy, Myanmar Times, IBT

Arakan State government backs mining projects in strife-torn north

The Irrawaddy

7 October 2013

A Chinese and a Luxembourg-registered firm have obtained Arakan State government approval to begin mining aluminum and titanium deposits located on beaches in the north of the state, said Arakan State Minister of Electricity and Industry Aung Than Tin.

He added that final approval from Naypyidaw for the projects, which are located in strife-torn parts of the state, was expected soon.

State government approvals were granted to a Chinese company called Shwe Shapweye (which means Gold Finder in the Burmese language) and the Luxembourg-registered Boulle Mining Group, Aung Than Tin said, adding that the firms needed to form a joint-venture with a Burmese partner.

"There is no objection from the state government to the projects," he told The Irrawaddy, adding that the firms had "proved that the operation areas are outside of farmlands and forestry areas."

Aung Than Tin, who until recently was state minister of mining, said the firms would mine sands for aluminum and titanium deposits at sites along the beaches of Rathedaung and Maungdaw townships.

The project sites would be located in townships where tens of thousands of people remain displaced after outbreaks of deadly inter-communal violence between Arakanese Buddhists and Rohingya Muslims last year. Maungdaw Township, a Muslim-majority area, has for many years been administered by Burmese security forces, which have been accused of committing of widespread human rights abuses against the population.

Boulle Mining Group's website said it has mined for copper, cobalt and zinc in the war-torn Democratic Republic of the Congo, for titanium dioxide, ilmenite and zircon in Sierra Leone and for diamonds in Namibia.

A 2006 article in the Globe and Mail describes the firm's owner Jean-Raymond Boulle as a controversial figure who "has had a long career in the diamond trade that has included brushes with rebel leaders during the civil war in the Democratic Republic of Congo and complaints about his business practices by a United Nations panel."

The Chinese firm Shwe Shapweye has been prospecting for mineral deposits along the Ale Than Kyaw beach in Maungdaw and Angu Maw beach in Rathedaung since 2010.

A manager at Shwe Shapweye told Radio Free Asia's Burmese-language service that mining operations on the beaches will start soon. He told the broadcaster that 1 ton of titanium could be produced by sifting through 500 tons of sand.

According to local villagers, the firm has already dug up massive amounts of sand while prospecting. The Chinese firm reportedly received security guarantees from the state government while carrying out the work.

A local civil society group, called the Wunlatt Foundation, said it was concerned over the projects' impacts on the approximately 30 Buddhist and Muslim villages that are located on the coast near the planned mining areas.

Wunlatt Foundation member Zaw Zaw Htun said, however, that the group had been unable to inspect the situation in the project areas since inter-communal violence first broke out in June last year.

Mining of mineral-rich sands on beaches is done through open pit strip-mining. Massive amounts of sand are dug up and valuable minerals are separated in water, after which the remaining sand is dumped back onto the beach.

The practice, which is being done in countries such as the US, Australia, India and Sierra Leone, is considered environmentally harmful as it causes erosion, destroys the local ecosystem and affects wildlife on the beaches, such as sea turtles.

State Minister of Electricity and IndustryAung Than Tin claimed that local communities had already accepted the projects' environmental consequences. "We will have to do business for our state's development, and selling these resources is for all the people's sake," he added.

Kyaw Thein, the state mining minister, said he saw no problem in attracting foreign investment to the region, despite the presence of tens of thousands of refugees and allegations of widespread human rights abuses.

"The project is for the sake of local development. It would create jobs for the local people," he said. "Although the companies would have to hire skilled workers from abroad, the manual laborers will be from the villages."

Soe Nyein, a state lawmaker from Kyauk Taw Township, said he was concerned about the decision to grant mining licenses, as it had not been discussed with Arakan parliamentarians or with local communities.

"These sands are very valuable, the government should be transparent about it, and consult with the locals first about whatever they do," he said.

Soe Nyein said that under Burma's military-drafted 2008 Constitution state governments are largely under direct control of the central government in Naypyidaw, which has often pushed through natural resource extraction projects in ethnic regions at the expense of local communities and the environment.

"It is important to think of the advantages for our local people and benefits for our state, and not have it be like projects such as the Shwe gas pipeline," he said, referring to the Chinese-owned project that pumps Burmese gas from the Arakan coast to southwestern China.

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Letpadaung Project Shouldn't Resume, Say Farmers

By Zarni Mann

The Irrawaddy

9 October 2013

RANGOON - Farmers in Letpadaung, Sagaing Division, whose land was confiscated to make way for a Chinese-back copper mine, are demanding that the controversial project not be restarted this month.

