grave diggers mining in burma

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

Author’s foreword ................................................................................... 5

Chapter One: Burma’s 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)



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.


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


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


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


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


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


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

Nostromo Research

41a Thornhill Square

London, England N1 1BE


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

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


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



Author’s 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 world’s 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 Guyana’s 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 world’s 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 Burma’smines, 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.


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, Colombia’s 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 Friedland’smost 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].


Chapter OneBurma’s 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


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 country’s 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 world’s 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.

Burma’s mining potential and foreigninterest

The mining potential of Burma is difficultto assess. In 1990, less than 1 per cent of thecountry’s 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 regime’s 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 country’s 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 regime’sbiggest legal

revenueearner -

rivaled only bythe lucrative

illegal trade inheroin and

othernarcotics.


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 Burma’sdefectiveness 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 Burma’s 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.


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 country’s 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 country’s 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 thatChina’s 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 country’s smelting and refiningplants; Japan became the world’s biggest singlemarket for upstream production in the majorminerals. However, vertical integration amongsome of the world’s 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 country’s

mineralenterprises has

come fromneighbouring

countries…which havecompatible

industries oftheir own to

promote andexpand.


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 country’s 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.


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, Burma’s 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 Burma’s 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 Guinea’s mining code with its then-revo-lutionary concept of a resource rent tax, whichput a flea in the ear of the world’s biggest min-ing conglomerate, RTZ (now Rio Tinto).51 Noteven a shadow of this concept can be foundin Burma’s 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.


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)


tives) doesn’t; 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 not“high 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 rent”for 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.”


“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 appropriated“in 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)


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

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


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 a“minimum 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 operations“wherever 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 government’sshare 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 incentives”for 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.


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 practices”mean 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.


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.


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


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


“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 both“across 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 Canada’sstock exchanges, specifically Toronto’s, 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


The following chapter profiles the maincompanies with current or recent involvementin Burma’s mining and exploration. The in-formation is sometimes sparse, largely becauseadequate objective information on many ofthese players just doesn’t 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 world’s most powerful miningcompany, Britain’s 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 Papua’sindigenous communities. Rio Tinto’s “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” for“natural 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


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:Canada’s 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,Canada’s 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 Canada’s stock exchanges, about80% of this on the TSE alone.81

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


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 Alberta’sStock 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 world’s 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 thecountry’s stock exchanges.85 The Toronto StockExchange became Canada’s 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 theTaskforce’s 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 company’s 18-month projectionsand its press releases. Dealers also have to backproperty agreements and the management’stechnical expertise, and sponsors will be ex-pected to have visited the mine prospect it-self. However, said Willis: “These rules won’tstifle activity in one of the few market seg-ments where Canada can claim global leader-ship. That’s a fair trade for the TSE”.89 The fol-lowing year, the chair of the TSE itself madethe disturbing observation that around 800 ofthe exchange’s 1,400 listed companies “wouldnot meet the listing requirements of Nasdaqor the New York Stock Exchange”.90


Why Canada?

Canada’s 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 Canada’s 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 Friedland’s Indochina Goldfields from1994 onwards was certainly assisted by hypewhich the company obtained from numerous“professional” 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 acompany’s reserves or financial viability, theyremain silent on the compelling need for thor-ough investigation of a company’s 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 thecountry’s 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 Omai’s 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 country’s 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 1970’s and 1980’s.95 A ros-ter of these junior boards reads like the guest-list at the Canadian Mining Association’s 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 ofCanada’s role as a vast and often dirty laun-dry for venture capital.

It is not hard to see why Canada’s 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.


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-profile“natural 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 “salting”of mineral samples revealed in the 1980s.98


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 (ME’s): 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)


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 exploitingBurma’s 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 a“bad 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 andThailand’s 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 company’sTak smelter in the country’s 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 Burma’s 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.


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 Australia’s 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 Canada’sNorth 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 country’s 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 themine’s 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 State’s Longh Keng region.112

CSA (Ireland)Consultants to International Panorama Re-

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


***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 1980’s, following the 1988SLORC crushing of Burmese democracy,Kissinger tried to put together a deal betweenFreeport and Daewoo to exploit Burma’s 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 Daewoo’s over-seas operations over an eighteen-month pe-riod, and possibly included the Monywamine.115 At the end of January 2000, thecompany’s 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% ofDaewoo’s 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


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 1980’s, 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 country’s 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 boostFriedland’s 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 handledFriedland’s sale to Inco at Voisey’s 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


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

Outside of Burma, IGL’s 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 Burma’s 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

Friedland’s Asian interests, including IvanhoeMyanmar Holdings, Myanmar First Dynasty,and Indochina Goldfields, and the power-house behind Friedland’s 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 company’s 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 Friedland’s Indochina Goldfields along withME1.142

IMH gained blocks 3, 4, 5, 6, 6A and 7 un-der the regime’s 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 ofFriedland’s 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 “overrun”with small-scale miners.146


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

Friedland’s 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 1970’s, 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 regime’s 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 Company (q.v.) in its 1996investigation of slag dumps at Namtu.153

**KILBORN-SNC LAVELIN (Canada)A long-established Canadian engineering

company with a great deal of experience in allaspects of mine design and construction, in-cluding several in the south Pacific and Indo-nesia,154 it was contracted to construct phaseone of the Monywa copper project.155

LEEWARD CAPITAL CORP (Calgary, Canada)See also Mindoro Resources Ltd.Originally Leeward held two blocks in

Kachin and Arakan (Rakhine) States, where itwas exploring for gold.156 In May 1998, Lee-ward reported positive results from Block 2/1in Katchin State, where it had located occur-rences of gold at U Kyi, and Nam Pan Northand gold-platinum at Thein Sat. It gave up thisconcession in October 1998,157 and more re-cently was reported to have begun exploitingthe market for Burmese amber (Burmite). Ac-cording to The Burma Courier, Leeward claimsto have been granted rights to purchase andexport amber by the DGSE, together with anunnamed Canadian geologist resident inBurma, who would purchase the amber, and aretired “economic and mineral explorationgeologist professor” Roger Morton, who oper-ates two diamond and gemstone cutting andmarketing companies.158

LEEWARD TIGER (Canada)See also Tiger International Resources and Lee-

ward Capital CorporationLeeward Tiger relinquished its Block 2/1 in

1998.159


LIAONING JIN DI CONSTRUCTIONCONSORTIUM (China)

A wholly-owned subsidiary of Liaoning Pro-vincial Construction, in 1998 this companyacquired rights to Blocks 3/6 (Sinbo-Nankesan,Waingmaw township in the Myitkyina district,Kachin State) and 3/7 (Bhamo-Myathit also inKachin State), but by 1999 had not startedwork on either block.160

LMJV (England)Wholly owned subsidiary of Minorco Ser-

vices (q.v.) and in turn owned by the Anglo-American Corporation of South Africa, nowbased in London England.

LYON LAKE MINES (Canada)See Palmer Resources

***MANDALAY MINING CO NL(Formerly MM Co Associates) (Australia)

A 50%-owned subsidiary of Diversified Min-erals NL (q.v.) which in 1996 mounted a jointventure with the Burma Ministry of Mines toexplore for lead, zinc and silver, and two JVswith ME1 (Blocks 6 and 7, second round). Thefirst contract was to carry out a feasibility studyon the Namtu/Bawdwin prospect, which hasestimated reserves of around 14 million tonnesof lead, zinc and gold at low-to-mediumgrades, along with slag recovery from theNamtu smelter, which has lower, but poten-tially economically recoverable, grade.161 Itssecond contract was to explore for base met-als and gold in the Mohochaung area to thenorth east of Bawdwin.

According to one trained observer, a formersenior mining engineer – the Namtu-Bawdwinmining complex carries with it a devastatinghistory of both environmental destruction anddeleterious impact on the health of workersand local residents.162

The main shaft reaches more than 1,500 feetbelow ground, and has plunged below thewater table. Constant pumping is required atlower levels. Locals have reported an entire

absence of fish in the severely silted riverNamtu Chaung, which receives all the tailings.Villagers have to use water brought by pipe-line from elsewhere. The workforce, which in-cludes women in the milling area, is allegedto have an average life-span of only 50 years.

In March 1997, the company announcedthat it had largely completed the mine andplant studies on the Namtu/Bawdwin project,which was then producing about 2,000 tonnesa year of refined lead, along with zinc, silverand smaller amounts of other metals. How-ever, the company said the mine was operat-ing well below capacity and required signifi-cant inputs of technology, power and capital,for which it was negotiating a deal with SilverStandard of Canada (q.v.).163

An earlier proposal to construct an electricplasma furnace with JV Technologies of Den-ver, USA seems to have been shelved, partlybecause of lack of cheaply available electricpower.164

In early 1998, some 8,000 workers and fam-ily members from the 3,000 strong Namtu sil-ver mines workforce staged a strike, demand-ing subsidised rice, higher wages for under-ground workers, full pay and medical assis-tance in the case of illness, and other ben-efits.165 Inflation and low wages made basicgoods, including rice, unaffordable. Althoughtheir demands for subsidised rice were met,leaders of the strike fled to avoid severe pun-ishment from the military regime which hasmade independent trade unions illegal.166

***MARUBENI CORP (Japan)Marubeni, in 1995, offered the regime a mi-

nor boost in its attempts to legitimise itselfand maintain control over Burma’s humanand natural resources. It signed an agreementwith the regime to “develop” both its infra-structure and market economy. Not only didthe agreement pledge the Japanesecorporation’s assistance in promoting specificjoint ventures (including oil and mining), butalso offered help to develop “a master plan to


attract foreign investments through effortssuch as the development of industrialparks”.167 The company justified its support forthe regime of Burma with the words:

“Any country has risks, so unless you take

that risk it is impossible to do anything.

