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GRAVE DIGGERS A REPORT ON MINING IN BURMA BY ROGER MOODY

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Introduction to Myanmar Mining Industry

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  • GRAVE DIGGERSA REPORT ON MINING IN BURMA

    BY ROGER MOODY

  • A Report on Mining in Burma 1

    CONTENTS

    Abbreviations........................................................................................... 2

    Map of Southeast Asia............................................................................. 3

    Acknowledgments ................................................................................... 4

    Authors foreword ................................................................................... 5

    Chapter One: Burmas Mining at the Crossroads ................................... 7

    Chapter Two: Summary Evaluation of Mining Companies in Burma .... 23

    Chapter Three: Index of Mining Corporations ....................................... 29

    Chapter Four: The Man with the Golden Arm ....................................... 43

    Appendix I: The Problems with Copper.................................................. 53

    Appendix II: Stripping Rubyland ............................................................. 59

    Appendix III: HIV/AIDS, Heroin and Mining in Burma ........................... 61

    Appendix IV: Interview with a former mining engineer ........................ 63

    Appendix V: Observations from discussions with Burmese miners ....... 67

    Endnotes .................................................................................................. 68

    Cover: Workers at Hpakant Gem Mine, Kachin State (Photo: Burma Centrum Nederland)

  • 2 A Report on Mining in Burma

    Abbreviations

    ASE Alberta Stock Exchange

    DGSE - Department of Geological Survey and Mineral Exploration (Burma)

    ISO14001 International Standards Organization Industrial Operating Standard

    LME London Metal Exchange

    ME1 Mining Enterprise No. 1 (Burma State Mining Company)

    ME2 Mining Enterprise No. 2 (Burma State Mining Company)

    ME3 Mining Enterprise No. 3 (Burma State Mining Company)

    MGE Myanmar Gems Enterprises (Burma State Gem Company)

    JV Joint Venture

    SLORC State Law and Order Restoration Council (The official name of the military regimein Burma; its name changed in November 1997 to State Peace and Development Council)

    SE-EW Solvent Extraction and Electro-winning Technique

    TSE Toronto Stock Exchange

    VSE Vancouver Stock Exchange

    Note: All source dates are abbreviated using the non-US system, with day preceding

    month and year, e.g. December 10th 1997 is 10/12/97.

  • A Report on Mining in Burma 3

    MAP OF SOUTHEAST ASIA(Courtesy: Map Library, The University of Texas at Austin)

  • 4 A Report on Mining in Burma

    AcknowledgmentsThis is a publication of Canada Asia Pacific Resource Network (CAPRN), September 1999. All or part of

    this report may be quoted or reproduced with the inclusion of credit to the author and CAPRN, without

    prior permission. The opinions and statements contained in the main body of this report are entirely

    those of the author, and do not necessarily reflect the opinions of any of the sponsoring organizations.

    Responsiblity for any statement or opinion expressed in the main report lies entirely with the author,

    Roger Moody. Information in the appendices has been derived from various other sources.

    Associates to Develop Democratic BurmaP.O. Box 659

    Shawville, Quebec, Canada J0X 2Y0

    Burma Centrum NederlandPaulus Potterstraat 201071 DA Amsterdam

    The Netherlands

    Phone: (310) 20 6716952

    Fax: (310) 20 6713513

    Email: [email protected]

    Website: http://www.xs4all.nl/~bcn

    The Columban Peace and Justice CommissionColumbian Missionary Society

    28 Redington Road MW3 7KH

    London, England

    Website: http://www.columban.com

    Canada Asia Pacific Resource Networkc/o 170 111 Victoria Drive

    Vancouver, British Columbia, Canada V5L 4C4

    Email: [email protected]

    Website: http://www.caprn.bc.ca

    Canadian Friends of Burma206 - 145 Spruce Street

    Ottawa, Ontario, Canada K1R 6P1

    Phone: (613) 237 8056

    Fax: (613) 563 0017

    Email: [email protected]

    Web Site: http://www.web.net/~cfob/

    Images Asia Eco DeskP.O. Box 2, Prasingha P.O., Muang,

    Chiang Mai 50200, Thailand

    Phone: (66 53) 278 948

    Fax (66 53) 279 544

    Email: [email protected]

    Mines, Minerals, and People1249/A Road 62

    Jubilee, Hyderabad 500033 AP, India

    Minewatch Asia-Pacificc/o Tebtebba Foundation

    Agpao Compound, Upper General Lund Road

    Baguio, The Philippines

    Miningwatch Canada

    Suite 508,880 Wellington St.

    Ottawa, Ontario K1R 6K7 Canada

    tel. (613) 569-3439

    fax: (613) 569-5138

    Email: [email protected]

    Website: http://www.miningwatch.ca/

    Nostromo Research

    41a Thornhill Square

    London, England N1 1BE

    Email: [email protected]

    Project Maje0104, SW Lane St, Portland OR 97201 USA.

    Phone/Fax (+1-503) 226 2189;

    Email: [email protected]

    Samarbeidsutvdget for Burma

    (Norwegian Burma Council)

    P.O. Box 6720, St. Olavs Plass,

    Oslo, Norway, 0130

    Phone: ( 47)22 20 56 17

    Fax: (47) 22 20 78 15

    Email: [email protected]

  • A Report on Mining in Burma 5

    Authors foreword

    As I write, the press is announcing that a waste dam at a gold mine in Eastern Europe has over-flowed, sending thousands of gallons of cyanide contaminated slurry cascading into Romanian wa-terways. The somewhat naive shock which has greeted this announcement is a sobering reminderthat the majority of people even those deeply concerned about other industrial hazards knowlittle about the worlds fifth most important industrial sector. What safety measures were in place atthis facility? Who was responsible for management? What are likely to be the long-term impacts onworkers and communities? How will those affected be compensated for any resulting damage? Thesequestions may take months, even years, to be satisfactorily answered. Or may never be.

    When Guyanas biggest gold mine suffered a similar disaster in 1995, this too seized headlinesacross the world. A national commission of inquiry was set up but, even before its report could beproperly debated, the government allowed the mine to re-open. None of those responsible for itsdesign or management have yet been brought to court, while thousands of potential claims fordamage have yet to be properly investigated.

    Romania and Guyana are democracies; access to the countries is reasonably open, if not unre-stricted. Moreover, the companies operating these two mines were apparently respectable outfits,hailing from countries boasting high standards of monitoring and control (Australia in the case ofRomania, and Canada in the case of Guyana). How much more dangerous are such projects likely tobe if located in states where the people cannot bring their grievances to any responsive authority;where independent investigations are nigh impossible; and where mines are run by local enterprisesand foreign companies which do not answer publicly to shareholders, or follow any internationallyaccepted standards?

    In 1998, I was asked to do a report on these issues by a consortium of Burma pro-democracygroups based in North America, Thailand and Europe. In the course of my research, several salientfacts emerged. First, the number of mining companies invited into Burma by the military regime, theState Law and Order Restoration Council (SLORC), is greater than we previously suspected. In Chap-ter Three, more than sixty of these are listed. Second, despite a high-profile and persistent interna-tional campaign to bar all foreign investment in Burma, some major corporations, not just juniors,have invested in mineral exploration and exploitation. Third, the most important single operator inthe country is a multi-millionaire, backed by several of the worlds biggest corporations, who ownscritical stakes in other mines, not only in the Asia-Pacific but also in Africa. Fourth, despite the ex-treme difficulty, and dangers to whistle blowers, of gaining direct evidence of conditions at Burmasmines, disturbing accounts of pollution, the use of forced labour, and violations of human rights,have emerged. Lastly, the laws under which miners operate under the regime appear lax or ambigu-ous, and provide virtually no protection to the communities most affected.

  • 6 A Report on Mining in Burma

    In the course of my research, I was sometimes asked the highly pertinent question: to whatextent does mining provide a cover for drug profiteering in, or indeed outside, Burma? It isrelevant that, four years ago, Colombias minister of mines ordered an investigation into all emeraldexport contracts following revelations that at least one mine had registered grossly inflated sales inthe US, in order to justify sending millions of dollars from cocaine trafficking back into the country.1

    Unfortunately, this is one Burmese issue about which rumour is rife, but hard evidence seems almosttotally lacking. What has been recently documented is an epidemic of HIV/AIDS among jade minersin Hpakant in Kachin State, northwest of the township of Myitkyina. These are mostly young maledrug addicts who inject heroin while working at the minesite and then transfer it back to wives andpartners when they return home.2

    The report is divided into three chapters and five appendices. The first chapter deals with thehistory, and current (post-1994) state of mining and mineral-related legislation in Burma. The secondand third chapters examine in some detail the operations of specific companies, including the largenumber of exploration projects which may, or may not become working mines. The fourth chapterexamines the Friedland empire, a brace of enterprises which includes the Monywa copper mine.This mine is not only the biggest of its kind in Burma, but is also mine promoter Robert Friedlandsmost important single investment. Appendix I briefly summarizes the impacts of copper mining and,in particular, the processing method used at Monywa. Appendix II looks at the consequences tosocial conditions of mineral development. Appendix III examines the heroin epidemic and the spreadof AIDS/HIV in mining towns. Appendix IV is an interview with a former mining engineer. AppendixV summarises additional observations gleaned from discussions with Burmese miners.

    I have set out here only a few of my own thoughts on the nature and timing of a pro-active Burmamining campaign. My prime aim has been to ensure that the campaign is well-informed, broad-based, and relevant to pro-Burma activists who otherwise may not regard mining as a priority issue.I hope the report will also be of use to democratic and ethnic organizations in Burma, as they lookforward to the time when their territory is freed of the influences of the SLORC. Of major challengefor them will be determining the degree and the manner in which Burma should exploit its minerals;while establishing the rights of its citizens to do so without jeopardizing community values, othernatural resources, and the biosphere.