They say the company developing the mine-for which 7,800 acres of land in Sarlingyi Township has been confiscated-is not following the suggestions made by a parliamentary commission led by opposition leader Aung San Suu Kyi.

The commission investigated the project after it was suspended in November 2012 following a brutal crackdown on protesters. The highly unpopular mine is being developed by China's Wanbao in a joint venture with a Burmese military company.

A deadline for locals to accept compensation passed at the end of September, and, although not all residents have agreed, Chinese state media has reported that the project resumed on Oct. 1.

"Since there's no transparency yet and the mining company is not working according to the report of the Letpadaung investigation commission, the project should not be resumed," said Sandar, a farmer from Tone village. "The negotiations with the locals are not finished yet".

Locals have also insisted that although major digging at the mine appeared to halt when the project was stalled, work has continued around the area.

"The mining company said they would suspend their work, but, in reality, they keep working. They are digging and dumping waste soil on the land where the landowners have not accepted compensation yet," Sandar said.

On Sunday, about 300 farmers from 14 villages near the mine went to a liaison office opened by the parliamentary commission's implementation committee, located at New Hse Tae and Zee Taw village, to urge the mining company not to resume work.

The farmers say fences are being erected on disputed land, and that the construction of an acid factory for processing copper is going ahead against the investigating commission's recommendation.

"According to the report of the investigation committee, the mining company must find the solution to take care of the environment and the health of the people who live nearby," said local resident Win Htay.

"But they have continued the construction of the acid factory since 2012. They are talking about transparency, but we know nothing about the new contract, about what they are doing or what the current status of the project is."

Under new terms agreed on the project, the government takes a 51 percent stake in the mine. The military company Union of Myanmar Economic Holding Ltd (UMEHL) now has a 30 percent stake and Wanbao 19 percent.

Locals say they have lost land farmed by their families for generations, and are now forced to work in industries like brick manufacturing.

"They said they will give jobs to those who lost their land, but in reality, the salary we earn from working with them is not enough to feed a family," Win Htay said. "We know nothing apart from planting crops, so that how can we get a good salary by working with them. We feel that they [the mining company] have no hearts."

The farmers say they are also in the dark about the future of ancient religious buildings in the mining area that it is feared could be demolished. Last month, about 50 farmers and activists marched from Mandalay to Sagaing to call for the protection of a Buddhist ordination hall and temple established by influential monk Letti Sayadaw.

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Wanbao prioritizes hiring of compensated residents

by Phoe Soe Thu

Mizzima

7 Sep 2013

The Myanmar Wanbao Copper Mining Ltd, operating the copper mining project in Salingyi Township, will appoint residents from 26 villages in the project area to trainee positions in the company.

Speaking on the condition of anonymity, a member of the Employment Committee of the Myanmar Wanbao, said that the people who gave up their land and have received compensation will be given top priority in order to secure their livelihoods. Residents of Salingyi Township in Sagaing Region will get the highest priority, the committee member said.

Hlaing Min Oo, a member of Generation Youth organization said, "Giving priority only to residents who received the compensation is discrimination. It shows their lack of transparency. They should give priority to all who want these jobs. They are discriminating residents who did not receive compensation."

This is the second time the Myanmar Wanbao have advertized job openings. 350 job vacancies have been advertisement, and positions include machine operators, electricians, mechanics, lab assistants and factory officials.

According to an official at the Myanmar Wanbao company, 125 residents from Sagaing Region were employed in the first batch.

Tin Thein living in the Tone Ywarthit Village in the project area said, "There are many university graduates in the villages. Most of them did not apply to these jobs. Though some applied, only one or two applicants from each village got jobs."

The job criterion says that applicants must have a university degree or a diploma in mechanical or electrical engineering. They must be aged between 18 and 45.

The company will provide job training for the first five months of their employment and each trainee will receive a stipend of MMK 100000 per month. After the five month period, the employees will receive full salary.

On November 29, 2012, about 100 Buddhist monks and some residents were injured during the riot-police's violent crackdown on protest-camps in the project area. Thereafter, there were protests against the copper mining project across the country.

Consequently, the government formed an Investigation Committee led by Aung San Suu Kyi to assess whether the project should be shut down, and to investigate the violent crackdown on protestors and compensations for confiscated lands. The committee supported the continuation of the project.

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Sweeping changes to Myanmar mining laws planned

Frik Els - http://www.mining.com/sweeping-changes-to-myanmar-mining-laws-planned-89507

13 October 2013

Myanmar's 1994 mining law is set for a major overhaul that could transform as much as 70% of current legislation, government officials from the Asian nation said on Sunday.