We believe the [Burmese] government is a

stable one and we expect to see a lot of

foreign interest in the country.”168

It is thus not surprising that, two years later,along with Nissho Iwai Corporation andChiyoda, Marubeni was lined up by RobertFriedland to provide US $90 million debt fi-nancing for the first phase of the Monywa SE-EW project.169 Marubeni also pledged to pur-chase the first seven years of copper produc-tion (1998 - 2005) at a rate of 25,000 tonnes ayear. By early 1998, the company had begundrawing down its loan, as the Monywa projectmoved to construction and production.170

Marubeni prides itself on being the leading“open” or liberal sogo shosha in Japan. Itspresident, Tohru Tosuji, in his Millenniummessage promised “integrated environmentalstandards”, in conformity with ISO14001 (in-dustrial operating standards).171 The companyhas come under scrutiny for possible connec-tions to activities during the 1970’s and early80’s where uranium supplies were routed fromRio Tinto’s Rossing Uranium mine in Namibiato Japanese utilities.172 Marubeni has been theleading company prompting Japan’s nuclearprogramme and allegedly arranging uraniumsupplies from South Africa during apartheid.It has links to the Fuji Bank (Fuyo Group), aformer joint venture in Papua New Guinea(with CRA), and smelting interests in the Phil-ippines at the PASAR copper smelter. In 1998,it was declared “Tropical Forest Destroyer #1”by Japanese Friends of the Earth (JATAN); inthat year Marubeni entered a joint venturewith an Indonesian logging company to har-vest forests in West Papua, at Bintuni Bay, toproduce woodchips.173

MAYFLOWER MININGsee Myanmar Mayflower Bank

MINDORO RESOURCES LTD(Edmonton, Canada)

In 1998, this company held a 50% owner-ship interest in block 2/11, a copper explora-tion JV with SLORC in southern Burma.174

Twenty percent of this concession had previ-ously been owned by Leeward Capital (q.v.),which held on to 5% net profits royalty inter-est. By October 1998, however, drilling resultsindicated that the concession was “too re-stricted to be of economic interest”,175 and inthe following June, Mindoro announced thatit had no plans for further work, while hold-ing on to “key areas”. The company also op-erates in the Philippines, where it has four goldprospects at Pan de Azucar.

***MINORCO SERVICES (Singapore)Minorco has historically been the overseas

vehicle for the huge South African miningcompany Anglo-American Corporation (AAC)as it sought to diversify overseas under apart-heid.176 In 1998, Minorco merged with AACand relocated to London.177 Along with AAC,Rio Tinto, Sudelektra and Glencore, it has beeninvolved in vast expansion of the Cerrejoncoal deposits on Wayuu territory in Colom-bia.178

Minorco operates in Burma through itswholly-owned subsidiary LMJV, which tookover copper-gold prospects in block 2/11 (pre-viously held by Atina Time Square) and in theprocess changed the emphasis from concen-trating on copper to gold, as the price of cop-per declined.179 As of early 1998, some 540 km2

had been aerially surveyed, identifying morethan 30 geological anomalies which couldprove viable for ground drilling to define de-posits. LMJV stated in 1999 that copper re-serves on Block 2/11 (Dkhta Chaung) were, atonly 150,000 tonnes with an average 1-2%grade cu, “far short” of its requirements.180


**MINPROC (Australia)One of Australia’s leading mine engineer-

ing companies, Minproc provides a “completerange of services” from plant design to finalproduct delivery.181 Currently expanding inChile and West Africa, Minproc completed afeasibility study in 1997 for phase two of theMonywa project on the Letpadaung ore body.Minproc estimated production capacity to be63,500 tonnes of copper cathode a year (morethan twice that from the initial phase one)with a capacity of up to 128,000 tonnes a year.

In 1990, Minproc came under heavy firefrom environmental groups in Australia whenit entered a joint partnership with Kerr-McGeeof the US to construct a potentially radioac-tive mineral sands processing plant in West-ern Australia. The partners were forced to aban-don the project.182 Controversy continues overits involvement in the Laverton Gold JV inSulawesi, Indonesia.183 Its other engineeringprojects include the Mount Kasi gold mine inFiji,184 the Macraes gold mine in Aoetearoa/New Zealand, the Bogosu gold mine inGhana,185 and the Dindiki mine of Climax. Inthe Philippines, it was one of the first compa-nies to be granted a Foreign Technical Assis-tance Agreement (FTAA) under the 1995 Min-ing Act.186

***MYANMAR FIRST DYNASTY MINES LTD(Singapore)

Another of Robert Friedland’s major ve-hicles, Myanmar First Dynasty Mines (MFDM)was originally a subsidiary of First Dynasty,then of Indochina Goldfields Ltd, the latternow renamed Ivanhoe Mines Ltd. MFDM ob-tained Blocks 2, 10, and 11 in the first roundof contract bidding. It claims to have locatedinteresting anomalies for gold in the WunthoMassif region, in particular on the NaungpatRidge,187 but drilling results the following yearwere disappointing, while the Naungpat andKoko Taung areas remained to be explored.

In order to cut costs, widespread core drill-ing was replaced by augur drilling and geo-

chemical analysis of the samples.188 Nonethe-less, on Block 1/2, Tonbon and Namma areain Kachin State, the company in 1998 “cat-egorically” claimed it had delineated a largetract with a “very high potential for multiplebulk mineable gold and gold-copper depos-its”,189 although it apparently took only threedrill holes to make the discovery. Despite thisoptimism (or perhaps because of it, in the wakeof Bre-X), the company could not muster suf-ficient exploration funds to continue drillingbeyond June that year, and it suspended op-erations until the end of 1999.190

MFDM sold its interests in the Sembajkungoil field in 1997 partly in order that First Dy-nasty itself could maintain its gold interestsin Armenia and repay a loan from holdingcompany, Ivanhoe Capital Finance.191

MYANMAR GOLDEN POINT FAMILY CO(Burma)

This national company has a production-sharing agreement with ME2 at the smallPhayaung Taung gold mine in Patheingyitownship, Mandalay Division.192

MYANMAR IVANHOE COPPER COMPANYLTD (MICCL)

This is the joint venture set up to exploitthe Monywa copper deposits (see IvanhoeMyanmar Co. Ltd), and which technicallyowns it. In the first quarter of 1999, revenueswere put at US $9.2 million and sales are madethrough Marubeni (q.v.) at prevailing LondonMetal Exchange (LME) rates. The first quarterproduct was shipped to Japan, Hong Kong,Thailand, Saudi Arabia, Malaysia, Korea andPakistan. The JV agreement provides for 10%of production to be made available for nationalconsumption, if called for. By the end of Au-gust 1999, the mine had produced approxi-mately 45.5 million pounds of copper at a re-ported minegate cost of US .27 cents a pound(including a 4% royalty paid to SLORC), mak-ing it one of the world’s lowest-cost produc-ers.193


MYANMAR MAYFLOWER BANK (Burma)The Mayflower group operates twenty

banks, a land development and constructioncompany and other enterprises. It also has a49% interest in Yangon Airlines, one of twoprivate air carriers in Burma.194 It has recentlybeen trying to “lure” foreign interests to par-ticipate in national mining projects , so farwith virtually no success.195

In December 1999 however, MayflowerMining did sign a production sharing agree-ment with ME1 to operate antimony minesin Mandalay division and Shan and KayahStates, with a smelter at Kalaw township, atthe confluence of the three states.196

***NEWMONT MINERAL EXPLORATION BV(USA)

See also SwedalaThis is a subsidiary of the large Newmont

Mining Company, one of North America’sthree biggest gold producers, with interests inthe US, Indonesia, the Philippines, and else-where.197 Although forced since to withdrawfrom Burma through external political pres-sures, in July 1996 it had signed an agreementwith ME2 to prospect and produce gold inUpper Burma, in two areas which include theKyaukpahto mine – the country’s largest state-owned project of its kind with alleged reservesof 6 million tonnes at a high 3g/te grade ofgold.198

NISSHO IWAI (Japan)This leading Japanese conglomerate was

brought in by Ivanhoe Myanmar and ME1 toco-finance the Monywa copper project. It alsohas a 10% share of the Bullmoose coal minein British Columbia, operated by Friedland’scorporate partner Teck, and owns 25% ofStratcor, the US vanadium producer.199

PACARC NL (Australia)Formerly Pacific Arc Exploration, the com-

pany has considerable experience exploring forgold in Malaysia, Fiji, Papua New Guinea and

Australia. It signed its first deal with the Bur-mese Ministry of Mines in 1995,200 and a yearlater, professed to have located gold at Taungyi(Block 1/8), Donwe (or Doe Nwe), in ShanState,201 and thirteen other gold areas in thenorthern part of Kwinthonese, near Mandalay,including Nyaung Kaya and Yebu (Block 1/13).202 However, in April 1998, it asked per-mission of the regime to cease work on itsBlock 1/8 in Popa, and Block 1/13 in theKwinthonese area for six months, apparentlybecause it had run out of money.203

PADAENG (Thailand)The leading Thai tin mining company,

Padaeng withdrew from exploration in Burmaon its own account in mid-1997 after forminga JV with Western Metals of Australia, whichthen acquired 45% of Padaeng.204 However, ayear later, in October 1998, Padaeng an-nounced that it had cleared “infrastructuralproblems” relating to zinc exploration inBurma, and would soon be concentrating onMawkhi (or Mawchi, a town oppositeThailand’s Tak province, where Padaeng op-erates a zinc mine). The regime had “guaran-teed” the safety of Padaeng’s exploration teamand, if a decision were made to mine, it wouldbe in JV with Burma’s Mayflower Bank whichholds the concession.205 No decision has as yetbeen taken.