    The author gratefully acknowledges the help of David Arnott in providing documents and othermaterial on which this research is based. The author is very grateful to Aaron James from the CanadaAsia Pacific Resource Network for his comments and suggestions. Many thanks also to to the TradeUnion Research Bureau for invaluable assistance. The author is indebted to Eric Snider for assistancein providing corporate and other information on many of the companies cited in the index of com-panies in active in mining activities in Burma. The author takes full responsiblity for any statementor opinion expressed in this report.

    Roger Moody, Nostromo ResearchLondon,EnglandFebruary 14th, 2000

    The author welcomes comment on, and additions to this report.Please communicate to: [email protected].

  • A Report on Mining in Burma 7

    Chapter OneBurmas Mining at the Crossroads

    Vertical cuts, Hpakant gem mine, Kachin State (Photo: Images Asia)

    This chapter summarises the history of miningin Burma, the current availability of minerals,prospects for mining and the role of state enter-prises and foreign companies. In particular it ex-amines in detail the 1994 Mineral Law and itsimplications for current and future good socialand environmental practice. It concludes that theLaw is deficient in numerous respects.

    A brief history of mineral discovery

    Lead, silver, zinc, tin, tungsten and gemshave been mined in Burma since the fifteenthcentury. These, and other minerals, are widelydistributed throughout the country. In 1997four areas of alluvial gem-quality diamondswere identified by the regime: Mohauk, in theMomeik area of the north east, Htantabin, eastof Toungoo in east central Burma, andKyaukmedaung (near Tavoy) and Theindaw inthe south.3 Sagaing Division (hosting copper,coal, gold, tin, tungsten and scheelite) is thelocation of the biggest state owned gold mine.4

  • 8 A Report on Mining in Burma

    Mandalay Division hosts rubies, sapphires,(especially in Mogok) other gemstones, gold,iron and barite. The Mogok area also producesa wide variety of industrial minerals and gems,including spinel, garnet, aquamarine, am-ethyst, citrine, zircon, moonstone and lime-stone.5 Tenasserim (Tanintharyi) Division isthe traditional tin-producing area of the coun-try with tungsten, scheelite and alluvial dia-monds also found at Theindaw.6 Tin is alsolocated offshore of the Gulf of Martaban. Thereis a high-grade manganese oxide deposit nearKeng Tung, Shan State,7 and the countrys big-gest antimony deposit lies near the Thai-Burma border around the Thabyu mine.8

    Kachin State is the site of a recently-locatedlarge iron ore deposit (at Kathaing Taung, nearHpakant) grading 50.54%.9 The state hosts jadeand coal and is also the site of an earlier later-itic nickel deposit, near Tagaung Taung moun-tain, along the Irrawaddy (Ayeyarwady) River200 kilometres north of Mandalay.10 Platinumhas been discovered in the Indawgyi area.

    Shan State has rubies, sapphires, lead, zinc,silver, copper, gold (in the Kalaw area) andcoal. Barite is found in the Western Shan pla-teau, north of Pyinoolwin as well as in thesouthern Shan State south of Heho. SouthernShan is also the location of a zinc deposit atLong Keng, near the Thai border. The Depart-ment of Geological Survey and Mineral Explo-ration (DGSE) has defined a high-grade gyp-sum deposit in the area, recently upgraded.11

    Copper is mined in the north of Shan State,where at Namtu high quality gems are to befound. Recently, the worlds largest ruby(weighing 21,450 carats) was located in Block12 within the Mogok Stone Tract in May1996.12 Copper is also mined in Salingya town-ship and coal in Salingyi and Kalewa in theSagaing Division. Chin State has a nickel de-posit near the Indian border.

    Burmas mining potential and foreigninterest

    The mining potential of Burma is difficultto assess. In 1990, less than 1 per cent of thecountrys GDP came from the mining sector,while agriculture accounted for more than40%.13 Within the next seven years, the re-gime certainly tried to boost the value of min-eral production and,14 according to the Inter-national Labour Organisation (ILO), by mid1998 oil and gas constituted the regimes big-gest legal revenue earner rivaled only by thelucrative illegal trade in heroin and other nar-cotics.15 During the last Four Year Plan (1992-1996), a claimed 21.1% increase in earningswas attributed to fees and charges on miningleases and rights, along with royalties andother taxes paid by mining companies.16 Al-though 1997/98 showed modest increases overthe previous two years in the output of silverand manganese dioxide, output fell in the caseof every other mineral or metal; and plum-meted with official diamond production, tinconcentrates, wolfram concentrates and lead.17

    The advisor to the DGSE, M Than Htay, in 1998concluded that the countrys energy sector wasoperating only fairly well and productioncould not even meet internal fuel demand.Coal output remains relatively insignificantand actually dropped considerably in 1997/98.18

    The administration still relies a great dealon antiquated geological data, much of it pre-pared by geologists who have now fled thecountry,19 or on data which may not have beenefficiently updated. In early 1998, for example,reserves at Monywa were estimated at 154.7million tonnes grading 0.47% at a 0.15% cut-off. This was based on a pit optimization atSebetaung, where ore reserve estimates wereexpanded by 60% after data gathered from afailed venture from the 1980s was considered.20

    According to the Burmese military authori-ties, only just over half of the country (57%)had been geologically mapped on a one-inch-

    By mid 1998oil and gasconstituted

    the regimesbiggest legal

    revenueearner -

    rivaled only bythe lucrative

    illegal trade inheroin and

    othernarcotics.

  • A Report on Mining in Burma 9

    to-the-mile basis by 1995. The following yearthe DGSE set out to systematically map min-eral occurrences in four states: Kachin, Karen(Kayin), Kayah and Shan.21 For fairly obviousreasons, it has been difficult to apply some ofthe newer techniques of prospecting and oreevaluation, not simply because of sensitivityto overflying and landing in remote areas, butalso because the country has been at war withits own people. Consequently, many mineral-rich areas could not be investigated.22 A sig-nificant proportion of the budget which mightbe available for prospecting and improvementof mine-related infrastructure is taken up bymilitary expenditures.23 The Asian Develop-ment Bank has also specifically noted Burmasdefectiveness in infrastructure ports, utili-ties and in transport all critical areas for large-scale mineral extraction, beneficiation and ex-port.24 It is only in the past three years thatthese specific problems seem to have been ad-dressed: for example, in 1996, agreements con-cluded between Burma, Malaysia and Thailandon international gas pipe line projects,25 and,in mid-1998, an agreement was reached witha Chinese company to supply equipment forthe Paung Laung hydro power plant, aimed atincreasing Burmas total generating capacityby 30%.26

    Sanctions

    Shortage of foreign exchange, combinedwith recent externally-imposed sanctions, bythe state of Massachusetts, for example hasresulted in a severe limitation in the amountof machinery and spare parts imported for ex-isting mines.27 Private investment, thoughmodestly increasing, is still very limited andcentered on the proving up of deposits inzones already broadly favorable to, or locatednear existing mines (e.g. Monywa). Partly be-cause of sanctions, but also because of indus-try perceptions of Burma as politically high-risk, with high levels of corruption and inad-

    equate infrastructure and administrative capa-bility, even the neo-liberal 1994 mining leg-islation (discussed later) failed to attract muchmajor interest from outside. There have beenthree rounds of bidding from mining con-tracts, or blocks, since then (see table and mapsat the end of this chapter.) The first round in1994 was rated fairly successful by the regime,but the second round in 1996 resulted in only13 overseas companies participating. Five firmswere awarded a total of nine explorationblocks, for platinum group metals, copper,gold, and other base metals. There were nobidders for Block 5 (nickel and chromite) orBlock 8 (lead-zinc).28

    By the beginning of 1999, only nine for-eign companies from seven countries allegedlyhad major investments in Burma, amountingto US$30 million. A major US mining com-pany, Newmont, pulled out of the country al-together following the US embargo on invest-ment in Burma after it had signed a JV agree-ment with the regime in mid-1996 for theKyaukpahto Area, Upper Burma. Only a sixthof this investment (US $5 million) was in themining sector, in the hands of four foreigncompanies.29 However, the situation did im-prove slightly for the regime during last year:while some exploration projects were put onhold or relinquished, others were resumed, forexample by East Asia Gold Corp of Spokane,Washington State, USA.

    Although comparisons with other countriesare approximate and speculative, it seems asif the state of mining activity in Burma atpresent stands somewhere between Venezu-ela and Malaysia. A country of considerablemineral potential, including oil, Venezuela haslimited commercial mining, ambivalent min-ing legislation, important unofficial small-scale operations, and problems in the sell-offof state-owned concerns. By comparison, Ma-

    It has beendifficult to applysome of thenewertechniques ofprospecting andore evaluation,not simplybecause ofsensitivity tooverflying andlanding inremote areas,but also becausethe country hasbeen at war withits own people.

  • 10 A Report on Mining in Burma

    laysia has a very wide range of prospectiveminerals, a national mineral policy, some fiftymajor exploration ventures, a well-establishedstate mining company and few ambiguitiesregarding foreign participation.30 This is notto say that Burma is lacking in realizable min-eral potential; on the contrary, its overall ge-ology and location in the Pacific Ring of Firehas long been considered highly favorable. Noris it to deny that the Burmese regime has, since1988, worked hard to attract capital, equip-ment and expertise from abroad.