Mostly undeveloped, Myanmar also known as Burma is home to vast reserves of oil and gas and minerals and metals, including gold, tungsten, copper, nickel, tin, lithium and precious stones.

The former military regime has loosened its grip on the economy and politics over the past few years prompting intense interest in Myanmar from mining companies and oil explorers.

But much of the initial enthusiasm has waned due to a lack of administrative capacity within the country, a weak legal and regulatory system and crumbling infrastructure.

Last year a brutal crackdown on protestors at the country's largest copper mine, Letpadaung, which is jointly by Myanmar's military and Wanbao Mining, a subsidiary of China North Industries, an arms manufacturer, lead to widespread condemnation and civil action.

The Myanmar Times on Sunday speculates that deals like Letpaduang signed when military rule was still in place would probably not be affected by the proposed laws, but several other changes could make life easier for foreign investors in the resource sector:

One of the biggest stumbling blocks for potential foreign miners is Myanmar's production sharing contract (PSC) between the private party and the Ministry of Mines.

Under the current Mines Law, the Ministry of Mines acts a non-equity partner but is still entitled to around 30pc of minerals extracted, plus the relevant income tax and royalties owed.

Yet another area of concern for foreign investors is the rule banning exports of ore, coal and gold, a protectionist measure meant to ensure that processing is done in-country.

There are also issues surrounding the ability of companies to move from one phase of an operation to the next, like from exploration to site development, without new contracts.

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Mining Law to get an overhaul, officials say

By Tim McLaughlin and Soe Than Lyn, Myanmar Times - http://www.mmtimes.com/index.php/business/8442-mining-law-to-get-an-overhaul-officials-say.html

13 October 2013

The 1994 Mining Law is set for a sweeping overhaul that could see nearly 70 percent of the existing law amended, an official said last week.

U Nay Win Tun, an Amyotha Hluttaw representative and chairman of the Mining and Resources Affairs Committee, said the changes would see the new bill reworked to meet international standards while giving more Myanmar companies the opportunity to work in the

sector.

"The new mining bill has two significant changes. First, it was drafted under international criteria and second, it will level the playing field among Myanmar investors in the mining sector," he said. A draft of the new law has not yet been made public. The Gemstone Law, which pertains to precious stones, is also being amended.

The committee submitted its proposed amendments to the Amyotha Hluttaw on October 1. The Mining Law amendments will be debated by MPs within two weeks, U Nay Win Tun, who also serves as the chairman of Ruby Dragon Mining, said. However, it could take months for a final version to emerge from parliament, because the amendments will also have to be approved by the Pyithu Hluttaw, or lower house.

The existing law, and the delay in amending it, have significantly dampened early excitement that Myanmar's economic opening would mean a quick score for international mining companies looking to capitalise on the country's abundant mineral resources that remain relatively unexplored.

Last year mining conferences in Yangon drew hundreds of international company representatives eying Myanmar's rich deposits of gold, zinc, copper, nickel and tin, but most walked away disappointed by the restrictive legal framework and the lack of preparation and capacity by the Ministry of Mines.

Instead of staking their claim in Myanmar, most have decided to take a wait-and-see approach, pursuing projects elsewhere while they keep an eye on Nay Pyi Taw to see what the new law will look like when it is signed before moving forward.

According to Alisher Ali, chairman of the Yangon-based investment banking advisory firm Mandalay Capital, the inadequate law is the biggest reason that there has been "lacklustre foreign direct investment in the mining sector".

Mr Ali added that proper changes to the law would make "the environment more conducive to foreign companies", and that Myanmar was a country of "significant potential", with the right framework in place.

"The oil and gas sector is testimony to how the country has been a magnet for FDI, and mining can do the same. There is the same level of interest if the legislation is correct," he said.

One of the biggest stumbling blocks for potential foreign miners is Myanmar's production sharing contract (PSC) between the private party and the Ministry of Mines.

Under the current Mines Law, the Ministry of Mines acts a non-equity partner but is still entitled to around 30pc of minerals extracted, plus the relevant income tax and royalties owed.

Yet another area of concern for foreign investors is the rule banning exports of ore, coal and gold, a protectionist measure meant to ensure that processing is done in-country.

There are also issues surrounding the ability of companies to move from one phase of an operation to the next, like from exploration to site development, without new contracts.

"In the current system these are separate contracts, so the mining companies have a concern that they might spend a lot of money in exploration without being legally certain they can take the next step," said Edwin Van der Bruggen, a partner at the law firm VDB Loi in Yangon.

Perhaps the most contentious issue for both local and domestic mining operations is land ownership and resettlement.

"In the current system, the mining company has to agree on compensation with the occupiers of land, but there is no guidance on how much that compensation should be," Mr Vanderbruggen said.