**PALMER RESOURCES (Vancouver, Canada)This junior first came to notice in 1997

when it started exploring for copper in the AnChau basin of Vietnam, through its Vietnam-ese subsidiary Canexco.206 The following yearit acquired Block 3/13, 180 kilometres east-northeast of Rangoon, in Kyaikto district ofMon State. It is one of only four companiesapparently to have held on to any of theseconcessions during 1999.207 It claims to haveidentified five prospects in Block 3/13 ofMeyongyi-Meyonglaya area in Mon and Karen(Kayin) States, though it suspended operationsfor a period in early 1999.208


That year it merged with another Canadiancompany, Lyon Lake Mines, to take over PlacerDome’s Cerro Crucitas project, which has beenthe subject of much condemnation by envi-ronmentalists and indigenous organisationswithin Costa Rica.209

Palmer has also purchased 200,000 sharesin Ridell Resources, also listed in Vancouverwhich has acquired an oil project in the Minbubasin of central Burma, for which Palmer dida due diligence survey.210

PRIME RESOURCES GROUP INC(Vancouver, Canada)

This company’s subsidiary, Prime ResourcesManagement, was the only bidder for Block3/9, located at Mwetaung, Chin State, (nickel,chromite and associated mineral), but it didnot sign the contract.211 Prime Resources is asubsidiary of the huge US gold mining com-pany, Homestake, and owns the Eskay CreekMine, the world’s fifth biggest gold producer,and Snip Mines in British Colombia.212

PT AUSTINDO NUSANTARA ENERGI(Indonesia/Australia)

A member of the Austindo Group of Indo-nesia, and a wholly–owned subsidiary of PTAustindo Nusnatara Jaya of Indonesia, thiscompany holds interests in Kalimantan, andin turn is the biggest shareholder in Australia’sAustindo Resources Corp. In July 1998,Austindo Nusantara Energi signed a prospect-ing, exploration and feasibility study withDGSE to develop thermal coal deposits in theTenasserim (Tanintharyi) Division of southernBurma, covering two separate areas.213

The Australian parent company, AustindoMining Corporation, has a joint venture withthe major Australian mining companyMeekatharra Minerals in southern Sumatra, In-donesia.214

RESOURCES SERVICES GROUP (RSG)(Australia)

An Australian mining consultant, in 1996/97 RSG assessed the resources of the Bawdwinmine for MMC (q.v.).215

ROONG SIAM MINING (Thailand)In 1993, Roong Siam signed a production-

sharing agreement with the regime’s ME2 foroffshore tin exploration in the Gulf ofMartaban and the Tenassarim Coast. This wasthe fourth such agreement between Burma andThai companies, the first three of which wereabrogated.216

SAMPU RESERVE CO (Burma)In December 1998, Sampu Reserve signed a

production-sharing agreement with ME3 to ex-ploit coal reserves at the Lweje deposit inMomauk township, Kachin State, close to theborder with China. The aim is to sell coal tolocal industrial plants until sufficient outputjustifies sales to China.217

SEA-SUN-STAR CO LTD / JAMES CAPELCANADA

In 1997, this company formed a joint ven-ture with ME2 and Kachin Nationals to pros-pect for gold along the Ayeyawady inMankheim, Mynkyinaq Township.218 JamesCapel also was major investor in IndochinaGoldfields (q.v.).

SILVER STANDARD RESOURCES INC (Canada)

An associate company of the big Canadianminerals producer Teck, Silver Standard isbased in British Columbia, Canada, with re-cent exploration activities in Australia, Boliviaand Mexico’s Santa Cruz province,219 as wellas Burma. The company says it is interested inresources with a “minimum threshold of 20-50 million ounces” (of silver).220


SUM CHEUNG EXPLORATION LTD(Singapore)

It relinquished its entire exploration con-cession in the Mabein area in 1996 (1/15), al-though this is an available small-scale placermining area (particularly in the Kaukkho andLawa prospects).221 The regime that year alsorejected a request from the company for ex-ploration rights near the Phayaung Taung goldmine in the Patheingyi township, MandalayDivision.222

***SUMITOMO METAL MINING COMPANY(SMMC) (Japan) 223

In 1996, SMMC took an “equity position”in the Monywa copper venture.224 One of themajor Japanese mining, smelting, refining andmarketing groups, Sumitomo owns Japan’slargest gold mine and has been a copper pro-ducer for over a hundred years. Indeed, untilits recent trading “scandal” (see below), it wasthe world’s biggest single trader in the metal.Comprising 78 subsidiaries and 16 affiliates,SMMC in 1997 declared its intention to “at-tain a leading position over other mining com-panies in Japan in the field of overseas min-eral resources development”.225

Sumitomo now obtains all its copper sup-plies from overseas, following the collapse ofmuch of Japan’s domestic mining industry.226

In order to acquire a reliable and cheap sourceof raw materials, 40% of Sumitomo’s copperneeds are met by mines in which it has ac-quired a direct interest: these are Morenci inthe USA, La Candelaria in Chile (both JVs withPhelps Dodge the US copper miner), and theNorthparkes mine in Australia (JV with NorthLtd).

In 1995, the company joined Newmont onits huge Batu Hijau copper-gold porphyry pros-pect in Sumbawa, Indonesia. This copperproject has dismayed local people and envi-ronmental groups in the country.227

Its nickel needs are also met by similar jointventures. It has a 20% stake of PT Inco in In-

donesia, which supplies some 40% of its re-quirements from the Soroako mine.228 Themine has come under heavy fire from com-munity and environmental groups.229

Sumitomo also recently purchased a smallstake (but with substantial voting rights of31.8%) in the Canadian Teck Corporation.230

Its advances into China are noteworthy. InApril 1997, its JV smelter with China’s JinongCopper Company came on-stream. With a ca-pacity of 100,000 tonnes/year, it is one of thebiggest in the country with plans to supplyprocessed metal to customers in both Chinaand the Pacific Rim.

The company was also awarded a contractin 1990 to supply turbines for the widely con-demned Narmada River Dam project in In-dia.231 That same year, it had to pay about US$1.5 million to nine people suffering from ar-senic poisoning and the families of nine oth-ers who had died from poisoning as a result ofthe operations of one of its mines in Japan’sMyazaki province.232

In June 1996, Sumitomo revealed that, fora period of ten years, its chief copper traderYasuo Hamananka had been engaged inunauthorised (and therefore illegal) coppertrades. Hamananka received an eight year jailsentence in March 1998; copper markets werewidely disrupted. Between 1994 and 1996, thisman had apparently tried to buy nearly 1.2million tonnes of copper based on a minimumpreferential market price, which enabled himand an unnamed New York trader to creamoff vast profits. Although these trades were os-tensibly made to satisfy demand, in fact halfof the contracted copper was immediately re-sold to the US merchant’s own supplier andnever delivered to Sumitomo. Although theend result of the investigation was thatSumitomo had to pay the USA Futures Com-modity Trading Commission US $125 millionand an unprecedented US $8 million to theUK’s Financial Services Agency – the identityof the US merchant and other parties benefit-


ting from the scam have not been revealed.Nonetheless, a current related US lawsuitnames brokerage firms Global Mineral & Met-als Corporation, Merrill Lynch and Company,and Morgan Stanley as engaged in improperconduct.

The revelation of this massive deceptionshattered the copper market in 1996 – caus-ing the price to collapse from US $2,900 atonne to less than US $2,000 a tonne. Themarket is still recovering.

SWEDALA INDUSTRI (Malmo, Sweden)See also NewmontIn 1996, this engineering company pro-

vided and installed linings for the ball mill atME2’s Kyaukpahto gold mine.233

TASAKI CO (Japan)In JV with the Ministry of Mines, Tasaski

has a pearl exploration and production projectin Burma.234

**TECK CORP (Canada)One of Canada’s largest and most diversi-

fied mining mineral companies, and also themajor shareholder in Cominco (the base met-als exploration, mining and refining com-pany), Teck has had a long relationship withRobert Friedland’s companies (q.v.).

TERRACE GOLD NL (Australia)A subsidiary of Australian Kimberley Mines,

this company signed a contract with the DGSEin early 1997 to explore and, if feasible, de-velop gold potential in the Malaw area of ShanState. This is adjacent to Ivanhoe Myanmar’sblock 2/10, but half the normal block size andreportedly granted outside the formal secondround of bidding.235

TIGER INTERNATIONAL RESOURCES (USA)This California-based company originally

held a 25% share in block 2/1 in Kachin Stateand block 2/11 in the Irrawaddy (Ayeyarwady)Division in JV with Leeward Capital. However,in December 1997, the company informedLeeward that “due to increasing political andeconomic problems being encountered” inBurma, it was withdrawing from the joint ven-ture, and from the country.236 Leeward laterabandoned the concession.237


Chapter Four

IvanhoeCapitalCorp.’sRobertFriedland(Photo:CP PictureArchive,RichardLautens)

In 1994, Robert Friedland set his sights onAsia. If most other mining entrepreneurs haddone the same, few observers would havetaken much note, and even fewer alarm bellswould have rung. When the world’s biggestmining company Rio Tinto (formerly RTZ) an-nounced two years later that it was doing thesame,238 only a few eyebrows were raised. How-ever, Friedland has not been known for hav-ing a great depth of experience with the min-ing industry, although he owns controllingstakes in several mining ventures. He is notsimply a mine promoter (financier), thoughhe has provided hundreds of millions of dol-lars of other peoples’ money, boosting the for-tunes of his own speculative projects. Whilehe wheels and deals in millions of shares – heisn’t known for playing the derivatives or fu-tures markets.