    Perilous strategy

    However, economic mineral potential mustpartly be assessed by comparison with the op-portunity costs of similar enterprises else-where, particularly in neighbouring countries,as well as with available markets. It is signifi-cant that, at least until very recently, a largepart of investment in the countrys mineralenterprises has come from neighbouring coun-tries notably Thailand and China, whichhave compatible industries of their own topromote and expand. At first (and second)sight, it seems a perilous economic strategyon the part of the military regime (SLORC) torely on putative competitors for critical newinvestment, or to become a cheap raw materi-als supplier to downstream processors locatedoutside their own sphere of national interestwhere there is potential for transfer-pricingmalpractice, misappropriation, and conse-quent loss of revenues. China has deepenedits involvement with the SLORC, in particu-lar, by financing a railway extension that re-lies on prison labour to improve roads andbridges,31 and by committing US$250 millionto help build the countrys biggest hydropower plant at Paung Laung.32 While Beijingdoes not appear to have directly invested inmineral exploration or mining, the Chineseleadership is undoubtedly waiting for an op-portunity to secure minerals from Burma, fol-

    lowing its announcement in late 1997 thatChinas mineral (and energy) requirementswould more than double by 2020.33

    The Japanese factor: rising or settingsun?

    Nor should we underestimate the impor-tance of Japanese investment the only coun-try which provides investors in Burma withpolitical risk insurance against the possibili-ties of expropriation and currency inconvert-ibility.34 It would however be simplistic to viewJapanese markets as some kind of a savinggrace for Burmese mining. Since the collapseof most domestic mines over the past twentyyears (not unrelated to stricter environmentallegislation),35 Japanese industry has cast a verywide net over the Asia-Pacific region. All cop-per is imported, along with the vast majorityof lead (94%) and zinc (83%).

    Until the 1990s, Japanese sogo shoshas(trading companies) took hefty shares in hugeoverseas mines as captive sources of raw ma-terials for the countrys smelting and refiningplants; Japan became the worlds biggest singlemarket for upstream production in the majorminerals. However, vertical integration amongsome of the worlds biggest mining enterpriseshas squeezed these opportunities for directaccess to unprocessed raw materials. For manyyears, the largest Japanese investments werein safe countries with stable exchange ratesand a well-established mining tradition (no-tably Chile, Australia and Canada).36 Recentyears have seen geographical diversification.On the one hand, this has spurred opportu-nistic involvement in some lesser developedcountries as in Indonesia, or at Monywa inBurma. On the other hand, this diversifica-tion has stimulated increased Japanese recy-cling of metals and especially under thewhiplash of the recent domestic debt crisis cost cutting, labour layoffs and plant

    Until veryrecently, a large

    part of inwardinvestment inthe countrys

    mineralenterprises has

    come fromneighbouring

    countrieswhich havecompatible

    industries oftheir own to

    promote andexpand.

  • A Report on Mining in Burma 11

    centralisation at home. It is conceivable thatthere will be no new major Japanese invest-ment within Burma.

    In a survey of 4,500 Japanese companies car-ried out in the middle of 1998, it was revealedthat overseas investment would be slashed by57% in fiscal year 1998, with only China see-ing increased levels (18% as opposed to 17%in 1997).37 Even if Burma were to consider es-tablishing its own copper smelting industry,it would be competing directly with large newprojects in the region, to which the Japaneseare already committed notably in Indonesiaat Gresik, where a joint venture partner isFreeport; and in India, Australia, Canada andChina.38

    The administration of mining in Burma

    Despite the 1994 legislation, mining law inBurma is, practically-speaking, among the leastdeveloped, or sound, of any in the world. Itstill retains some of the elements of the post-World War II nationalisation policy, in whichpolitical control and state-oriented exploita-tion took precedence over most other factors(environmental, social justice, local owner-ship, regional economic cooperation), whilenow also attempting to win the hearts andpockets of overseas investors. For example, theState Economic Enterprises Law tries to pre-serve the fiction that certain precious metalsand stones can only be mined and marketedthrough state-owned enterprises. But, underthe new law, the government may also per-mit joint ventures with any other person oreconomic organisation if it chooses.39

    There has undoubtedly been a marked shiftaway from reliance on state investment inmining, although it is difficult to detect whatcriteria are being used to assess this class ofinvestment. In 1990, government investmentsupposedly stood at between 5.6 and 8.6% of

    total annual budgetary expenditure. The dis-crepancy was attributed to statistical differ-ences within the regime.40 By 1996-97, itcame to just over US $11 million.41 A year later,state investment in mining was virtually thesame, US $12.5 million. In comparison, some37 foreign mining concerns had supposedlyinvested around US $388 million by October1998.42

    Expropriation

    Following independence in 1948, the Bur-mese government set up three mineral regu-latory bodies: the Geological Department (re-sponsible for geological mapping); the Minesand Explosives Department (responsible for es-tablishing mining laws and taxation policies);and the Mineral Resources Development Corpo-ration (responsible for further exploitation ofthe countrys minerals). Joint venture compa-nies were then established between the stateand British companies to exploit or re-openmines at Namtu, Bawdwin, Mawchi, Heindaand Mogok.43 After nationalization and the ex-propriation of foreign assets in 1962, separatecorporations were formed to take charge ofspecific groups of minerals. These were:

    No. 1 MINING ENTERPRISE (ME1), withoversight of non-ferrous metals (lead, zinc,copper, silver), and by-products, including an-timonial lead, copper matte and nickel speiss.

    No. 2 MINING ENTERPRISE (ME2), respon-sible for 21 items, including refined tin, wol-fram concentrates, tin-wolfram-scheelite andtin-wolfram mixed concentrates, gold andother by-products associated with tin andtungsten minerals; also the exploration andproduction of tin-tungsten and gold. ME2 wasalso made responsible for the importation ofmachinery and equipment for these activi-ties.44

    Mining law inBurma is,practically-speaking,among theleast developed,or sound, ofanywhere in theworld.

  • 12 A Report on Mining in Burma

    No.3 MINING ENTERPRISE (ME3), incharge of production of industrial minerals(barytes, gypsum, limestone, fire clay, talcpowder, graphite, manganese dioxide, bento-nite, calcium carbonate, red and yellow ochres,iron ore, sponge iron, pig iron, steel billets andcoal), also the importation of coal and coke.

    MYANMA GEMS ENTERPRISE (MGE), re-sponsible for the mining of gems and jade, aswell as processing and manufacturing finishedgems, jade, pearls, silver and gold and mer-chandising them.

    In addition, the Myanma Pearl Enterpriseand Myanma Salt and Marine Chemical En-terprise corporations were established.

    Although these enterprises exist today, themilitary regime soon turned its back on thestate centralisation which they epitomised.Now its avowed policy is to offer virgin landsfor grass-roots exploration and boost exist-ing production, by attracting foreign invest-ment.45 In 1988, Burmas mining legislationwas changed to allow foreign ventures or in-dividuals up to a 100% share in miningprojects.46 However, this arrangement was lim-ited to exploration, exploitation, productionand marketing of non-metallic industrial min-erals, such as coal, limestone, gypsum, andmarble.47 The following year, joint ventureswere allowed on a 49/51% basis. A barite minejoint venture between ME3 and ECI Mineralsof Singapore was one of the first such arrange-ments.48 Conflicting messages were being sentto foreign investors hardly aided by the factthat the 1988 law was ambiguous in many in-stances,49 with powers being redefined if theywere deemed in the best interest of theState.50

    UN complicity

    It seems quite extraordinary that the UnitedNations Center on Transnational Corporations(UNCTC) effectively disbanded after the1992 Rio Conference on the Environment,thanks to multinational pressures shouldhave helped draft Burmas 1994 Mining Law.For, despite long-standing accusations that theUNCTC was actually a center to promotetransnationals rather than to curb them, theUnited Nations has a reasonable though notunblemished reputation for assisting South-ern governments to defend their cornersagainst foreign enterprises. Twenty years ago,UN advisor Stephen Zorn helped draft PapuaNew Guineas mining code with its then-revo-lutionary concept of a resource rent tax, whichput a flea in the ear of the worlds biggest min-ing conglomerate, RTZ (now Rio Tinto).51 Noteven a shadow of this concept can be foundin Burmas mining law. In fact, the discerningobserver will find virtually little of substancein the legislation. For a start, the law is rivenwith vague definitions and loose distinctions.In particular, prospecting, exploration and pro-duction are ill-defined (in the space of onlysix lines); more important, the distinctionbetween these activities is blurred by the factthat an integrated permit can be issued cov-ering all three stages.52

    However, it is extremely important to beable to distinguish between these stages ofmineral exploitation, both from the point ofview of regulation (taxation and permits), andfor the communities involved. Local commu-nities must be able to determine what is likelyto happen well in advance of any develop-ment. The mining industry in general has adeplorable record of using prospecting permitsto carry out exploration, and exploration per-mits to do what, effectively, is mining.53 Deeptrenching is an example of what can be ahighly disruptive and ecologically damagingform of extraction, masquerading as explora-tion.

    Localcommunitiesmust be ableto determinewhat is likely

    to happenwell in

    advanceof any

    development.

  • A Report on Mining in Burma 13

    The failure to firmly legislate these stages ismirrored in the very lax, indeed virtuallymeaningless, legal distinction made betweenlarge scale and small scale production. Thefirst, we are told, means commercial produc-tion of minerals which requires substantial in-vestment and expenditure or special techni-cal know-how and methods while the lattermeans commercial production of mineralswhich does not require etc....54 The generallyaccepted cut-off between medium and small-scale production is yearly extraction of 50,000tonnes of ore which at least has the merit ofdefining the practical and environmental im-plications of the operations. Trying to distin-guish between small and large scale miningsimply on the grounds of size of investmentis like trying to tell the difference between acat and the dog by virtue of the amount offood they eat. In fact, if we look at Chapter III

    of the new Law (see below) not surprisinglywe find a blatant tautology:

    The Ministry shall determine the classifi-

    cation of large scale production, small scale

    production or subsistence production as

    defined in sub-section (k), (l) (m) of sec-

    tion 2.

    The Red Queen told Alice in Wonderlandthat a word means what I want it to mean.She would have been at home on the bureau-cratic benches in Rangoon!