These problems have been highlighted by the ongoing dispute at the Letpadaung copper mine in central Myanmar.

The mine, the country's largest, is a joint venture between the Chinese backed Wanbao Mining and the military-controlled Union of Myanmar Economic Holdings Limited. It has been the site of tensions as local residents continue to protest government land confiscations.

"This is a really difficult issue to address so I would not be surprised if the new law remains silent on this point," he said.

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Gold output hindered by conflict

By Khin Mohn Win

Myanmar Times

13 October 2013

Despite the amount that national gold production increases in 2013, it would likely grow two-fold in comparison with previous years if mining is resumed in Kachin and Kayin states, where it is seeking peace, a government mining official said.

"This year's increase is due to large-scale production in Yamaethin in Mandalay Region and Kalaw in Shan State. But the production in Kachin and Kayin has declined since 2011," U Aye Zaw, Director (Production) of No. 2 Mining Enterprise of the Ministry of Mining, told The Myanmar Times.

He said that of 200 mining blocks in Kachin State, only 10 remain open, while only one or two of 150 in Kayin State are extracting gold.

"If some areas are open following peace being made in those two states, gold production would almost instantly increase by 40 percent beyond current production," he said.

Myanmar's total gold production currently comes from known deposits in two states, Kachin and Kayin, as well as four regions, Mandalay, Sagaing, Bago and Tanintharyi.

Mining contracts currently require that each functioning gold mining firm must supply at least 24 ticals (0.24 viss; 1 viss equals 1.6 kilograms) to the state each year, he continued.

"This year's supply is 300 viss, which is double of last year's," U Aye Zaw said. "This is partly because of outstanding debts from last year, and increases in productions of Sagaing and Mandalay Regions."

Neverthess, some miners extract outside of their leases and keep unrecorded yields, thus avoiding having to make government payments."

- Translated by Zaw Winn

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Land Seizure In Myanmar Continues Despite Reforms, Government Faces Internal And External Pressure To Develop Land Policies

By Sophie Song

International Business Times

27 August 2013

With their country undergoing political and economic reforms, Myanmar farmers have finally found their voice in protesting against rampant land grabbing under the former junta that has continued under the current government. Developing a set of clear and complete land policies is now critical, as Myanmar's leaders face both internal and external pressure on that front.

On Aug. 19 and 20, hundreds of farmers protested in Yangon, Myanmar's commercial center, to demand amendments to the 2012 land reform law, according to the Bangkok Post. The law, enacted by the civilian government, set up a complicated process for farmers to seek compensation that depends on the farmers having paperwork showing that they were using the land, even though record keeping is poor in the country.

"Land disputes are common because of the absence of written titles, a situation that was widely exploited by the military government," Christian Lewis, Southeast Asia expert for the Eurasia Group, a leading global political risk research and consulting firm, said in an email to the International Business Times.

The former government took ownership of all land, and sold off huge swaths of farmland and valuable mining areas to cronies and military-backed conglomerates. Despite military generals giving up some of their power since 2011, land seizure has not stopped. Now, under the reform government, some farmers are finally able to speak out.

"There were no complaints from farmers under the previous government, and I don't need to tell you why," said Shwe Thein, chair of the Land Core Group, one of a broader network of NGOs called the Food Security Group. But with the transition to democratic rule, "the issue is now arising."

Protests are especially loud in resource-rich areas, where citizens are displaced by mining projects, such as the one at Letpadaung Mountain. In 2010, the government confiscated nearly 8,000 acres of land to expand the project, jointly funded by the Chinese and Myanmar's military. Clashes took place from late last year into this year between protesters and authorities.

With public pressure on the rise, the government is forced to give land confiscation more consideration and it has created high-profile commission to do that. Multiple reports have been issued, but the commission has taken little action, despite leaders proclaiming the issue a top priority.

"Land ownership issues, for example, are extremely complex," President Thein Sein said in a July 15 speech at Chatham House during a visit to London, according to the Bangkok Post. "As part of our drive to foster growth for all the people of Myanmar, we will develop clear, fair and open land policies."

Besides respecting farmers' property ownerships, clear land policies are also essential for Myanmar's continued progress in economic development, and its ability to attract foreign investment.

"The government faces a tricky balancing act," Lewis told the IBTimes.

"Internally," he said, "it must weigh competing demands from citizens who have grown comfortable exercising their rights. Externally, the government must accommodate citizens' rights in an effort to show donor countries that Myanmar's liberalizing political trajectory continues, while also satisfying foreign investors, whose concerns about contract sovereignty are rising due to signals that several large (predominantly Chinese) investments may be forcibly renegotiated."