In a word, this man is a phenomenon – al-though this is a term which disguises muchmore than it can possibly reveal. This 49-year-old Canadian of US parentage has escaped un-scathed from situations which would havedriven most others into the ground. He hasnot faced charges in American courts to ac-count for any part of the Summitville envi-ronmental disaster in Colorado. Until recently,he seemed well on the road to acquiring morebargaining power than any other person onthe planet in one of its most important andprofitable industries.239

The birth of an enigma

In 1981, Friedland launched his first min-erals venture, the ill-fated Galactic Resources.240

Galactic started basically as a shell company,registered on Vancouver’s “wild west” stockexchange, a modest opportunity waiting for ahighly-motivated opportunist. Over the nextfew years, Friedland took Galactic into vari-ous joint ventures (JVs), including the IvanhoeJV along the fabled Carlin gold belt in Nevada,and a stake in the Far South-East Gold Re-sources (FSGR) project in the indigenous Phil-ippine Cordillera, where it was partnered withthe domestic mining company Lepanto Con-solidated, known for its anti-union bias.241

But the company’s showpiece wasSummitville, a cyanide heap-leach gold projectin the State of Colorado. Built half-way up amountain during winter and opened in recordtime in 1985, the enterprise appeared aboutas safe as ice lollies made with water drawnfrom a Rangoon sewer. The liners on which

The Man with the Golden Arm

...the company’sshowpiece wasSummitville…the enterpriseappeared aboutas safe as icelollies made withwater drawnfrom a Rangoonsewer.


the ore was heaped began stretching and col-lapsing almost immediately. Cyanide solution,sprayed in thousands of gallons over theheaps, began leaking from the pads – whichthen overflowed. Worse, acidic wastes, lacedwith heavy metals from ore and rock, beganforming the deadly cocktail known as acidmine drainage.

Although temporarily closed in 1989 by or-der of the Colorado state government, the sitewas reopened the following year. Mining washalted in 1991, but further heap-leaching con-tinued until 1992, at which point the US En-vironmental Protection Agency (USEPA) belat-edly showed its teeth. Summitville, the oper-ating company, was declared bankrupt thatyear. Its parent, Galactic, followed suit in1993.242 It had already sold its stake in FSGRto RTZ/CRA, the world’s biggest mining com-pany.243

The USEPA has had to pay around US$50,000 a day at Summitville, just containingthe cocktail of heavy metals and cyanidewastes, while final clean-up costs will almostcertainly exceed US $100 million, mostly ofUS taxpayer’s money.244 Friedland quit all hisposts at Galactic in 1990.245 In 1996, trusteesfor the bankrupt Summitville companypleaded guilty to no less than 40 felony counts– for which they were fined the maximum US$20 million penalty. In November 1996, theOntario Court’s General Division (now theOntario Superior Court) lifted a freeze imposedon Friedland’s $500 million worth of sharesin Inco, as requested by the US government.Friedland also counter-sued the USEPA andJustice Department in a hubristic claim for“damages for conspiracy, abuse of process, li-bel, breach of disclosure duties, loss of busi-ness opportunities and damage to reputa-tion”.246 This ploy appeared to come to griefin early 2000 when the Ontario Court of Ap-peal ruled that the two US state agencies re-

tained their sovereign immunity from pros-ecution.247

Dubbed the “Exxon Valdez of the miningindustry”,248 Summitville was the earliest dis-play of Friedland’s tactics in dealing with prob-lematic mining practices.249 Although the minepolluted surrounding land and waterways fora period of six years, the state of Coloradoacted late to try to stop the pollution. Not onlyhad Friedland’s charismatic style of presenta-tion boosted Galactic’s share price from an ini-tial Cdn 50-cents to Cdn $18 a share withinfour years, but he had lured the Bank ofAmerica into providing debt financing, andsold shares in Galactic to Homestake – one ofthe biggest gold minining companies in NorthAmerica, with powerful friends in the Ameri-can Southwest.

Omai, Omai!

By 1990, Friedland was looking for goldenopportunities further south. His early venturesinto eastern Venezuela, through Vengold, sooncame up against knotty problems of land own-ership, and indifferent drilling results. He laterwithdrew most of his investment. By then,however, he had struck it rich in Guyana. Jun-ior Canadian company Golden Star Resources(GSR) had been eyeing the country’s biggestgold deposit at Omai on the Essequibo river.Friedland’s strategy with GSR resembled thatof Galactic. Using shares in a company calledSouth American Goldfields Inc., he bought hisreverse way into GSR at a bargain price. Soon,GSR sealed a deal with Quebec companyCambior, and the Guyana government, as wellas the World Bank and the Canadian ExportDevelopment Corporation.

According to GSR, Friedland sold all hisshares in the company in 1994. However, hisbrother Eric continued in an executive role.Friedland’s withdrawal from the company waswell-timed. For, in mid-1995, the tailings damat the Omai mine collapsed completely, shoot-


ing several million cubic metres of diluted cya-nide and heavy metals cascading into theEssequibo, Guyana’s main river and its fresh-water lifeline. It was one of the worst envi-ronmental disasters of its kind ever in SouthAmerica.250 Once again, Friedland escaped anylegal sanctions. Indeed, it is now unlikely thatCambior or partner GSR will ever have to payout adequate compensation to families andcommunities along the Essequibo river.

Diamond Fields comes up trumps

Ironically, just a year after the Omai debacle,one of Friedland’s other mining vehicles, Dia-mond Fields Resources (DFR), struck it rich inVoisey’s Bay, Labrador, Canada, with the dis-covery – not of diamonds – but of a huge basemetals (mainly nickel) deposit on the territoryof the Innu and Inuit. The Voisey’s Bay findhas been described as the biggest of its kindanywhere in the world. Whether or notFriedland was ever seriously tempted himselfto put together a consortium to exploit thedeposit, it was clear from early on that DFRrequired the backing of one or other ofCanada’s major companies. After flirting withthe nickel miner Falconbridge, Friedland even-tually arranged a takeover of DFR by Inco.

The deal cost the Canadian company US$4.3 billion, but Friedland personally gainedInco shares and other benefits, worth morethan US $5 million.251 With the stroke of a pen,Friedland had become the biggest single share-holder in the world’s largest nickel producer.252

Diamond Fields International is now concen-trating on its offshore concession nearLudertiz, Namibia, where it completed its ini-tial sampling programme in 1999.253

In the company of...

Friedland’s partner in the establishment ofDFR in 1993 was the soft-spoken Jean-Raymond Boulle, an ex-manager in Africa forthe world’s most lucrative minerals cartel

Anglo-De Beers (diamonds). In 1997 Boulledramatically entered the chaotic stamping-ground of Zaire (now the Democratic Repub-lic of Congo) where he reportedly lent sup-port to Laurent Kabila, pretender to the throneof the notoriously-corrupt President Mobutu.In exchange, Boulle received rights to vastmineral deposits.254 Although Boulle andFriedland parted ways that year, by then theCanadian had established ties in West Africa.255

Largely in order to restructure his interestsin DFR following the Inco takeover, Friedlandhad created a company called DiamondWorks.This was yet another corporate revamping, thistime of a semi-dormant Friedland outfit calledCarson Gold. Although it has diamondprojects in war-devastated Angola,256

DiamondWorks’ main interest has become twopotentially valuable diamond fields in SierraLeone. Originally acquired by Friedland in1994, this deposit was later overrun by anti-government forces. In early 1996, the notori-ous South African private army Executive Out-comes teamed up with another companycalled Branch Energy in an apparent move torecapture Koidu and hand it over toDiamondWorks.

There appears to be little doubt over thecorporate links between Friedland’sDiamondWorks and Branch Energy.257 BranchEnergy also reportedly made links with an-other mercenary group, the Sandline.258 Theabortive role of the Sandline in trying to seizefrom Bougainville nationalists the coppermine of Rio Tinto was one of the subjects in-vestigated in an inquiry held by the Papua NewGuinean government in 1997.259

However, memories appear short in min-ing; the industry seems afflicted by collectiveamnesia. The Voisey’s Bay success was enoughto wipe away any bad odour from Omai andSummitville still lingering over Friedland atthe time. Indeed, his ability to survive the

...the tailingsdam at theOmai minecollapsedcompletely,shootingseveral millioncubic metres ofdiluted cyanideand heavymetalscascading intothe Essequibo,Guyana’s mainriver and itsfreshwaterlifeline.


Summitville and Omai disasters may even beregarded in some quarters as evidence he canweather any scandal.

Asia, here I come!

During the eighties, Galactic had acquireda share in the Far South East gold project(FSGR) on Igorot land in the northern Philip-pines, then sold it to Rio Tinto in 1990 as Ga-lactic descended into the mire of Summitvilleand eventual bankruptcy.260 It was not until1994 that Friedland set his sights seriously onthe Asia-Pacific again. He targeted firstKazakhstan, Indonesia, and West Papua, thenVietnam, China, Mongolia, and Burma.261 Hisfinancial vehicles were First Dynasty,Indochina Goldfields (IGL), and Ivanhoe Capi-tal Corp (ICC).

Ivanhoe rides on

ICC is the privately-owned venture capitalcorporation that Friedland had used through-out the late eighties, both to fund his exploitsand to secure personal financial coups. Indeed,when he resigned from Galactic in November1990, “removing himself from any hand inmanagement of the precious metals com-pany”,262 Friedland declared he would now“devote all my time to Ivanhoe”. It is not com-mon knowledge that Ivanhoe entered anagreement with the discredited Galactic at thesame time, under which the latter had firstright to participate with either Ivanhoe orFriedland personally in any future joint ven-ture anywhere in the world.263

Friedland moved Ivanhoe from Vancouverto Singapore in 1996. Two years earlier, his en-try into Burma had been facilitated by theVancouver-based Burmese businessman,Reggie Tun Maung, who became the seniorvice-president of Ivanhoe Myanmar Holdings,a wholly-owned subsidiary of ICC. Maung’sson had married the daughter of the Burmesemilitary regime’s deputy prime minister, Vice

Admiral Maung Khin. Reggie Tun Maung wasalso the president of the Vancouver BuddhistSociety to which Friedland had once donatedaround US $75,000.264 It was IvanhoeMyanmar Holdings which in early 1994 wasto seal a compact with the Burmese regime’sMining Enterprise No. 1, in order to exploitthe Monywa copper deposit.265 The financingwould later be bequeathed to Friedland’sIndochina Goldfields (IGL).266 In mid-1999,Indochina Goldfields Ltd. changed its nameto Ivanhoe Mines Ltd. – reflecting the originsof the company (the Ivanhoe property for-merly owned by Galactic Resources),267 and thecentral role of Ivanhoe Capital Corp. inFriedland’s corporate empire.268