    Contradictory

    The avowed objectives of the Law also leavea great deal to be desired. While Paragraph (n)of Chapter I (Title and Definitions) recognisesthe value of upgrading or beneficiation of spe-cific minerals (milled ores), Chapter II (Objec-

    Work scene, Hpakant Mining District, Kachin State 1997(Photo: Burma Centrum Nederland)

  • 14 A Report on Mining in Burma

    tives) doesnt; it simply refers to an increase[in] export (sic) by producing more mineralproducts. Among the Objectives are also thecurious behests:

    to carry out the development of, conser-

    vation (sic), utilisation and research works

    (sic), of mineral resources,55 and ...to pro-

    tect the environmental conservation works

    (sic) that may have detrimental effects (sic)

    due to mining operation (sic).56

    It is possible to infer what this might mean,namely that mining companies must nothigh grade deposits, or, in other words cream off the higher value ore at the expenseof generating a steady income and employ-ment over a more substantial period of time;and that companies will be held responsiblefor failure to stabilise workings, site reclama-tion (seed overburden and waste piles), andrehabilitation of closed mines. However, thisis not what the letter of the law says, and thusappears contradictory.57

    Chapter III covers the application for andgranting of permits. This section is simply aninvitation to apply for a permit and little else.There is no reference to any kind of environ-mental/reclamation bond being posted by themining company, or to a programme to inde-pendently monitor and audit social and envi-ronmental impacts (and publicly disseminatesuch regular reports) in either the mining orthe post-closure phase of operations.

    Claims

    As for Duties (Chapter IV), these cover but only briefly the payment of dead rentfor land occupation and use, a security depositor advance payment against fulfillment of thecontract, and royalties to be paid in either lo-cal or foreign currency. The permit holder isthen enjoined to observe the rules prescribedunder this Law in respect of such matters asemployment, working days, safety, welfare,

    health, sanitation discipline, environmentalconservation works and inspection by theChief Inspector of Mines. However, some ofthe matters included in this inventory are ac-tually not dealt with (so far as can be seen) inother rules or laws set out by the Mines au-thorities. For example, there seems to be noproper prescribing of... wages, salaries andother fees (for workers) nor the fixing of work-ing days or safety, health, and welfare plansper se. It is as if a company is being encour-aged to make their own prescriptions on thesematters. One day the government may getaround to devising its own by which timeconsiderable exploitation of workers will havealready taken place and legal redress may beimpossible i.e. by entertaining compensationclaims within Burma by the workforce or itsdependents. As well, changing existing con-tracts to favour real community returns andprotection may prove extremely difficult.58

    And the environment?

    No duty is imposed on the holder of thepermit to carry out an environmental and so-cial impact study or report, let alone is thereany procedure laid down for the independentassessment of such reports, or their filing forpublic scrutiny or public hearings. As one ofthe more recent apologists for the regime hasexpressed it: There are still no environmen-tal laws in Myanmar. The regime has decidedthat operations will prevent, or where pre-vention is not reasonably practical, mitigateand wherever possible remedy consequencesadverse to the environment or to the healthof the people directly effected (sic) by miningoperations.59

    Contracts signed between the governmentand mining companies simply replicate therhetoric, without imposing any restrictions.For example, a model Production SharingAgreement (PSA) between the Ministry ofMines, ME2, and a foreign partner intent ondredging for tin simply counsels to follow:

    As one of themore recent

    apologistsfor the

    regime hasexpressed it:

    There arestill no

    environmentallaws in

    Myanmar.

  • A Report on Mining in Burma 15

    internationally accepted mining stan-

    dards and engineering practice and... [tak-

    ing] necessary precautions for protection

    of navigation, fishing and prevent avoid-

    able and unnecessary pollution of the sea

    and river.

    Almost laughably, it includes the injunc-tion:

    Contractor shall...clean bed rocks suffi-

    ciently and try not to leave tin ores be-

    hind.60

    Appropriation

    Chapter V covers the utilisation of land andwater for mineral production. Once again, theterm production is assumed to include ex-ploration. Since this is not spelled out, it pro-vides a glaring loophole for a company in-

    volved in exploration to excuse any encroach-ment on communal or privately held land.Production is supposed to be carried out onlyafter agreement from the individual ororganisation having the right of cultivation,right of possession, right of use and occupancy,beneficial enjoyment, right of succession ortransfer of the said land. In any case, if thestate so decides, the land can be appropriatedin accordance with the existing law, whilepublic water (again it is not clear what the defi-nition of public means) can also be seques-tered by permission (presumably from thegovernment) for company purposes, if its useis really necessary. Such false syllogismswould definitely delight the Red Queen ormine operators who may feel themselves ex-cused from introducing water recycling andflow control methods when the state handsout the aquatic resources of the nation.

    View of Hpakant gem mine and tailings pond, Kachin State (Photo: Images Asia)

  • 16 A Report on Mining in Burma

    However, regulations are evaded by thepractice of the military regime which com-monly confiscates land for commercial pur-poses without consent and in often brutal fash-ion.61 The regime in turn compels these vil-lagers to work as unpaid forced labour on theprojects or extracts from them a quota of theiroutput. Sometimes, lands are acquired throughextortion of peasants who wish to avoid forcedlabour.62 The regime defends this deplorablepractice on the basis of tradition and twocolonial era laws.63

    Chapter VI deals with the royalty rates ondifferent groups of minerals and metals andexemptions which may be applied at varioustimes to promote production. This chapteris not exceptional.

    The following chapter, number VII, is con-cerned with the designation of a Mineral Re-serve Area. This provides the opportunity toaffirm that the State owns all subsoil rights,including the continental shelf, thus nullify-ing the promise to observe the rights of pub-lic (ownership and use) in Mineral ReserveAreas. Chapter VIII outlines the duties of theChief Inspector of Mines, and allows her toassign the powers of inspector to any suit-able officer in the Department, or delegateher own powers to the inspectors. While thismay be standard procedure in certain circum-stances, it seems to open the way for inexpe-rienced, untrained, personnel (or those seek-ing a sinecure or bribe) to investigate majorbreaches of procedure or threats to people andthe environment. There is no reference to anydivision of responsibility between the centralgovernment and the states, nor any duties ofthe inspectors to ensure that pollution preven-tion or other remedial works are carried outas agreed. The rest of the law relates to ad-ministrative action to secure compliance withthe legislation, and penalties for violations.

    There is nothing particular to note aboutthese two chapters except that the penaltiesof up to seven years imprisonment for pros-pecting without a permit, for example, couldbe considered draconian, especially when ap-plied against small-scale miners (so-called sub-sistence miners) who may be unaware of anexisting corporate permit in their area of tra-ditional exploitation. Indeed, the potentialconflict between local and corporate miners,and disputes over prior ownership, seemsscarcely recognised by those who drafted the1994 Mining Law.

    Small is beautiful?

    What is known about conditions at somesmall-scale cooperative run mines in Burmagives cause for concern; in particular wheregem rushes have precipitated a form of ethniccleansing of indigenous inhabitants, such asis reported to have recently occurred in theMong Hsu area of Shan State.64

    Burmas most socially useful project couldbe in the methodical development of gem andjewelry manufacture. But, the problems posedby large-scale smuggling are entrenched. At-tempts to centralise the financing and pur-chase of gem products elsewhere in SoutheastAsia have recently depended upon drastic, ifnot draconian, measures such that when at-tempted in neighbouring countries (viz. Indo-nesia, Vietnam, Cambodia) they have onlydeepened inter-ethnic or regional conflicts. In1997, the regime complained that althoughthere was an alleged tremendous increase ingold, jade and gemstone production fromsmall enterprises only a small fraction of thisactually found its way to the emporia spon-sored by the Myanma Gem Enterprise (MGE).65

    Indeed, MGEs identified production actuallyplummeted. Nonetheless, there is now sub-stantial improved practice in small-scale min-eral extraction elsewhere, notably Zimbabwe;

  • A Report on Mining in Burma 17

    several agencies, including those of the UN,offer advice and financing in developing thesmall-scale sector.

    After 1994

    Following enactment of the new MiningLaw, the regime instituted the first of threerounds of bids for prospecting and explora-tion for the various blocks in November 1994.Bidders are required to submit reports of theirexperience within similar areas of mining andmining activities over the preceding four years.Reports must also contain the financial andtechnical information of the company and aminimum expenditure commitment in USdollars per square kilometer for each stage ofthe cooperation.66 Companies also have topromise to employ Burmese Institute of Minespersonnel, at all stages of the operationswherever possible and give particulars re-garding their training, an undertaking clearlyfalling short of a commitment to training.Under Annexure C, the general terms and con-ditions applied to the contractor, provision ismade for prospecting to be completed withintwo years (previously one year) and at least25% of the contracted area to be relinquishedbefore the company proceeds to exploration;previously this was 50%. Within the next year,the company may withdraw altogether or con-duct a feasibility study over one year, with apossible one-year extension. Again, there hasto be relinquishment of a minimum of 25%of the contracted area within the followingyear.

    On the signing of a joint venture agree-ment, the government (not the state per se)takes up not less than 50% of the share capi-tal. However, in the case of the state-ownedtin-tungsten joint ventures at Mawchi, Heinda,Kanbank, Hermyigyi, Kyaukmedaung andNanthilari (near Tavoy), the governmentsshare has recently dropped to 35%, with pri-

    vate Burmese companies taking the remain-der. Companies can apply for up to 25% ofrevenues per quarter in any year for cost re-covery of previous expenditures. The devel-opment and production period for a mine isset at 15 years, in the case of joint ventures.All gold mined must be first offered to the gov-ernment, based on a London Metal Exchange(LME) selling price. If the government doesnot offer to buy the gold can then be soldon the market. The government has entitleditself to a minimum 15% free carried equityin the joint ventures, with the remainder ofits share to be fully paid up by the companyor paid by arrangement. If the operations pro-ceed without the government having paid itsagreed share, it shall still be entitled to fullprofits as if it had paid up in full. Incometax is set at 30%, with a three-year exemptionfrom the commencement of production. Thebidder is able to propose the rate of dead rent(minimum US $15 per square kilometre atprospecting stage) while other license fees, andpresumably taxes, are to be decided by exist-ing laws.

