Burma: What does "security clearance" mean in practice?

Published by MAC on 2015-07-19
Source: Reuters, Irrawaddy, DVB, Myanmar Times, KachinNews

Myanmar gems sales slump as conflict stems jade supply

Reuters

9 July 2015

Proceeds from an annual gems emporium in Myanmar that ended this week fell 63 percent from last year to $1.26 billion, with sales suppressed by limited supply due to fighting in the mineral-rich Kachin state bordering China.

The sales fell from last year's record $3.4 billion, with output of jade interrupted by clashes between government troops and the Kachin Independence Army, a formidable rebel militia that has refused to join a nationwide peace process until its terms are met.

"The underlying cause is the fall in jade production because of the continued fighting," said a senior Ministry of Mines official, who declined to be identified because he was not authorised to speak to the media.

Kachin state is home to the world 's highest concentration of jade, but conflict has raged since a 17-year ceasefire broke down in 2011. The quantity and value of the jade available for sale have declined as a result.

Jade accounted for about 90 percent of this year's sales and 80 percent of proceeds in 2014.

The precious stone is especially popular in China, where many buyers believe wearing jade jewelry brings luck, prosperity and longevity. Myanmar is also a source of some of the world's best quality rubies.

Myanmar's gems emporium has been held annually since 1964 and provides a rare glimpse into its largely opaque jade trade . Experts believe about half of Myanmar's jade is traded unofficially and ends up across the border in China without formal taxation.

Total jade production during the fiscal year that ended on March 31 was 13,200 tonnes, down from 15,000 tonnes in 2013-14, according to official figures. That extends the decline since 2011-12 when 43 ,180 tonnes of jade was extracted.

---

Several injured during land dispute at a gold mine in central Burma – Zarni Mann

The Irrawaddy

8 July 2015

A land dispute at the site of a gold mine in Yay Htwat village in Mandalay Division’s Thabeikkyin Township turned violent on Monday, leaving small-scale miners and police injured, including a 50-year-old man who was allegedly shot in the knee, according to local eyewitnesses.

Small-scale miners faced off with police who had come to intervene in a dispute over land between the miners and the firm behind a gold mining project in the village area, Myanmar Sithu Company.

“Police arrived and the local miners became more angry and slingshots and stones were used. Later police opened fire to disperse the crowd and Chit Thae was shot in the knee,” said Kyaw Win, a local witness.

In total, around 20 local miners and eight police were injured in the clash, locals said. Chit Thae was admitted to Mandalay General Hospital while at least three policemen and six protesters were admitted to hospital in Thabeikkyin with minor injuries.

Police are investigating the matter, a local officer told The Irrawaddy, and Myanmar Sithu Company plans to open a case at the Thabeikkyin police station.

“We haven’t detained anyone yet, but have to deploy heavy security in the area to restore the situation back to normal. The case is under investigation and the company is planning to file a case at our station,” said the duty officer of Thabeikkyin police station.

During the clash, three trucks and two cars were smashed while nearly a dozen motorbikes belonging to police and local officials, as well as an office building belonging to Myanmar Sithu Company, were set on fire, according to the police officer.

The mining firm could not be reached for comment on Tuesday.

Thabeikkyin Township, located over 90 km north of Mandalay, is home to some of the country’s largest gold mines.

Disputes between small-scale miners and mining companies have arisen in the past when firms prevented local miners from working in certain areas.

Earlier this year, when Myanmar Sithu began the gold mining project in Thabeikkyin Township, locals from Yay Htwat complained that the project encompassed an area where independent local miners often searched for gold.

In May, locals staged a protest in the area and urged divisional authorities and the company to abandon the project in their village.

---

Gold traders fret opaque exchange rate – Khin Su Wai

Myanmar Times

7 July 2015

Mandalay gold dealers are seeing their business complicated by the difficulty determining the daily kyat-dollar exchange rate, with dealers working to avoid too much volatility in price.

While dealers had previously been able to simply ask money changers for the kyat-dollar rate each day, many dealers have been reluctant to do so since the unofficial market exchange rate moved outside the Central Bank of Myanmar’s official rate.

“In the past, we could ask the daily exchange rate from them openly. Now, the rate on their signboard is usually blank,” said Ko Maw from Aung Thamardi gold shop.

“It is not good. In one place, the rate is K1180 per dollar, and in another it is K1170, so the difference is K10. That makes a big difference when buying or selling gold.”

The Central Bank maintains an official reference rate for dollar-kyat exchange. It is illegal to trade outside a band of plus or minus 0.8 percent of this rate, though the parallel market rate is currently different from the official rate.