Ivanhoe now holds 100% of three mineralconcessions (Contracts of Work or COWs) ineast Kalimantan (Indonesia Borneo), coveringnearly three million hectares, of which the“most prospective” sites are situated atSeruyung Sekatak, Jelai-Mewet and LongLaai.269 Friedland’s access to these COWs wasallegedly assisted by his partnership withBambang, a brother of then-president of In-donesia, Suharto. In 1997, émigré Indonesianacademic George Aditjondro commented: “Itis not unlikely that Bambang is a ‘silent part-ner’ in Ivanhoe Myanmar Holdings as well”.270

Ivanhoe holds 18% of the Emperor Gold Minein Fiji, a prospect on Gasado Island in SouthKorea, and the Khao Wong “property” in Thai-land.271 It also has oil interests in China atDagang, 200 kilometres southeast of Beijing,272

and in the southern San Joaquin Valley, Cali-fornia.273

Savage River

Meanwhile, a subsidiary of ICC was takingover the Savage River mine in Tasmania, Aus-tralia, a year after it was officially closed in1995, bequeathing to both community andenvironment some serious acid mine drain-age problems. Technically, the mine is now


owned by Australian Bulk Minerals (ABM), asubsidiary of Goldamere Pty. Ltd. – itselfowned by ICC. Friedland promised not onlyto revive the mine, extending its life by thirtyyears and employing 260 people, but also tocarry out a feasibility study on situating a pigiron plant to replace the old pelletising plant.However, closer scrutiny of the small print inhis company’s agreement with the Tasmaniangovernment (the Goldamere Pty Ltd. Agree-ment Act 1996) reveals that Friedland engi-neered “indemnity without limitation” in re-gard to “any liability for past pollution or sitedegradation or any future pollution generated asa result of past activities” (author’s italics).274

The state government then promptlywaived regulatory standards on the groundsthat it was impossible to distinguish betweenpast and current pollution. ABM was simplyto uphold “Best Practice in EnvironmentalManagement” (BPEM).275

The Tasmanian Greens (Green Party),briefed on Friedland’s history by Australia’sMineral Policy Institute and others, tried toget the agreement annulled. Defending ABM,Gordon Toll (an ex-Rio Tinto mining execu-tive who appears to have been important inlending credibility to Friedland as he pen-etrated the Asia-Pacific region) claimed thecompany had never tried to hide from the stategovernment facts about Friedland’s past, or hisexperience with the Summitville mine. Hadthe Tasmanian Department of the Environ-ment relied solely on Toll’s briefing, it maynot have gotten the full story.276

Bull shopping Indochina

During the period 1996-97, Friedland, prof-iting from the DFR takeover by Inco, was busyturning his other holding company, IndochinaGoldfields (IGL), into another conduit for pri-vate speculation in the region. IGL’s prelimi-nary prospectus promised the company would“...identify and establish an early presence in

those countries...that combine the potentialfor significant ore deposits with limited ex-ploration and development by foreign min-ing companies, due to past economic or po-litical constraints”.277

By mid-1996, Friedland directly owned38.2% of IGL, after its first public flotation andregistration on the Toronto Stock Exchange.278

He had also attracted investment from two in-dustry heavyweights, the Canadian miningcompany Teck, and Japan’s huge Sumitomo,the world’s largest copper trader.279 IGL’s 1996public offering was underwritten by a raft ofleading Canadian banks and brokerage firms,including First Marathon Securities.

Friedland’s genius for drawing financiersinto his projects was aptly demonstratedwhen, in the two years before the offering, fiveemployees of First Marathon were invited toparticipate in a series of private placements,enabling them to secure IGL stock at heavilydiscounted prices. Allegedly, one broker, Rob-ert Hartkinson, invested over $1.25-million inthe deal at up to Cdn $5 a share.280 When IGLwent public, with shares issued at three timesthis value (Cdn $15 per share), Hartkinson andhis colleagues made millions. This wasn’t all.Friedland himself loaned Cdn $3 million toIGL in February 1994 for “general corporatepurposes”. Later that year, he was repaid with16.78 million shares in the company, valuedthen at only Cdn 25-cents a share. In 1996,the quoted value of IGL shot up to nearly Cdn$186 million – a paper profit for Friedland ofmore than $180-million.

The dealing continued. That year, IGL se-cured its 50% stake in the Monywa copperproject in Burma in joint venture with the Bur-mese military regime.281 Ostensibly, Friedlandpurchased the half-share in this mine, but healso profited from the deal. Ivanhoe Capital’sexpenditure of Cdn $4.36 million on the prop-


erty was paid for with 5 million IGL shares,whose worth later climbed more than tenfold.

Indochina Goldfields’ interests also includea 17% stake in Fiji’s Emperor Gold Mines.282

Emperor had been targeted by Friedland in aclassic manoeuver to “turn around” the ailingenterprise. He bought nearly 14% of thecompany’s stock from Emperor’s chair, GeorgeDrysdale, at Australian $1.85 apiece. Another10% of the equity ended up in the hands ofleading Malaysian entrepreneur, Tan Sri AzmiWan Hamzah, who joined the board, alongwith Friedland nominees Edward Flood andGordon Toll (the apologist for Summitville)who became, respectively, the president andchief operating officer of IGL.283

Third arm, First dynasty

There was yet another aspect to Friedland’sastonishing reach. In 1995, he had dined withIndonesian tycoon Johanes Kotjo, one ofIndonesia’s ten richest businessmen. Out ofthis meeting came Friedland’s decision tomove his business empire from Denver toSingapore (with an operating office in Jakarta)and to lodge himself for half the year in aluxury villa on Sydney, Australia’s water-front.284 He would use a company called FirstDynasty.

First Dynasty had been formed in 1994 fol-lowing another Friedland “reverse takeover”(like that of Golden Star Resources); this timeof Starmin Mining by his company IvanhoeGoldfields.285 Ivanhoe was set up by Friedlandin 1993 to “develop an early dominant posi-tion in gold mining in Indonesia and south-east Asia”.286 First Dynasty’s Denver-based ex-ecutives resigned in 1996, promptly to takeup similar positions in Ivanhoe Goldfields.Marcus Randolph, yet another recruit from theRio Tinto stable, where he had been head ofmetals/mining, became First Dynasty’s presi-dent, and Johanes Kotjo its chair.287

Although focused primarily on Indonesiaand West Papua, the initial product of thisfruitful arrangement was that First Dynasty be-came ensconced in the highly-promisingBakyrchik gold joint venture, at Vasilkovskoyein Kazakhstan. Teck, an investor in IGL, alsobecame a partner in Bakyrchik.288 A disagree-ment over financing arrangements betweenFriedland’s Central Asia Mining Ltd (CAML)and the Kazakhstan government appeared tohave finally been resolved in 1999, reducingCAML’s financial obligation and giving thecentral Asian government a 30% stake in theventure.289

In the interim, Kotjo had enabled Friedlandto gain a stake in the promising MontaguMimika exploration COW in West Papua, ofwhich the Indonesian tycoon owned the ma-jority stake. There seemed no regard for thefact that West Papua is a territory appropri-ated by Indonesia in 1967 under a fraudulent“act of free choice” that was really its antith-esis.290 Much of Montagu Mimika’s COW isadjacent to the vast Freeport/Rio Tinto secondCOW, which the two companies claim to bethe most prospective terrain on earth for cop-per and gold.

Friedland’s sights in Indonesia were thenset beyond the mountainous indigenous ter-ritory of West Papua. He forged a firm rela-tionship with one of Indonesia’s biggest min-ing companies, the nickel and gold miner PTAneka Tambang (ANTAM), which began to beprivatised in 1996. Under an agreementreached that year, First Dynasty was to gaincontrol of the active Gunung Pongkor gold/silver mine and all of that company’s relatedmineral concessions in West Java, while PTAneka Tambang received shares worth US$120-US $145 million in First Dynasty and theright to appoint two directors to its board.291


ANTAM seemed delighted with the arrange-ment: “We (have gained) the opportunity ofworking with First Dynasty and internation-ally recognised experts in evaluating innova-tive approaches to the privatisation of govern-ment-owned assets,” the company declared.292

Through the tie-in with ANTAM, Friedlandsealed a deal with yet another leading Indo-nesian, this time one of President Suharto’ssons, Bambang Trihatmodjo.293

However, ANTAM’s reputation has not im-proved in its three year association with theCanadian financial wizard. Five miners on anight shift died at Gunung Ponkgor in Octo-ber 1997 when a shaft collapsed. Villagers liv-ing on the island of Haruku in central Indo-nesia have filed numerous complaints aboutthe pollution of the Wai Ira River and the ad-verse effects on all their lives of ANTAM’s jointventure with Ingold (a subsidiary of Inco).294

First Dynasty has also benefited from in-vestment by the Sterlite Group of India, a cop-per and aluminium smelter and refiner,through the latter’s holding company TwinStar. Under an arrangement made in late 1998,Twin Star acquired US $7.5 million shares(about 43% of the equity) in Friedland’s com-pany, and became entitled to appoint threedirectors to First Dynasty’s board. In return,First Dynasty gained capital to expand itsmodest gold tailings treatment plant at Ararat,and open a gold mine at Zod, both in Arme-nia, a country facing economic collapse andcivil unrest after a failed government-admin-istered “pyramid” money-making scheme.295

A wide reach

The conditions surrounding such venturesin the mining field over the past decade haveincluded: the erosion of multilateral govern-ment investments in mining; severe post-1980market losses experienced by big private min-

ing companies in the west (in particular thewithdrawal of the world’s biggest oil compa-nies from almost all mining ventures); and,not least, the World Bank/IMF’s Structural Ad-justment programmes (SAPs). The latter haveenforced a dangerous weakening of state regu-lation of the mining industry in many vul-nerable debt-laden, yet mineral-prospectivecountries.