    In particular, it is the Union of MyanmarForeign Investment Law of November 30, 1988(MFIL) which defines numerous incentivesfor overseas participation, although, apartfrom the three-year tax break, these are all dis-cretionary. Were they to be awarded all at once,such discretionary incentives would indeedmake Burma one of the most attractive tar-gets for investment, since they include theright to deduct Research and Developmentexpenditures from assessable income; the rightto carry forward losses for up to three yearsfrom the year the loss is sustained; exemption(or relief) from customs duty and other inter-nal taxes on imported machinery, spare parts,etc.; and a 50% relief from income tax on prof-its accrued from exports; commercial tax onexports can also be exempted. The MFIL givesan irrevocable guarantee that enterprises will

    Were they tobe awarded allat once, suchdiscretionaryincentiveswould indeedmake Burmaone of themost attractivetargets forinvestment.

  • 18 A Report on Mining in Burma

    It seems clearthat the

    regulations arenot intended to

    identifycompanies with

    poor social orenvironmental

    recordselsewhere.

    not be nationalised during the permit period,and that profits can be repatriated after pay-ment of the agreed domestic taxes.

    Seeking good practice

    The new Mining Law and its annexures areextremely short on standards of good miningpractice; procedures to ensure their implemen-tation; or avenues for any public or individualrecourse should practices fail. While prospec-tive bidders are supposed to submit accountsof their previous experience and past perfor-mance of similar work, the work itself is notdefined. So, it might be possible for a com-pany with an apparently unblemished recordin quarrying in Europe or Thailand to submita bid for an iron ore project without anyexperience of hard rock metallic mining. Inany case, it seems clear that the regulationsare not intended to identify companies withpoor social or environmental records else-where, only to guarantee that they will keepto the narrow margins of their technical andfinancial undertaking. The concept of a badactor law such as exists in several states inthe USA seems to have no place in currentthinking within the Burmese regime. Underthe 1994 regulations no attempt was made todefine obligations during prospecting and ex-ploration. This defect has been partially rem-edied in the current regulations.67 However,the language is once again vague to the pointof being worthless. References to observinggood prospecting and exploration practicesmean little while the demand to compensatelegitimate land uses (sic) for any disturbanceor damage rests on variable definitions of le-gitimate, users, disturbance and dam-age. At the same time, procedures for claim-ing compensation, or evaluating claims, arenot to be found.

    Deplorable failure

    In summary, the updated 1994 regulationsand the Mining Law itself reveal a deplorablefailure of the regime and its advisors in thefollowing respects:

    to espouse existing good (let alonebest) mining practices

    to take account of the potential or ac-tual conflict between other land use (and us-ers or claimants) and the demands of mining

    to consider and legislate for the liabili-ties which mining companies should bear inthe event of failure or disaster (including theposting of environmental bonds adequate tocover worst case scenarios, in escrow and infully convertible currency).

    The Mining Law and its annexures appearnot to have been properly proofread, despitethe supposed input of the United Nations.There is, for example, a risible typographicalerror in Chapter VII of the Law in paragraph23, where we are told that:

    all naturally occurring minerals

    found...under the oil (sic) shall be deemed

    to be owned by the state.

    To date, attempts to equitably promote, pro-tect, democratise and make safer the overallmining environment in Burma have not beenseriously been made.

  • A Report on Mining in Burma 19

  • 20 A Report on Mining in Burma

    Yadanabon

    Kyaukmedaung

    Myitkyina

    Keng Tung

    Heho

    Toungoo

    MandalaySagaing

    Rangoon

    Pegu

    Pa-anMoulmein

    Bassein

    Bokpyin

    Tavoy

    Tenasserim

    KalewaKalemyo

    Muse

    Theindaw

    ProspectsA - Kyaukpahto GoldB - Phayaungdaung GoldC - Thayetkana Gold

    Location of small & large scale mines in BurmaSource: Report Text, UN ESCAP 1996. Atlas of MineralResources of the ESCAP Region, Vol. 12 New York. UN.and various other sources.Map produced by Aaron James CAPRN.

  • A Report on Mining in Burma 21

    Exploration Blocks in Round Oneof Contract Bidding 1994Source: The Mining Journal 10/08/99Map produced by Aaron James CAPRN

  • 22 A Report on Mining in Burma

    Exploration Blocks in Round Twoof Contract Bidding 1996Source: The Mining Journal 10/08/99Map produced by Aaron James CAPRN

  • A Report on Mining in Burma 23

    When we own any financial instrument whatwe basically own is an opinion. That opinion is aprice. Think of the stock market as an endlessGallup poll.68

    Each working day, in packed halls at thecentre of a growing number of cities, men(rarely women) can be found shouting curtmessages and pointing frantically at eachother, their words and gestures appearing in-comprehensible to the rest of humanity. Com-binations of dizzying digits, displayed onscreens and boards, change with bewilderingrapidity as these participants in the GreatGame stand to gain or lose fortunes in sec-onds. These are players on the Stock Exchange.

    In order to bankroll new mines or expan-sion projects, big mining companies relylargely on cash flow and debt financing (loans)provided by banks and investment institu-tions, or through share issues to existing stock-holders.69 In 1997, nearly six billion dollarsworth of capital was raised in this fashion, plusanother US $930 million on the internationalbond market.70

    However, the past decade has also seen aneruption of venture capital generated bothacross the counter,71 and on virtually un-regulated stock exchanges by juniors. Thisin turn has significantly determined the na-ture and location of mineral exploration inthe South, as well as raising crucial questionsabout its impacts. Burma is no exception. Al-though several mining companies currentlyoperating in the country are from within theregion (notably Thailand), the most important

    foreign interest has been shown by Canadianand Australian juniors. At the head of these isa small brace of outfits controlled by RobertFriedland: his holding company Ivanhoe Capi-tal Corporation (ICC) and two companies in-terlocked with ICC, Indochina Goldfields Ltd(IGL now Ivanhoe Mining Ltd.) and First Dy-nasty.

    Friedland occupies a privileged, if contro-versial, space between investment banks whichare normally only attracted to well-established,listed companies, and the private investors andmutual funds which have powered the rise ofthe junior companies. In the case of theMonywa project, he not only managed to at-tract the interest of high-profile product pur-chasing partners Sumitomo and Marubeni, butalso a range of brokerage and venture capitalfunds, including First Marathon and NesbittBurns, as well as a public flotation which se-cured enormous windfalls.72

    Beyond the venture capital stage, the keymechanisms for this remarkable movement ofmonies are Canadian stock exchanges. Evenif Robert Friedland were not around,73 Burmamay well be the recipient of more approachesby Canadian juniors in the near future. Thischapter therefore looks at the phenomenonmore closely and asks whether recent avowedattempts to improve regulation on Canadasstock exchanges, specifically Torontos, willactually improve the accountability of suchcompanies not only to investors and gov-ernments, but most importantly to local com-munities. The conclusion is No.

    Summary Evaluation ofMining Companies in Burma

    Chapter Two

  • 24 A Report on Mining in Burma

    The following chapter profiles the maincompanies with current or recent involvementin Burmas mining and exploration. The in-formation is sometimes sparse, largely becauseadequate objective information on many ofthese players just doesnt exist. This lack ofinformation is one of the worst aspects of thejunior venture phenomenon. More data isavailable on the well-established investors,primarily Japanese, and some of this is pro-vided here.74

    Codes of (Mis) Conduct

    In 1997, the worlds most powerful miningcompany, Britains Rio Tinto, announced thatit would not invest in Burma on humanrights grounds: a position, so it maintains,which shows that it bases its investment andoperational decisions on specific principles.Yet, this same company continues to rake inlarge profits from its joint venture with theUS company Freeport McMoran in Papua (for-merly West Papua or Irian Jaya). The produc-tion-sharing contract Rio Tinto signed withFreeport in early 1995 directly benefited theSuharto regime in Indonesia an oligarchicaladministration that bears comparison in sev-eral respects (militarisation, corruption, andnepotism) with the Burmese military regime.Further, Rio Tinto committed itself to expand-ing a copper and gold complex which had,for more than twenty years, trespassed on andviolated the land and resources of West Papuasindigenous communities. Rio Tintos code ofpractice appears to be applied in variableways.75

    In the past four years, an increasing amountof faith has been invested by some NGOs inthe drawing-up of codes of conduct fornatural resource extraction companies.These range from a simple one-page statementemanating from the Asia-Pacific Mining Con-ference, held in 1996 in Canada to a docu-

    ment of principles drafted by various Austra-lian NGOs in 1998, which rather perplexinglystates from the outset that it is not a code ofconduct.

    There is growing skepticism about whethersuch codes are either relevant in many situa-tions, or enforceable in states such as Burmawhich are being encouraged to change theirold (usually protectionist) mining investmentrules. These states are essentially respondingnot to better environmental, human rightsand social/labour standards set elsewhere butto the need for foreign investment, and tomeet structural adjustment criteria set by mul-tilateral institutions. Where infrastructure andpower supply is poor, social/ethnic conflictswith government are endemic and small-scale,and localised mineral output stands in com-petition to the claims of bigger companies the tendency in any administration will be tofavour privatisation and increased investmentover protection of its own internal trade orlocal community interests.

    This author maintains that there is little evi-dence that even the larger, publicly well-ex-posed multinational companies are really in-tent on improving standards across the board.As Australian experience has shown, miningcompanies will often try for as long as pos-sible to fence off their critics by coming upwith their own limited criteria and system ofauditing, rather than submit to being overseenby an empowered national or internationalbody.76 It is therefore naive to expect that jun-ior companies, which are at the forefront ofmineral-related exploitation of Burma, willtake more notice of increasingly stringent stan-dards which may be set elsewhere, let alonehave the capacity to introduce innovationswhich reduce resource consumption or pollu-tion.77

  • A Report on Mining in Burma 25

    What these juniors will take notice of arerestrictions laid down by strong administra-tions, thorough monitoring by mine inspec-tors, and local communities empowered to dotheir own impact monitoring. In this respect,these companies are more susceptible to pres-sure than the multinationals. It is preciselybecause these factors do not operate in manycountries, such as Burma, that many of thesejunior outfits locate there in the first place.