Exchangeswould rather use the market rate than the official rate, and many are continuing businesses using market rates. However, they are now generally hiding their rates for outside scrutiny so as to avoid attention from authorities.

Gold pricesalso depend heavily on the exchange rate, as gold prices otherwise closely track international prices.

Since international gold is denominated in dollars, but locally it is denominated in kyat, the value of the dollar-kyat exchange rate is crucial for local gold dealers to know when buying or selling the precious metal.

On July 4, one tical (0.576 ounces or 0.527 troy ounces) cost K740,000 in Yangon and K739,300 i n Yangon. The international price of gold meanwhile was about US$1164 a troy ounce.

International gold prices have not moved much in months. However, local gold hit a peak in early June as the value of the kyat against the dollar bottomed out. At one point a dollar traded at K1300 on the market, though it has since rebounded nearer to K1190. The Central Bank of Myanmar’s rate was K1125 per dollar yesterday, the highest it has been this year.

U Tin Tun, chair of the Mandalay Region Gold Traders Association, said traders in Mandalay work together to keep the price of gold from moving too quickly in any direction.

“The reason we don’t want an open market is we want to look after gold,” he said.

“There have been abnormal swings in prices, particularly in Yangon. After we took steps to control prices, Yangon followed.”

U Tin Tun said much of the problem has come from the effect of exchange rates on the gold price.
“On one day at 12:30pm, the exchange rate was K1290 a dollar, but we waited until 1pm and then 2:30pm and there had been a decline to K1235 a dollar. That’s a difference of K55, and that meant a large difference in the gold price, which fell from K805,000 to K740,000 a tical that day,” he said. “But in Mandalay, we never let the gold price go past K800,000.”

He added that in Myanmar, gold is seen as a safe haven during times of political instability, such as the introduction of new notes or inflationary concerns.

“The actual gold price can’t be controlled, but it can be manipulated by people due to their greed,” he said.

U Tin Tun said that the spread of information is the most important determinant for gold dealers. If news grows that the Yangon and Mandalay associations have lots of gold to sell, the price will drop.

On a normal day, about 20 viss (or 2000 tical) of gold is traded in Mandalay markets. Often, p eople sell their gold back to shops to obtain cash to meet expenses.

Interest ingold also depends on other markets such as jade and property. Both of these two have slowed down recently, though gold is still primarily determined by international prices.

The dealers said that both Mandalay and Yangon associations attempt to keep the price of gold from fluctuating too much. They added that in other countries, the government plays a more direct role in the price of gold.

Yet it is not only the price of gold that is affected by the exchange rate.

“Importers and petrol traders need dollars,” said U Than Tun, deputy chair of the Mandalay gold association. “The Central Bank doesn’t do its work properly. They don’t want to see use of the dollar.

“Now the Central Bank is selling dollars, but it is not enough. Dollars are also important for other businesses like jade trading in Nay Pyi Taw. But when you strip away dollars, gold price depends on politics.”

The Mandalay association has called on dealers not to trade in large volumes, and also to end the sale of gold to neighbouring countries such as China and India.

Government officials also periodically discuss plans to open a central gold market in Mandalay, as well as different laws, regulations and taxes. Gold is produced on a small-scale level in Mandalay and Sagaing Region as well as Kachin State, though insiders say Kachin production has slid in recent years.

---

UK mining firm looking to explore in Burmese jade area expects permit delay

Kachinnews

11 July 2015

Aurasian Minerals Plc (AuM) a British mining firm that has applied for a mineral exploration permit in a jade mining area in Burma has told its shareholders that it expects the permitting process to take some time. This admission was disclosed in a statement to shareholders issued last month that was penned by the firm's Non-Executive Chairman, Bruce Kay. Kay's statement was published in Aurasian's Annual Report.

Last year the firm applied for three exploration permits totalling 1,900 sq.kms in Burma but Aurasian is still waiting for these permits to be approved. "We expect that the approval process will initially be slow because of provincial issues, the national political transition and the ongoing revision of the Myanmar Mines Law", Kay explained in his statement.

In January the London based firm announced in an update to shareholders that the previous month it had delivered "three applications for mineral exploration licenses to the Myanmar Mining Authorities." Though the firm did not say where in Burma these applications were made it did reveal that the applications were made in areas that according to the company there exists "jade and gem mining concessions".

The only known commercially viable jade deposits in Burma are located in Kachin state in Hpakant, an area that has seen repeated clashes between the government and the Kachin Independence Organization (KIO) since a 17 year ceasefire collapsed in June 2011. Fighting between the KIO and government forces has continued over the past few months in jade rich Hpakant. Clashes last month forced more than 200 civilians in Hpakant to flee from their homes. Although both sides in the conflict continue to meet regularly for peace talks it remains unclear when the fighting will come to a complete end.