However, Friedland didn’t just take advan-tage of these changes, he appears to have ahad a hand in creating some of the new con-ditions. It is quite likely that the junior ven-ture capital phenomenon would be a differ-ent, certainly lesser beast, without his stockpromotions activities during the late 80’s.296

His negotiations with Inco over Voisey’s Baycan be regarded as part of a strategy similar tothat used by the legendary Texas oilman, T.Boone Pickens, though far more opaque;namely, to purge the lumbering, old-style min-ing companies of their penchant for lengthyboard meetings and interminable rounds withconventional institutional investors.297 He hasproliferated and diversified his corporate op-erations so as to take advantage of the oppor-tunities provided by diminishing state over-sight, more flexible operations in the field,while he has cultivated connections with busi-ness and political leaders of dubious reputa-tion among the “Asian Tigers”.

Friedland stands out for his readiness, in-deed eagerness, to play a critical role, directlyor indirectly, in territories where battles forcontrol over resources, abetted by foreign in-tervention, are at their worst: Indonesia, WestPapua, Bougainville, Sierra Leone, Burma. Inthe case of Bakyrchik, he was willing to standin keen competition with some well-estab-lished mining outfits. He has also spread hisnets further afield.298


Friedland has acquired some eminentlyworkable deposits and selected metals (particu-larly gold) which historically have turned aquick and hefty profit. He has chosen finan-cial partners with political clout and readycapital, and, crucially, registered his compa-nies in tax havens (Isle of Man, the BritishVirgin Islands) or on stock exchanges in states(Canada and Singapore) where stringent regu-latory oversight often takes second-place toso-called “business as usual, and more of it”.He has apparently been able to count on com-placency not only from private backers, butalso several governments. This is well-illus-trated through his exploits in Burma and theprotection afforded his operations there by theCanadian government.

Burma

When the Burmese military regime, theSLORC, began offering large stakes in thecountry’s mineral resources to outside inter-ests in 1995, Canadian venturers were first offthe block. Two-thirds of the initial sixteenmineral concessions were taken by Canadianjuniors, of which no less than eight were con-trolled by Friedland’s Ivanhoe Myanmar Hold-ings. By late 1998, six such juniors – Pacarc,East Asia Gold Corporation, Palmer Resources,Leeward Capital Corp., Mindoro Resources andInternational Panorama Resources – were stillactively pursuing their “interests” in the coun-try.299 In mid-1999, Friedland renamedIndochina Goldfields to Ivanhoe Mines. It isthe Monywa project that is now at the heartof Friedland’s empire. Output from theMonywa copper mine was running slightlyahead of schedule by early 1999, allegedly withsome of the lowest operating costs of any suchmine, anywhere.300 At mid-year, an optimisticFriedland announced that Monywa wouldsoon expand to 35,000 tonnes a year.301

By this point, local people were reportingthe effects, such as skin irritation, of possiblecontamination from mining discharges intoMonywa area waters.302 Before the mine offi-cially came on-stream and was still the respon-sibility of the Ministry of Mines, one expatri-ate visitor declared the site “a safety hazard”,describing how local villagers were not pre-vented from “running all over...even duringblasting”. Said this witness,

“The [drillers] were too lazy to drill to the

required depth and so were making up for

it by packing the holes full of far too much

power-gel. Every time they blew a shot,

there were huge blowouts and rock frag-

ments sprayed everywhere like shrapnel.”

Some of these fragments hit the truck inwhich the witness was traveling. Local peoplehad been scooping copper-sulphate contami-nated water from the river adjacent to themine-site in order to evaporate and sell thecopper sulphate to the government, and thewaters were running “bright blue”.303

This mine appears to lend more credibilityto Burma’s infamous current regime, which isa 50% partner in Monywa, than any othermineral project in the country. Ivanhoe paysa 2-4% royalty directly to the military and isdestined to be one of the country’s biggestsingle foreign exchange earners. The SLORChas already benefited from selling Friedlandfurther extensive mineral rights in Burma.304

Friedland has boasted that his operations couldgenerate at least an extra 100,000 tonnes ofcopper a year – to add to what is currentlybeing sold to the mine partners Marubeni andSumitomo in Japan, and to customers in HongKong, Thailand, Saudi Arabia, Malaysia, Ko-rea and Pakistan.305


In September 1998, Burmese pro-democracycampaigners in Canada challenged Friedland,by phone, about his promotion of theMonywa mine. Claiming that he had enteredinto negotiations over the project as long agoas 1990, Friedland stated that he had resistedrequests for bribes (signature bonus), and waschanneling the mine profits into various goodworks within the country, to wit: “I put outmore for medical care [in Burma] than the gov-ernment.”

According to Friedland, Burma’s generalswere not corrupt and were pursuing enlight-ened forestry policies; while the way to “gaintheir approval” was by recognising that “theylove their country.” Friedland’s only conces-sion was to remark that “if they [the military]start killing students en masse, we would haveto re-evaluate our involvement in Myanmar[Burma].”306

Canadian oversight

The Monywa mine appears to be a likelycandidate for the category of Burmese invest-ments projects currently condemned by theInternational Labour Organization. Were itoperated by a US company, it would likely besubject to human rights legal action inAmerica.307 However, the Canadian Govern-ment did nothing to prevent IGL’s initial en-try into Burma. Indeed, in 1997 Friedlandboasted that “in 1996, representatives of thecompany met with officials of the Canadiangovernment in Ottawa [and] at no time didthe government advise us against investing inMyanmar [Burma] or attempt to dissuade usfrom doing business in the country”.308 Equallyimportant, Canadian authorities allowedFriedland to relocate to Singapore without anyinvestigation of the deals which permitted IGLand its investment partners to extend theirreach throughout the Asia-Pacific region.

Nearly a decade after the Summitville de-bacle, the world’s most prominent environ-mental protection agency, the USEPA, had fi-nally commenced legal proceedings againstFriedland. The Supreme Court of British Co-lumbia temporarily froze US $152 millionworth of Friedland’s newly-acquired shares inInco, in order to pay towards the Summitvillemine’s clean-up.309 An outraged Friedlandclaimed he had already offered a “substantial”financial contribution to mitigate the disas-ter, while he needed the Inco shares to finance“business opportunities” and support the linesof credit he had with the Bank of Montreal.310

Friedland attempted a counter-suit for dam-ages against the US government, which, asalready pointed out, was dismissed in early2000.

The prices reached for copper, gold and dia-monds have become highly volatile in the pasttwo years under the impact of commodityscandals, price collapses, and the shaking ofentire economies in precisely the region onwhich Friedland has come most to dependboth for resource extraction and marketing.Moreover, the stock market shocks of mid-1998, by revealing most shares to be woefullyoverpriced, could already have dented pros-pects for some of Friedland’s putative ventures.

Finally, as global consciousness grows aboutboth indigenous peoples’ struggles for self-determination and the negative consequencesof mining in bio-diverse regions, this miningimpresario will likely face mounting resistanceon several fronts.

In 1997, the World Wide Fund for Nature(WWF) compiled a dossier on Friedland’s ex-ploits, based on material supplied byNostromo Research, and presented it to theIndonesian authorities in support of an appli-


cation for the Lorentz reserve in West Papuato be protected from all mining.

A few months after Indonesian leaderSuharto fell from power in 1998, the Ministryof the Environment in Jakarta promised thatLorentz would indeed be designated as a Na-tional Park from which mining, including ac-tivities by Friedland’s company MontaguMimika, would be banned.

When democratic rule is established inBurma... well, the reader is invited to fill inthe conclusion for themselves.


Appendix I

This appendix takes a broad view of theproblems associated with copper mining andthe methods employed at the Monywa minein particular solvent exchange–electro-win-ning (SE-EW). The author believes that the Bur-mese authorities have ignored the potentialdangers.

Copper options

The mining of copper has historically pro-duced the largest volume of uncontrolled anddangerous wastes in the mining industry. Itdoes so still today. For example, the Clark ForkComplex is the biggest Environmental Protec-tion Agency Superfund cleanup site in theUSA, and one of the largest dumping groundsfor metallic wastes in the world. By the early‘90s, this contained an estimated 90,000tonnes of copper in its tailings slurry ponds.311

The Bougainville mine, until the cessationof its activities in 1989 due to armed rebel-lion, was estimated to have released over 600million tonnes of copper-rich tailings directlyinto the Kawerong and Jaba rivers and theEmpress Augusta Bay, 30 kilometres down-stream. A third of the sediment was depositedin the flood plains and the delta.312

A 1998 study of Peru’s biggest copper op-eration, Southern Peru Copper (SPC), revealedthat tailings containing iron, aluminium, cop-per, manganese, zinc, lead, arsenic, chromeand cadmium had been deposited in theLocumba river, and from thence into theMoquegua river basin from 1960 until 1995,when they reached a discharge level of 107,000tonnes a day. The river contained so much

metal that “more than one billion cars couldbe constructed from the iron...discharged.”The value of the copper, if sold at 1998 mar-ket prices, could reach US $45 billion!313 Farmland had been virtually annihilated by cop-per deposition, and a toxic blanket had formedover the narrow continental shelf, with thebeach line being extended into the sea at therate of 40 to 60 metres a year.314 One small sealimpet was found with copper concentrationsno less than 46 times the UN Food and Agri-culture Organisation (FAO) guidelines. Al-though SPC constructed a tailings dam in1995, effluents continued to flow from thisfacility into the Locumba.315

Smelting

The smelting of copper from concentratehas also resulted in vast pollution worldwide,with copper constituting a large proportionof the estimated 3.7 billion tonnes of airborneparticulates emitted globally each year. Particu-late emissions from the Sudbury complex,operated by Inco in Ontario, are alone esti-mated to have contaminated more than onehundred square kilometres of surroundingland.316 At the Ilo smelter operations in Peru,the concentrate is judged to contain 29% iron,an equal percentage of copper and 33% of sul-phur by weight. Although the company con-tinues to reduce the amount of sulphur diox-ide (SO2) emissions, its daily output from theplant during 1998 was still estimated at aroundfour times the total for the Netherlands. Lev-els of 14mg/m3 of SO2 have been measured inthe urban areas of Ilo district itself at 28 timesthe World Health Organisation (WHO) guide-lines for short-term exposure.317

The Problems with Copper


Toxicity in water

Acidic mine drainage from tailings and rock,or overburden, is generally acknowledged tobe the greatest single pollution hazard frommining. It poses enormous and continuingproblems, for without effective neutralisationof the drainage and heavy metal componentsin water sources, toxic uptake will continueindefinitely. Unlike organic contaminantswhich change form, metal pollutants usuallycannot be dissociated into other elementalcomponents; toxicity potential is governed bythe bio-availability of the metal. Copper, forexample, when widely available in solubleform, makes complexes with other metalspresent in water.