    Where the money blows:Canadas central role

    In 1997, 40% of all global mine finance wasraised on Canadian stock exchanges, of whichthe Toronto Stock Exchange (TSE) accountedfor more than one third of the world total (Cdn$4 billion). Funds were also raised in over-the-counter, or unlisted, deals for which the Ca-nadian Dealing Network required no prop-

    erty standard (i.e. three-dimensional evalua-tion of a given deposit) whatsoever.78 For ourpurposes, it is the dealings on the stock ex-changes which are most significant.

    Over 300 of the 1,450 TSE listed companiesare mining outfits, trading more than Cdn $69billion all-told in 1997. By 1993, companieslisted on the TSE represented more than halfthe global equity market capitalisation in gold a total of US $50,000 million.79 Since 1973,Canadas share of world mining equities(shareholdings) has climbed from 16% to25%.80 Moreover, Canadian companies withmore than Cdn $3 million in their annual ex-ploration budgets are estimated to control 35%of exploration expenditures world-wide. In1998, just over half of global mining financewas raised on Canadas stock exchanges, about80% of this on the TSE alone.81

    Heavy duty equipment working at Hpakant gem mine, Kachin State(Credit: Images Asia)

  • 26 A Report on Mining in Burma

    The Vancouver Stock Exchange (VSE) is pro-portionately even more heavily loaded withmining equities with 60% of its total, com-prising 861 corporate listings at the end of1997. A fifth of all global mining explorationcapital was being raised on the VSE by 1997 primarily for Latin America, but with SouthEast Asia coming a close second.82 AlbertasStock Exchange (ASE) also had a significant17% of its total registry in mining.

    For the past ten years, criticism of the ac-tivities of Canadian stock exchanges has esca-lated from rumbles of discontent to clamorsfor radical change. The VSE has come in forparticular condemnation: in 1994, one busi-ness commentator dubbed it the Sodom andGomorrah of modern day financial markets.83

    Then, in the spring of 1997 came the Bre-Xscandal. A junior company called Bre-X hadbuilt up an extraordinary equity position, firston the ASE and then the TSE, after boastingdiscovery of the worlds biggest untapped golddeposit in East Kalimantan, Indonesia. Whenits drilling results were proven to have beenmassively faked,84 Bre-X spectacularly crashed,amid claims that some directors and Canadianinvestment houses had walked off with hugegains while more pedestrian investors lost theirentire investments en masse. Confidence injunior companies was severely shaken as pub-lic demands for proper corroboration of cor-porate claims began to grow.

    In 1998, an official Canadian Mining Stan-dards Taskforce made numerous recommen-dations to improve operating standards of thecountrys stock exchanges.85 The Toronto StockExchange became Canadas senior stock ex-change, and the ASE and VSE were merged intoa new national exchange for junior compa-nies.86 Minor tightening of VSE rules occurredin the eighteen months after the release of theTaskforces report, but most criticism was fo-cused on the TSE. After all, this exchange is

    considered the graduate school for juniorsmaking the grade out of the VSE, and it is thebiggest single source of mineral and explora-tion finance capital in North America. It istherefore worrying that between January 1996and mid-1998 only 26 mining companies ac-tually did make it from the VSE to the TSE.

    Cosmetics

    In mid-1998, in response to the aftershockof Bre-X, the Toronto Stock Exchange intro-duced a new set of rules supposedly to curbsuch crimes and excesses as seen with the Bre-X debacle. According to The Toronto Globe andMail columnist Andrew Willis, the changeswere pretty weak tea on first reading.87 Fol-lowing this minor reform, a company musthave a minimum working capital of $3-mil-lion, up from a previous floor of $2-million,and assets of $4-million. No threshold on as-sets had existed in the past. In addition, a com-pany must file detailed plans on how it willfund the development of projects over the suc-ceeding 18 months. Ironically, these new stan-dards would not have halted Bre-X.88

    The new TSE rules do increase the respon-sibilities of those who bring junior miningcompanies to market usually the investmentdealers. Underwriters now have to sign boththe junior companys 18-month projectionsand its press releases. Dealers also have to backproperty agreements and the managementstechnical expertise, and sponsors will be ex-pected to have visited the mine prospect it-self. However, said Willis: These rules wontstifle activity in one of the few market seg-ments where Canada can claim global leader-ship. Thats a fair trade for the TSE.89 The fol-lowing year, the chair of the TSE itself madethe disturbing observation that around 800 ofthe exchanges 1,400 listed companies wouldnot meet the listing requirements of Nasdaqor the New York Stock Exchange.90

  • A Report on Mining in Burma 27

    Why Canada?

    Canadas unique position in mining invest-ment derives from several factors:

    1) Canada has played an historical role as asource of mining expertise and finance.Around 100 professional mining analysts arebased in the country, by far, the greatest ag-glomeration of such analysts in the world.They boost the fortunes of Canadas miningcompanies and, in so doing, often boost theirown fortunes too. This has often been donewithout proper analysis of technical data, letalone any recognition of potential humanrights or environmental abuses. The boost toRobert Friedlands Indochina Goldfields from1994 onwards was certainly assisted by hypewhich the company obtained from numerousprofessional industry newsletters. Three edi-tors of these, James Blanchard, Bob Bishop andAdrian Day, allegedly got cheap stock in IGLin a 1994 private placement, the value ofwhich quickly rose twelve-fold.91

    While new rules may curb the most exces-sive and unfounded speculation about acompanys reserves or financial viability, theyremain silent on the compelling need for thor-ough investigation of a companys social andenvironmental impacts.

    Although national papers like The TorontoGlobe and Mail and Canadian TV programmeslike The Fifth Estate critically covered the Omaimine disaster in Guyana in 1995 when a tail-ings dam broke its banks, sending millions ofgallons of contaminating wastes into thecountrys main river, the Essequibo, much ofthis coverage was too little and came too late.92

    Almost with a single voice, the Quebec pressrushed to defend Omais operating company,Cambior, which was listed on the MontrealStock Exchange (MSE), and downplayed criti-cal comment on the activities of Quebec-basedjuniors. In 1997, as human rights groups in

    the Philippines accused another CanadianTSE-listed junior, TVI, of torturing Subanen vil-lagers in Mindanao, the Canadian press re-mained silent.93

    2) Although the juniors are largely unableto raise capital from the big investment banks,they have been spectacularly successful in tap-ping venture capital and pension, mutual andinsurance funds.94 The countrys three largestpension plans accounted for Cdn $136 billionin assets at the end of 1997. A large propor-tion of Canadians, around 37% of the adultpopulation that year, invest in equities directlythrough brokerage firms, a substantial amountof which goes into mining.

    3) There are more mining company headoffices, both junior and senior, in Toronto thananywhere else in the world. Their personnelare drawn from the ranks of geologists, engi-neers, and executives looking for jobs as big-ger companies reduced their undertakings ormerged during the 1970s and 1980s.95 A ros-ter of these junior boards reads like the guest-list at the Canadian Mining Associations An-nual Ball.

    Until the Omai disaster in 1995, few con-scientious Canadians were aware of the lackof control exercised over these companies. But,as the legal threat by Guyanese citizens to sueCambior on Canadian soil seemed to recedeinto the distance during 1996 (this suit wasfinally dismissed in 1999), so did criticisms ofCanadas role as a vast and often dirty laun-dry for venture capital.

    It is not hard to see why Canadas stock ex-changes may never be able to regulate the in-dustry on which they themselves are so de-pendent. Any code of conduct based on moralor human rights criteria would sound a knellof doom. Any expectation that bigger compa-nies, ostensibly more responsive to institu-tional shareholders and public opinion, will

    Until the Omaidisaster in1995, fewconscientiousCanadians wereaware of thelack of controlexercised overthesecompanies.

  • 28 A Report on Mining in Burma

    somehow curb the excesses of their junior col-leagues is naive. It is, in many instances, pre-cisely the majors who encourage and court thejuniors as outfits that can deliver what orwhere they cannot, sometimes for politicalreasons. An obvious illustration of this is thefact that Canadian-financed companies op-erate and are now expanding with impu-nity in Burma, despite mild Canadian embar-goes on government investment,96 or demandsfrom the ILO and other human rightsorganisations. Meanwhile higher-profilenatural resource companies like Newmontand Arco have been forced to withdraw, orbeen discouraged from investing, for the timebeing.

    Tailings between our legs

    It is a glaring fact that no less than three ofthe four most serious mine tailing dam catas-trophes in the past five years can be laid atthe door of Canadian companies.97 It is alsosobering to realise that all but one of thesecompanies (Golden Star) were actually juniors:they were all held to be well-established com-panies with responsible management.

    So, despite the gloss, Canada today still con-stitutes a kind of wild north comparable tothat of the mining camps of its past exceptthat the reach of these companies is now glo-bal, and the consequences of failure and di-saster can be much more serious.

    Australia

    As the index which follows in the nextchapter demonstrates the junior phenom-enon is not restricted to Canada. Almost asmany such companies recently involved inBurma are registered in Australia, a countrywhich has also had its fair share of stock ex-change scandals in particular the saltingof mineral samples revealed in the 1980s.98

  • A Report on Mining in Burma 29

    The following companies listed in this in-dex were active in Burma at some point be-tween 1995 and the present, judged on datafrom the Burma Ministry of Mines and con-temporary mining industry sources.

