Myanmar encourages private sector to mine gold

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.