In January's Progress Update Aurasian noted that that its exploration applications for gold, copper and silver were "pending" with Burmese authorities "due to the current security situation in the relevant areas." According to Aurasian "when the areas have been given security clearance the authorities have indicated that they will then process the AuM applications after excising".

Although the firm, which was previously called Triple Plate Junction, did not specify what the "security situation" actually entails this appears to be a reference to the ongoing conflict between ethnic armed groups and the central government which continues in several parts of the country including in Kachin state. Likewise the firm's statement did not elaborate on what needs to happen in the areas in question before authorities can give "security clearance".

Though the firm is relatively small, 22.36% of Aurasian's shares are owned by the giant US mining firm Newmont Mining Corporation, the world's second largest gold miner. According to Aurasian, the firm entered into an agreement last year with a subsidiary of Newmont that allows for Aurasian to gain access to "Newmont's proprietary database covering various exploration activities in Myanmar, Lao PDR, Malaysia, Indonesia and Cambodia".

Newmont was previously involved in Burma in the 1990's before pulling out in 1997 after spending some $40 Million to develop gold deposits in Kyaukpahto in northern Sagaing division

---

Civil society reps blast Burma’s opaque extractive industries – Yen Snaing

The Irrawaddy

26 June 2015
 
A group of civil society stakeholders called on the government on Friday to halt all extractive projects in ethnic areas until a ceasefire is brokered between Naypyidaw and ethnic armed groups.
 
At a press conference held in Rangoon, the Myanmar Alliance for Transparency and Accountability (MATA) issued a statement criticizing Burma’s extractive industries for a lack of transparency and accountability and called for public participation in the decision making process regarding large-scale projects.
 
MATA representatives from various states and divisions detailed the secretive practices behind resource extraction projects in their regions and the negative social and environmental effects.
 
In some cases, MATA said, natural resources were being extracted unofficially during the implementation stage of projects. K Zaw Lun, a MATA representative from Kachin State, said soil dug during initial construction efforts on the now suspended Myitsone Dam was transported to China.
 
Tin Ko Ko Oo from Tenasserim Division claimed dredging in the species-rich Myeik area, involving a Singapore registered company and the military-owned Myawaddy Trading company, had damaged coral reefs and caused soil erosion which threatened the region’s marine life.
 
Naw Thapi Thar described the opaque development of a tin and ore extraction project in Pegu Division which the government had licensed to two companies. When locals sought to question authorities over the project and its potential impacts, they were met with silence.
 
“We formed a group to stop the project and inspected roads constructed in the name of community development. But the roads are not for locall development, but constructed for the company to use,” she said.
 
Tint Aung Soe, a representative from Sagaing, said land issues related to the Letpadaung copper mine, the nearby copper extraction site on Sabe mountain and the Kyay Sin Taung copper mine site remained unresolved.
 
“If the [Letpadaung] project is to be continued, there is an investigation report and an implementation committee. Locals, the government and the company should meet and try to solve the issues. The Letpadaung project should continue only after problems are solved,” he said.
 
In Shan State, various extractive projects from gold mining to silicon mining, hydropower and coal are underway, according to MATA representative Zaw Tun.
 
“We have seen that the state government lacks accountability and [won’t accept] responsibility for solving these problems in Shan State,” he said.
 
In July 2014, Burma was accepted as a candidate for the Extractive Industries Transparency Initiative (EITI), a voluntary reporting protocol promoting the transparent and responsible management of natural resources.
 
As an initial requirement, Burma will have to file its first EITI report in early 2016.

---

Thein Sein signs mining, agriculture, tourism MoUs in Mongolia

Democratic Voice of Burma

29 June 2015
 
Burma’s President Thein Sein has concluded the first day of an official visit in Ulaanbaatar, expressing his satisfaction with Mongolian-Burmese relations in a press briefing on Monday afternoon.
 
“I am confident that visit will be an impetus to the relations and cooperation between Mongolia and the Republic of Union of Myanmar,” Thein Sein announ ced, according to Mongolian state media.
 
“I am pleased to inform you that official talks have concluded some quite efficient and mutually-beneficial deals.”
 
Thein Sein spent the day meeting with President Taskhiagiin Elbegdorj and Prime Minister Chimediin Saikhanbileg, and oversaw the signing of cooperation agreements in mining, agriculture and tourism industries. The Burmese president also took time for a friendly horse ride with his Mongolian counterpart.
 
The official visit, at the invitation of President Elbegdorj, is the first time a Burmese leader has graced Mongolian soil since the establishment of diplomatic relations between the two countries in 1956.