    Several Burmese national or state (provin-cial) registered companies are included, but theactivities of the state-owned mining enter-prises (ME1, ME2, and ME3) and MyanmaGem Enterprises (MGE) are mentioned prima-rily in the context of their joint ventures (JVs)with overseas firms.99 All outsider applicationsto explore or mine in Burma have to be madethrough these Mining Enterprises (MEs): to

    ME1 for lead, zinc and copper; to ME2 for goldand tin-tungsten; to ME3 for coal and indus-trial minerals; and, for jade and gemstones, toMGE.

    Some of these companies have ostensiblywithdrawn from the country, and others havesuspended operations. The reasons for this areusually the fact of disappointing drilling andassay results, but also in some cases, a lack ofexternal capital to carry work forward. At leastone outfit, Tiger International Resources,pulled out in late 1997 because it had encoun-tered increasing political...problems inBurma. Along with Newmont, which also

    Chapter Three Index of Mining Corporations

    Campsite at Hpakant gem mine, Kachin State(Photo: Burma Centrum Nederland)

  • 30 A Report on Mining in Burma

    withdrew soon afterwards, Tiger is one of thefew US mining companies to have demon-strated a readiness to enter Burma, under theauspices of the regime.

    Whether recent or current, it is importantboth to note such corporate complicity withthe SLORC regime, and that most companieslisted here retain a commitment to exploitingBurmas resources. Hopefully, such data willbe of use to a future democratically-electedgovernment, when it comes to deciding whatreliance to place on specific foreign (and do-mestic) companies which may bid for explo-ration or mining concessions. The legal con-cept of refusing government contracts to abad actor (a corporate body which has beenproven responsible for unacceptable past prac-tices) is so far current primarily in the US.Nonetheless, other governments have placedprohibitions on specific companies for theirmisdeeds; India, in the case of Union Carbide,after the 1985 Bhopal holocaust, for example.Following the Marcopper blow out in 1996,the Philippine government threatened PlacerDome that it would not be granted further con-cessions in the country, although it later wentback on this decree.

    Ratings

    To assist the vetting of companies recentlyactive in Burma, these profiles include sum-maries of corporate social and environmentalrecords (where information is available) and acorresponding rating, created by the author:

    * company has a fair reputation for itssocial and environmental practices

    ** gives some cause for concern*** gives special cause for concern**** company has a very poor record or repu-

    tation for its social and environmental practicesno symbols author unable to comment due

    to lack of data

    Mining Companies Active in Burma

    AMALG RESOURCES NL (Australia)In 1997 this company was discussing a pos-

    sible junior venture with ME 2 for thePhayuang Taung gold mine (see Sum Cheung)

    AMDAHL CORPSee Diversified Mineral Resources

    ***ANGLO AMERICAN CORPORATION(Britain and South Africa)

    See Minorco Services and LMJV

    ASIA INVESTMENT [1995] COIn some sources, it is called Asia Investors.

    This is a joint venture between City Realty andThailands Padaeng Industry Co (holding 20%)which signed an agreement with the BurmaMinistry of Mines in September 1996 to ex-plore 1,400 square kilometres of northernBurma for zinc and copper (Block 9, secondround) in order to feed the Thai companysTak smelter in the countrys north-east.100

    However, in July 1997 Padaeng announcedthat it would cease its own exploration inBurma, Laos and Vietnam after forming a stra-tegic alliance with Western Metals of Austra-lia, which may itself include Burma.101

    ATINA TIME SQUARE (Thailand)Like Ivanhoe Myanmar Holdings, ATS, pre-

    viously misnamed by some sources as AsianTimes Square, won blocks in the first and sec-ond round (blocks 1 and 11) of Burmas con-tract bidding. It bid for Block 10 in the 1997third round of bidding (3/10), but did not signon.102 It also appears to have transferred Block11 to Minorco (q.v.).

    AUSTRALIAN KIMBERLEY DIAMONDS(Australia)

    Although trying to acquire prospects in1997,103 it does not appear to have proceededfurther and by 1999 had no known interestsin Burma.

  • A Report on Mining in Burma 31

    AUSTRALIA-MYANMAR GROUP PTY LTD(Perth, Australia)

    Reportedly interested in 1997 in exploringfor diamonds in the Thiendaw area.104

    AYEYAWADY MYITPHYA CO. (China)This Chinese company, registered in Burma,

    signed an agreement last November with ME3to study the Lweje coal deposit at Momauktownship in southern Kachin state, near theChinese border.105

    *** BROKEN HILL PROPRIETARY (Australia)Historically, Broken Hill Proprietary (BHP)

    has been Australias largest mining conglom-erate. Broken Hill has received criticism for al-legedly disregarding aboriginal rights athome,106 and elsewhere, for example, throughits DiaMet diamond joint venture in CanadasNorth West Territories.107 In the late 80s andearly 90s it became the target of criticism, bothinside and outside Australia, for its connec-tions with the two most notorious regimes inthe Asia-Pacific region: Indonesia, where it wasthe chief beneficiary of the Timor Gap treatyon oil and gas reserves in the Timor sea, signedbetween Australia and the Suharto clique; andBurma. In 1999, as profits fell, it announcedthe abandonment of its interests in the TimorGap. In 1998, the company had leased out itsstake in the Tennaserim (Tanintharyi) coalfieldin Burma, to PT Austindo (q.v.), perhaps be-cause of flak from pro-democracy activists.

    Broken Hill recently confronted the impactsof its biggest single mine project, Ok Tedi cop-per-gold, in the highlands of Papua NewGuinea. Following a 1996 settlement of a dam-ages action brought by landowners livingdownstream of the mine, the company com-missioned a survey of options for dealing withthe massive contamination, caused by millionsof tonnes of tailings dumped directly into theOk Tedi-Fly river system.BHP has reportedlyadmitted that its mining operation caused se-rious damage in this instance.108

    **CHIYODA (Japan)A leading Japanese engineering construc-

    tion company which is also a shareholder inTomen Corp (Sushiki Kaisha Tomen), Chiyodais one of the countrys leading sogo shoshas,which has major interests in mineral miningand imports, especially coal and iron. ChiyodaCorporation first announced an intention toexplore in Burma in early 1996.109 It wasbrought on board in 1997 by Friedland, alongwith Marubeni (q.v.) to design and constructthe ore crushing, conveying and heap-leachfacilities at Monywa (see Ivanhoe MyanmarHoldings below), as well as construct themines SE-EW plant. Two years later, the com-pany contributed financing to the exploita-tion of the Letpadaung Taung reserves atMonywa.110 See also Ivanhoe Myanmar (be-low).

    CITY REALTYSee Asia Investments

    * CMPS&F (Australia)This Brisbane, Australia-based engineering

    firm was commissioned by Indochina Gold-fields to construct the initial phase of theMonywa Copper project (the Sabetaung-Kyisintaung deposits). In 1994, CMPS&F re-ceived the major Award of Merit in the (Aus-tralian) Awards of Engineering Excellence forits construction of an SE-EW plant in NewSouth Wales.111

    CORNERSTONE RESOURCES (Australia)According to The New Light of Burma, the

    official organ of the Burmese military regime,in October 1999 this junior signed a profit-sharing contract with ME1 to produce zincmetal from Shan States Longh Keng region.112

    CSA (Ireland)Consultants to International Panorama Re-

    sources Corp. of Vancouver (q.v.) during thatcompanys abortive exploration of the ShanScarpo fault (Pyinana region) in 1995-6.

  • 32 A Report on Mining in Burma

    ***DAEWOO (South Korea)For many years, Henry Kissinger, the former

    US Secretary of State, has acted as a consult-ant for Freeport-McMoran, the huge US min-ing and oil company of which he is also adirector. In the late 1980s, following the 1988SLORC crushing of Burmese democracy,Kissinger tried to put together a deal betweenFreeport and Daewoo to exploit Burmas natu-ral resources, but it failed to materialise.113

    Daewoo had to wait another few years be-fore it gained a foothold in Burma, when itbecame a finance provider for the Monywacopper project.114 However, the company facedcollapse in late 1999, after major discrepan-cies were discovered between its official debtposition and actual cash transactions. In De-cember 1999, South Korean financial regula-tors opened an enquiry into the operations ofan alleged US $7.3 billion secret fund, basedin London, which supported Daewoos over-seas operations over an eighteen-month pe-riod, and possibly included the Monywamine.115 At the end of January 2000, thecompanys domestic creditors took over thecompany, and were negotiating an agreementwith foreign debtors (which includes ChaseManhattan Bank, HSBC Holdings and theBank of Tokyo-Mitsubishi) after about 60% ofDaewoos debts had been written off.116

    DIVERSIFIED MINERAL RESOURCES LTD(DMR) (Sydney, Australia)

    A subsidiary of Amdahl Corporation of theUSA and, in 1996, a 50% owner of MandalayMining Company, NL (q.v.).

    **EAST ASIA GOLD CORP (EAGC)(Spokane, USA)

    Based in Spokane, Washington, USA, thiscompany announced in March 1998 that ithad discovered a new gold target on its Block14 concession at Subok Taung, in western ShanState, located seven kilometres south-west ofits Bawdwin copper project. The Block 14 con-

    cession has significant gold in nine streams,draining the chiefly rhyolite deposit.117 Its ini-tial contract for this prospect situated atThabeikkyin township had been signed in1995,118 with a duration of three years and apossible two-year extension.119 A year laterEAGC claimed that fieldwork had identifiedthe so-called Shante Gold Belt,120 with morethan one million ounces of gold in just onetarget area, at Taungkantlant.121 During thatyear, the company also signed up for Blocks 2and 3 in Kachin State (gold and copper) andBlock 4 in Northern Shan State.