Neutralisation may consist of the additionof lime, at best a temporary measure with itsown problems;318 the planting of marshlandspecies which “eat up” heavy metals;319 andthe addition of organic matter to specially-con-structed containment facilities in order tomaintain pH near neutral and establish anaero-bic conditions. Ultimately, as was recognisedby the US Federal government twenty yearsago in the context of uranium mining, theonly fail-safe way of containing tailings is todry them out and store them in a permanentstable site, which may mean transpor to otherground. This is a method of disposal onlygradually being introduced by the industry,and only in North America at present. Theprospect of heavy metal contamination of wa-ters many miles from the source or dischargepoint is very real and has already been dem-onstrated by studies carried out at Clark Fork,in the Philippines, and elsewhere. For example,a reservoir more than 200 kilometres from theButte and Anaconda mines at Clark Fork wasdiscovered to retain 13,000 tonnes of copper,along with almost twice as much zinc, andsignificant amounts of arsenic, cadmium andlead.320

Such well-documented examples of toxic-ity from copper mining are general indicationsof what might result from inadequate or faultyconstruction, cost-cutting technical measures,or failure to rehabilitate mined-out sites. How-ever, the degree of damage is relative to a num-ber of different factors including climate andrainfall, seismicity, elevation of the mine andtailings outflow, river flows, background lev-els of heavy metals, and composition (tem-perature and acidity) of the water.

End of copper?

The proposition that widespread use of cop-per should be phased out on toxicologicalgrounds has been current for some years. In1993, the European Union (EU) extended itsclassification of eco-toxicological substances,raising the possibility that copper would beincluded in the Risk Assessment and Risk Re-duction phases of the EU Existing SubstancesProgramme, while the Organisation of Euro-pean Cooperation and Development (OECD),and the United Nations’ harmonisationprogrammes might similarly include copperin the future.321 Equally important, several re-cent cases receiving global publicity have fo-cused on the hazards of copper wastes disposal– notably from the Rio Tinto-ownedBougainville mine (officially closed in 1989),the Grasberg gold-copper mine in Papua,322

and the Ok Tedi mine run by BHP of Australiain the highlands of Papua New Guinea. Thelatter was subject to a landowners’ compensa-tion suit commenced in 1994 and settled outof court in 1996. As part of the settlement,the company promised to carry out technicalstudies on the best possible method of tail-ings deposition. On completion of those cor-porate studies in mid-1999, BHP declared thatnone of the four main options considered werecompatible with its “environmental values”.323

It recommended that the government ofPapua New Guinea close the Ok Tedi mine.But even if this were to occur, 300 km2 along


the river Ok Tedi is already dead or dying,while one authority has suggested that the“cascading effect” of tailings swept down-stream could eventually result in a “die back”of more than 3,000 km2.324

Partly in response to the outcry at disposalmethods used by these mines, the industry hasmoved towards so-called submarine tailingsdisposal (STD) of copper, gold and other tail-ings, sometimes untreated. STD is not em-ployed and arguably not permitted in severalnorthern countries, notably the US.325 Essen-tially the practice is only applicable wheremines are close to coasts, or sufficiently el-evated to permit gravity flow discharge. Intheory, wastes could be pumped into the seafrom inland mines, using large quantities ofseawater to carry the slurry, but the furtherthe mine from the disposal point, then themore prohibitive the expense would become.BHP, in its studies for the Ok Tedi mine, esti-mated that the costs of a pipeline from themine to a lowland dam would be several hun-dred million dollars.326

What copper does to the environment?

An estimated 325,000 tonnes of copper ayear goes into the marine environment fromnatural erosion. But more than twenty timesthis amount gets transferred by human activi-ties, including mines and as secondary scrap.It is generally accepted that copper is the mosttoxic metal for marine life after mercury andsilver, even though its ability to move throughthe food chain, and into humans, is more lim-ited than either of these.327 According to oneworld authority on the impacts of copper inmine wastes, the metal’s pollutive and toxico-logical effects can persist almost indefinitely.In the case of Ok Tedi, “it may take centuriesuntil copper in sedimented deposits are sealedby an unpolluted sediment cover.”328 The biotamost sensitive to dissolved copper are juve-nile fish and aquatic invertebrates.329 Crusta-

ceans and, in particular, planktons of the ge-nus Daphnia are the most susceptible to cop-per poisoning in fresh water. It is generally ac-knowledged that, though salmonid and non-salmonid species evince different reactions toother heavy metals in such an environment,with copper the distinction does not exist –both are equally susceptible.330 While salinitygenerally reduces vulnerability, larval fishprove much more susceptible than adult fish,and on a similar scale to crustaceans. Toxicityincreases with higher water temperatures.331

Sulphide mining

Although the geology of mineral depositscan vary enormously, porphyry deposits, char-acteristic of the Pacific Rim countries includ-ing those at Monywa, typically contain anoxidised upper zone and a sulphide lowerzone. They are also often associated with highgold values.332 Depending on the degree ofweathering of the oxide zone, the sulphidedeposit may be accessed and mined earlierrather than later in any project development.

Specific problems are associated with sul-phide mining. Essentially, exposure to air andwater of the deposit or tailings can lead to mas-sive acid rock or mine drainage. For this rea-son, activists in the US have campaigned toban sulphide mining, unless and until it canbe shown that these problems are absolutelyavoidable. In early 1998, groups in Wisconsinfinally got the State Senate to pass a MiningMoratorium Bill. This stipulates that no newsulphide ore-based mine should be openeduntil the company demonstrates that a simi-lar mine has operated for at least ten years,and been closed for a similar period, without“damaging the environment”.333 One impor-tant aspect of this legislation, believed so farto be unique, is that it was passed by a statelegislature which has long been supportive ofthe mining industry; indeed, it permitted theFlambeau copper mine, managed by Rio Tinto,


to come on stream six years ago in the face ofunprecedented opposition from a coalition ofenvironmentalists, farmers, sports-people andAnishinabe native bands.334 The US Environ-mental Protection Agency (EPA) in August1998 issued a document confirming the dan-gers of sulphide mining and concluding thatthere were no current technical fixes whichadequately guarded against them.

Role of SE-EW(hydrometallurgical processing)

Monywa is claimed to be Asia’s largest SE-EW project, with estimated reserves of two bil-lion tonnes of ore and a project life of thirtyyears. With initial financing secured and thegrade of its cathode rated at LME-standard (i.e.acceptable in trades on the London Metal Ex-change), it seems to be, to quote another SE-EW producer, “an incredibly lovely process”.335

Estimates by Mining Journal Research Ser-vices in 1997 were that, by the year 2000, 43%of world copper production would be recov-ered by this method and costs per pound couldgo as low as 50c/lb.336 This would put SE-EWin the lowest quartile of copper costs, thoughstill higher than the magic 40c/lb aimed at bymany conventional producers, and which hasbeen claimed as the unit cost at the El Abramine managed by Cyprus Amax, the world’slargest single employer of the process, withcurrent production ten times that originallyenvisaged at Monywa during phase 1.337 Lastyear, Ivanhoe Myanma claimed that itsminegate costs at Monywa were as low asUS27c/lb,338 though until the company pro-duces fully and independently audited ac-counts, this figure should be treated with somesuspicion. Crucial to the long-term Monywascenario is Japanese demand for copper, andto a lesser extent that of South Korea. Japan’s

Heap leach pad at Ivanhoe’s Monywa mine(Photo: Mining Environmental Management)


refining capacity was, at the beginning of1998, scheduled to increase to 1.34 milliontonnes per year by 1999, but the Asian eco-nomic crisis swiftly threw a spanner into theworks, as a bear market took hold, and copperdemand took a downward swing.

Conventional methods of copper produc-tion are loosely described as pyro-metallurgi-cal. After mining, the ore is crushed and rolledinto a fine pulp, which is then concentratedby flotation using chemical reagents. An esti-mated 80% of all newly-mined copper isshipped in concentrate form to be smelted andrefined, often offshore. Indeed, the growingtrend is for smelters to be constructed and theiroutput marketed separately from mines.339

Among this new generation of custom smelt-ers is one operated since 1995 by Sterlite In-dustries in India. In late 1998, Sterlite arrangeda major equity investment in Friedland’s com-pany, First Dynasty.340 A year ago the smelterwas closed for a period, by order of an Indiancourt, following petitions by environmentalgroups and local politicians.341

The smelting and refining process (withsome variations) has been criticised over manyyears, first because of the impurities – prima-rily toxic metals – in the waste, second becauseof the pollutive potential of the chemical re-agents, and thirdly, for the vast amounts ofSO2 produced from sulphide ores and not dealtwithEnvironmental Protection Agency. For ex-ample, the copper and nickel ores customar-ily processed by Inco in Canada contain 4.5tonnes of sulphur for every 1 tonne of copperand nickel available, which are capable ofthemselves producing an estimated 9 tonnesof SO2.

342 Despite considerable improvementsover the past decade, Inco’s nickel and coppersmelters are still the biggest single source ofSO2 emissions in North America.