---

Exploring Shan State’s Forgotten Mines

By Yan Pai

The Irrawaddy

4 July 2015

NAMTU, Shan State — Just before the rains set in, I set out on the 170-mile journey from Mandalay to Namtu in northern Shan State.

My destination: the legendary Bawdwin mine, developed under British rule by Herbert Hoover and others in the early part of the last century, before the former engineer and globetrotter became the 31st president of the United States.

The mine became famous before the Second World War as one of the globe’s biggest sources of lead as well as an important source of silver and zinc.

Today, the Bawdwin mine remains largely forgotten after it was nationalized in 1965 and handed over to the Asia World Company in 2010. I wondered what I would find.

In the early morning, the roads were dry and the only green I saw from the windows of my hired van were banyan trees, irrigated maze plantations and the uniforms of soldiers providing security on the road.

We passed through Pyin Oo Lwin, Gohtwin, Nawngkhio and Kyaukme before we arrived at around 10 am at the fork in the road in Hsipaw that leads to the near-deserted winding one-lane road to Namtu, 42 miles away.

The air was filled with the smell of smoke rising from land being burned off for farming. Occasionally I saw trees in full blossom, natural springs, grazing cattle and road workers on the four-hour journey.

At Namtu, I discovered a town that is home to a diverse mix of people. There are many Bamar originally from the central dry zone, Chinese and Gurkhas as well as the local Shan, Kachin and Palaung.

Scattered about the town and its environs on either side of the Namtu river (whose name translates as “rotten water” in the Shan language), I found relics of history in all directions.

On the western side of the river I found the old train station, with British-built warehouses still standing and a signboard that read, “1,765 feet above sea level.”

Steam locomotives with wooden coaches manufactured around the time of the First World War by UK firms Keer-Stuart & Co. Ltd and W.G. Bagnall Co. Ltd were stationed at the start of the spectacular winding railroad to Kya Sa Khan, which means Tiger Camp.

It was there that Herbert Hoover reportedly found the footprints of a tiger close to the source of what would become a massive mine descending 12 levels and 1,200 feet underground.

Once also called the Timber Mine for its walls propped up with local hardwood, today the Bawdwin depths are deserted, and they are only accessible down to the sixth floor, according to engineer and foreman at the site U Tin Tun Aung.

Locals told me that an approximately 140-foot-long section of the railway line to Tiger Camp was damaged during last year’s rainy season and remains unrepaired.

Near the station, up a snaking hill road lined with eucalyptus and frangipani trees, I found a part of the old mine headquarters.

In the colonial period this rise was named Bo Gon, or Foreigner Hill. The mine superintendent and foremen lived on the peak, where there was also a hospital and a post office.

On another hill close to the station is the deserted refinery that dates back more than 100 years. Here I saw two-foot wide railway tracks, old coaches and wheeled iron containers.

It was easy to imagine the bustle of the past, when thousands of workers led busy lives here. But now, silence reigns, and just a handful of male and female guards watch over the refinery on shi fts.

A female guard showed me a room with a modern-looking Chinese-made iron furnace where silver, gold and lead were extracted.

Local sources later told me that state officials sold off five 30 foot high colonial-era furnaces before the mine was privatized. For a while back then, junior officials dug out a type of arsenic compound called “speiss” and sold it to Chinese buyers. “It was like a festival,” a local said, as money flowed through the area and gambling and drug abuse spread among local youth.

Nearby stood the chimney, which channeled the fumes from the refinery into the open sky, and below this there is a high lava hill.

Future Prospects

Though Bawdwin mine and the refinery have not functioned since privatization five years ago, some open pit mining continues here and Asia World still has a skeleton staff, doing mainly odd jobs and security.

According to workers, the company is investing more in more profitable mines such as the Heinda mine and the Kawlin gold mine in Tanintharyi and Sagaing regions respectively.

But a Chinese-run refinery called Myanmar Apex is extracting zinc from the old lava dumps, effectively making money from rubbish.

Local workers say that bad-smelling fumes and ash from the chimney may harm their health, but they have to put up with it as the refinery is a source of occasional work.

I had the sense that workers from various parts of Myanmar find it hard to leave this area where they recall the golden days and hope for a revival.

Some old-timers said they hoped a foreign investor might arrive with expertise as well as respect for labor conditions and the local environment.

They might get their wish. Though an expected new mining law is still delayed, there have been recent reports of Australian interest in Bawdwin area deposits.

For me, if armed conflicts in the region cease, this place full of atmosphere and lovely scenery seems well-placed to become an attractive tourist draw.

This article originally appeared in the July 2015 issue of The Irrawaddy magazine.