    The company said in 1998 that results fromBlocks 1/12, 2/2, 2/3 and 2/4 were unspectacu-lar. Although it was continuing investigation,especially at Bwettaw and Wetthe, EAGC re-linquished Blocks 2/2 and 2/3 in March 1998,but announced further exploration in Block2/4 in the Yanbo-Kandaw area, which it con-sidered most prospective. Like Pacific Arc Ex-ploration (q.v.), it also asked for permissionto stop work for six months in Blocks 1/14and 2/4 after April 1st that year.

    In 1999, after a six-month suspension ofoperations (until March that year), EAGC de-cided to resume exploration on Block 1/14,since it had located three copper porphyry de-posits at Sadwin, Kodan and Saladokhta. Aswell, its Block 2/4 (Mabein north area) hadyielded possible gold and copper deposits in a50 km2 zone.122 EAGC also acquired interestsin two mineral prospects in Katanga province,Democratic Republic of Congo, in late 1998.123

    FIRST DYNASTY MINES LTD(Singapore and Vancouver)

    See Myanmar First Dynasty

    **** FREEPORT-McMORAN (USA)In 1995 Freeport-McMoran became part-

    owned (14%) by Rio Tinto. Together the twocompanies control the Grasberg mine in Papua(formerly West Papua/Irian Jaya), the largestgold and third largest copper producer onearth. This mine is one of the most criticised

  • A Report on Mining in Burma 33

    of any in the world, having exploited the landand rivers and gained a reputation of disre-gard for human rights in allegedly risking thelives and health of indigenous Papuans for aquarter of a century. It dumps some 220,000tonnes of untreated tailings per day into theAjkwa river system.124 Until the fall of Suhartoin 1998, this region comprised (after EastTimor) the second most heavily militarisedarea under Indonesian military hegemony.

    Freeport has also been condemned for itspollutive operations on home ground in Loui-siana. During 1999, it was the subject of wide-spread village protests in north-central SriLanka, where it is attempting to open up ahuge phosphate deposit at Eppawala.125

    In the late 1980s, guided by Henry Kissinger(a Freeport director), the company tried to ne-gotiate entry into Burma, along with Daewoo(q.v.).

    HAW SENG MINING (Burma)A Burmese company, Haw Seng signed a

    1996 JV agreement with ME1 for lead-zincmining in Nam Lo/Nam Hmwe area in Musetownship and Kohmann, Kutkhai township,northeast Burma.126

    HOLY S PIN CO LTD (Kachin State, Burma)Also a Burmese company, Holy S Pin signed

    a profit-sharing contract with ME2 in January1997 to produce gold from the confluence ofthe Malikha and Maykha rivers in KachinState, 64 kilometres north of Myitkyina.127

    ** HOMESTAKE MINING (USA)This is the legendary US gold producer

    whose fortunes were aided in part through thetakeover of Lakota (Sioux) land and gold fromthe Black Hills (the sacred Paha Sapa) of Da-kota in the nineteenth century.128 It ownsHomestake Canada, which in turn controlsaround 51% of the share capital of Prime Re-sources Group Inc (q.v.).

    ***INDOCHINA GOLDFIELDS(Vancouver, Canada)

    Robert Friedland formed Indochina Gold-fields, Ltd. (IGL on the VSE) in 1993 to de-velop an early dominant position in gold min-ing in Indochina and Southeast Asia. Its firstexplorations were in Vietnam where itquickly became the countrys largest foreignmining company followed by forays into In-donesia and Burma.129

    In mid-1996, when IGL announced itsnearly US $100 million floatation to exploitproperties and prospects in Asia, eight under-writers were employed to boast and boostFriedlands Asian fortunes. The Canadian Fi-nancial Post dubbed the group a road show.Among these were representatives of leadingbrokerage firms First Marathon and NesbittBurns, and major investment bankersDeutsche Bank Morgan Grenfell and HSBC-James Capel Canada, Inc.

    The role of First Marathon in the deal, oneof the leading Canadian brokerage companieswith involvement in mining ventures, hasbeen questioned. According to William Green,writing in Forbes Magazine, by the time IGLwent public, players connected to First Mara-thon had made millions of dollars in personalgains.130 Canadian securities and mutual fundcompanies Deans Knight Capital Manage-ment, Altamira, and AGF, plus the chairmanof Haywood Securities, an investment man-ager for San Francisco-based RobertsonStephens & Company, and several miningjournalists apparently also got in on cheapstock offerings.131

    Nesbitt Burns, which had handledFriedlands sale to Inco at Voiseys Bay,132 wasnamed as one of the stockbroking firms pro-moting the Bre-X gold prospect. Class actionsuits, started in early 1998 by shareholders inthis investment venture, maintained thatNesbitt Burns and others should have re-searched their claims before recommendingthat their customers buy shares in the com-pany.133

  • 34 A Report on Mining in Burma

    IGL and its JV partner ME1 signed contractswith a number of companies in 1997 to fi-nance and develop Monwya.134 At the sametime, Friedlands company confirmed itscommitment to Burma, despite the Cana-dian governments imposition of selective eco-nomic sanctions against the regime.135

    Outside of Burma, IGLs most advancedprojects are at Sekatak and Jelai-Mewat inKalimantan, Indonesia. It started a drillingprogramme last year on the Gasado Island goldprospect backed by a grant from the govern-ment of South Korea.136

    ** INTERNATIONAL PANORAMA RESOURCESCORP (IPRC) (Vancouver, Canada)

    This Canadian company, which manages aportfolio of mineral properties in the US andCanada, signed a first round prospecting agree-ment covering old resources in Burmas Block9 in the Pyinmana region, Central Burma, in1995.137 Later the company abandoned theThayatkhon and Thayarwhan prospects, al-though its consultant geologists, CSA of Ire-land, claimed that the area was favourable forgold.138

    IPRC was among a number of companieswhich, in 1997, signed a deal with the Zaireanstate company Gecamines, to exploit theKabove/Kakanda copper-cobalt deposits as warraged in Zaire (now the Democratic Republicof Congo).139 An SE-EW plant, similar to thatat Monywa, was planned, but the opening wasdelayed due to the renewed outbreak of vio-lence in mid-1998.140

    **** IVANHOE CAPITAL CORP (Singapore)The holding company for all of Robert

    Friedlands Asian interests, including IvanhoeMyanmar Holdings, Myanmar First Dynasty,and Indochina Goldfields, and the power-house behind Friedlands global reach.

    **** IVANHOE MINES LTD (Singapore)The name coined in 1999 by Robert

    Friedland to replace that of Indochina Gold-fields (IGL), which saw the companys sharesmove to the Toronto and Australian stock ex-changes.

    *** IVANHOE MYANMAR HOLDINGS LTD(IMH) (British Virgin Islands)

    See also Myanmar Ivanhoe Copper Co. Ltd.In September 1996, this company stated it

    would place 5.88 million special warrants (atCdn $4.25 each) to finance, in particular, theSembajkung oil field and general explorationin Burma.141

    Technically, the joint venture owner of theMonywa copper mine, Ivanhoe MyanmarHoldings, is officially registered in the BritishVirgin Islands and actually is a subsidiary ofSingapore-based Ivanhoe Capital Corporation.Initial financing for the project was obtainedby Friedlands Indochina Goldfields along withME1.142

    IMH gained blocks 3, 4, 5, 6, 6A and 7 un-der the regimes first round of bidding, butappears to have been consistently exploringonly blocks 3, 4 and 5, then, in the secondround block 10. The results from these blockswere all reported to be disappointing.143 In1998, a ground magnetic survey was con-ducted over part of the Yebu area under block2/10, allegedly intercepting some high gradesalong a fairly small strike. It seems Block 10was initially contracted to Myanmar First Dy-nasty Mines (q.v.).144 The apparent switch toIMH illustrates the interchangeability ofFriedlands interests in Burma in order tomaximise profit potential.

    In 1999, IMH surrendered blocks 1/3, 1/4,1/5, 1/6, 1/6A and 1/7, but continued workon Block 3/12 (the Myezedaung area in Pegu(Bago) division). In Block 2/10 (Shweminbon-Lehyin area) drilling in old workings and newaudits revealed high gold values.145 This areawas reported last year to have been overrunwith small-scale miners.146

  • A Report on Mining in Burma 35

    Monywa is Burmas biggest copper deposit(or set of deposits) located to date. The feasi-bility study agreement between IvanhoeMyanmar Holdings and Burmas Number OneMining Enterprise (ME1) was signed in March1994.

    Friedlands company undertook to exploreand then exploit the very substantial copperin the Sabetaung, Sabetaung South,Kyisintaung and Letpandaung Taung depos-its of the Monywa area, described by Friedlandas a bit like Nevada due (presumably) to itstopography and climate.147 The site had al-ready seen limited production, using conven-tional methods of flotation and smelting in apilot plant, by the Yugoslav state Invest Im-port Company in the early 1970s, but this waslater abandoned due to lack of finance andplant disrepair. 148

    By late 1996, the Monywa project was welladvanced. IMH announced that first produc-tion from Sabetaung and Kyisintaung wouldcommence in 1998, six months ahead ofschedule, at a production rate of 25,000 tonnesa year of refined copper. The mine was for-mally opened in January 1999. Corporate pro-jections were that output could reach 125,000-128,000 tonnes of copper cathode a year,149

    provided investments of an estimated US$ 300million were forthcoming.150 Drilling alsostarted on the Swebontha prospect onekilometre north-west of Letpadaung, and atKyaukmyet, a supposedly high-grade gold andsilver deposit two kilometres fromSabetaung.151

    After payment of a first installment toMarubeni and Nissho Iwai of US $12 millionon their debt finance in 1999, Ivanhoe wasable to proceed with expansion of currentoutput and consider exploiting theLetpadaung reserves. One of its supposed part-ners in this could be Chiyoda (q.v.), which metwith the military regimes investment headMaung Maung Khin in the 1999 to discuss thispossibility.152

    JAMES CAPELSee Sea-Sun Star below

    JV TECHNOLOGIES (Denver, USA)It was employed as a consultant to

    Mandalay Mining Compan