In contrast, the hydrometallurgical route,such as the solvent extraction–electro-winning(SE-EW) method employed at Monywa, con-sists of leaching either by bacterial methodsor sulphuric acid, followed by concentrationof solvent through ion exchange and electroly-sis to deliver a high-grade copper cathode.Since its origins in the 1960s, advocates haveoften claimed that hydrometallurgy is acleaner, more environmentally sound way ofproducing copper.343 It is also considerablycheaper, avoiding not only the expense ofbuilding costly plant and transporting concen-trate to smelters, but also it is capable of con-forming to more stringent controls on gaseousemissions, adapting to different scales of orefeed, and often ending up with sulphur resi-dues of an economic value. In contrast, it hasbeen estimated that the cost to copper smelt-ers of conforming to the US Clean Air Act isno less than 26% of total operating expenses,a figure based on data from seven smelters in1987.344

The SE-EW method cannot be applied toall ores. It is primarily used for low-gradeoxidised ores, although it can and is being usedfor sulphide ores as well, primarily those con-taining chalcocite and covellite. Those oreswhich are higher in sulphides can be enhancedby the addition of the micro-organism,thiobacillus ferroxidans, at the leaching stage.This consumes carbon dioxide, and oxidisesferrous iron and sulphides, thus convertingcopper sulphide to copper sulphate. Somemines, such as Cerro Colorado in Chile, useboth solvent and bacteria at the heap-leach-ing stage, in the treatment of both oxide andsulphide ores.345

Although slow, the SE-EW process not onlyenables companies to exploit deposits whichmay have been considered uneconomic someyears ago, but to retrieve copper commercially


from “dumps”, which might otherwise beabandoned and could themselves be a sourceof continuing contamination. The Canadianmining weekly The Northern Miner a few yearsago candidly attributed “SE-EW’s impressivegains [as having] everything to do withaffordability”. Indeed, the journal estimatedthat savings could be as high as 40% over py-rometallurgical methods.

There are several stages in SE-EW: the acidleaching of the ores, either in existing dumpsor newly constructed heaps; solvent extraction(sometimes in more than one stage) of theresulting copper sulphate leach solution withan organic immiscible solution; and electro-winning after the addition of acid to precipi-tate the copper, ending in the production ofcopper cathodes.

Although the ore can also be leached in situ(i.e. usually underground), this is potentiallya highly hazardous operation, except wherethorough research shows that undergroundaquifers, springs and other water sources couldnot possibly be affected. In situ leaching hasin general been frowned upon by environmen-tal authorities, with several mine proposals forthe US and Australia having been refused per-mits as a result.36

Non-polluting? Nonsense!

However, claims that SE-EW isnon-polluting are questionable. In fact, themethod shifts pollution upstream from thedownstream smelter; usually from more popu-lated to less populated areas. According toGavin Bridge of the Mining and EnvironmentResearch Network (England), this is a key fea-ture of attempts by the copper industry tomaintain or increase profits

In the SE-EW method, ore must be crushedand prepared in heaps on purportedly imper-meable pads. It is arguable whether there issuch a thing as “impermeable pads”. Tropicalconditions, seismic shifts, flash flooding, andoverloading contribute to the rupturing of lin-ers, sometimes disastrously, as at Summitville(see Chapter 4).

After the electro-winning stage, vastamounts of liquids and sludge containingundissolved acids and heavy metals need tobe disposed. When dumped into waterways,this results in siltation, acid drainage, heavymetal toxicity and contamination of under-ground aquifers. Bridge studied the SE-EWmodel, as prepared by the US EPA, at a site inNew Mexico and found pH levels in ground-water in the vicinity of the leach dumpsdropped from 7 (alkalinity) to around 3-4 (ab-normally high acidity), while sulphate andtotal dissolved solids were elevated. In someplaces, groundwater quality was “virtuallyundiluted leach solution”.

It is possible to reduce or contain contami-nants emanating from the leach pads, but thispresupposes the installation of a self-containedcarefully managed, leak-proof system, wellaway from all groundwater and flowing wa-ter, with an extensive network of pump-backwells, where groundwater is sent to the SE-EWplant for metal to be recovered. Vat leachingcan also reduce some problems. Nonetheless,there will remain the huge challenge of per-manently disposing of the acidic solid residues.


Appendix II

Located in central Shan State lies the townof Monghsu.347 The tragic story of Monghsucaptures a picture of mining development un-der military rule in Burma. Once a sleepy, re-mote town set among farming villages whichhad little outside traffic, Monghsu was drasti-cally transformed with the discovery of rubiesin the surrounding hills. Reckless mining andcorresponding build up of militarism createdtremendous upheaval, which resulted in thedisintegration of social life and the villageeconomy.

Monghsu was named after a fable of an oldwife and her husband which, as legend has it,became the twin hills of Loi Song Tao, or“Mount of the old couple”. In the story, a rest-less man left his home to explore the end ofthe earth. In his journey, he encountered aspinster who was as restless as he and also setoff from her home to find what lied beyondthe horizon. Understanding each other andsharing the same feelings, they became mar-ried and settled at that place of meeting atMonghsu, which in Shan translates as “meet-ing with contentment”.

Native villagers of the area, mostly ethnicThai, sustained themselves through farmingand managed to export crops such as tea, soy-beans, peanuts and fruit to towns and citiesin the country. They were unaware that thered sands underneath their farm paddies andin the surrounding hills contained preciousgems.

News got out in the early 1990s about LoiSeng, the “gem hills” twenty-nine kilometressoutheast of Monghsu. With this arrived scores

of young internal migrant workers from allquarters of the country, reminiscent of thegold rushes of the past. Still, direct access tothe hills proved difficult. Before the boom,convoys only reached the town every monthor two, and no direct road reached the Loi Sengfrom Monghsu, requiring that itinerant min-ers rely on human labour or beast of burdento carry mining gear and supplies up to thehills.

Most itinerant miners were inexperiencedand unprepared for mining, and therefore didit poorly.348 However, some were adept andmade quick fortunes, and this was enough tokeep migrants arriving.

Native villagers remained for the most partuninvolved with the mining activity. Somepeddled basic goods such as rice, cooking oiland vegetables, and others hired themselvesto clear jungles for fuel and construction ma-terials and access to ruby deposits. Breaks fromharvesting crops brought out the occasionalfarmer trying his or her hand at digging forgems.

By 1992, Monghsu became overcrowdedwith merchants, gem traders, and other activi-ties – prostitution, gambling and drug dealing– connected with the lifestyle of young min-ers. Natives could scarcely afford the risingcosts of living. Schools, once full of students,became half-empty, and the students, seeingthe wealth of those in town who now hadmoney, showed less interest in learning.

Ethnic militias who had signed cease-firearrangements with the Burmese military junta

Stripping Rubyland: The social conditions ofmineral development in Monghsu, Shan State


began extorting money from people enteringthe district, charging peddlers extra for theircargo. Native villagers with little money werenot spared from extortion either.

Towards the end of 1992, the junta tookcontrol over the gem trade in the area. Landsaround Loi Seng that were being excavated byitinerant miners were divided into large plotsand handed out to those with capital, includ-ing companies, cooperatives, and other fin-anciers. Indigenous villagers were not permit-ted compensation for confiscated ancestralhomelands. The best plots, or “sop sur” mean-ing “tiger’s mouth”, were reserved for theheads of the junta, and developed by soldiersfrom the Eastern Command. Jobs were givento cheap migrant workers brought in fromsouthern Burma. Mining camps, along withthe belongings of itinerant miners, wereburned. The few that returned were chargedwith trespassing and were either shot orflogged then jailed. Before being taken toprison, many were tied up until their limbsstrangulated.

The situation worsened a year later. Forestswere being depleted at an alarming rate aslarger plots were cleared for excavation. Minetailings created during the washing process ofgem extraction were dumped directly into theNam Ngaa river that past through the district,blackening the water.

Social problems associated with illicit druguse (heroin, amphetamines, and opium), andprostitution, and poverty became aggravated.A growing number of miners developed drugadditions and, with needle sharing and pros-titution, came an outbreak of HIV/AIDS.

Helpless in preventing the rush of minerswho invaded their fields with the discoveryof rubies, farmers joined the growing popula-tion of jobless and landless, who were turn-

ing more and more to begging and thieveryto survive.349 The junta soon took control ofthe farm paddies, and then sectioned theminto plots and sold them off for excavation.Farmers who, once could amply provide fortheir families, were not compensated eitherand ended up destitute.

The military began to take up local peopleas compulsory, unpaid workers. Soldiersrounded up villagers and used them as mili-tary porters, to carry their equipment and sup-plies into frontline battles with insurgent mi-litias. On the frontlines, porters were used ashuman shields and minesweepers. Sentry dutybecame common for elderly and children inparticular, who had to watch over roadsidesand alert the soldiers to disturbances or insur-gency. The roadsides and highways from LaiKha to Monghsu, Nam Sarung to Kung Hingand elsewhere in Shan State were soon linedwith sentries, who had to beg for food to carryon. At first, travelers were sympathetic andgave them food, though later they ignored thesentries.

The hasty and ruthless development of rubymining by the junta in Monghsu led to theprogressive breakdown of village economiesand communities in the area. In the rush toretrieve the precious stones, the regimeshowed complete disregard for the impact onthe environment, and rights of the existingcommunities over their lands and way of life.Lands and homes were confiscated, posses-sions removed, people were displaced and usedas forced labour. Even the camps of small-scaleminers were destroyed. While the benefits ofmining are tightly controlled, the long termsocial consequences of heroin addiction, land-lessness, HIV/AIDS, prostitution and poverty,and the severe environmental degradationmake the chance of rebuilding the previouscommunity structure and village economydifficult, if not impossible to envisage.


Appendix III

Under the military regime, the link betweenthe mining industry, the illicit heroin indus-try and the spread of HIV/AIDS has become agrowing problem in Burma. At the heart ofthe matter are the policies of the military re-gime, and their involvement in the heroinindustry.

In signing cease-fire agreements with druglords and their private armies in 1989 (Wa andKokang, for instance, both in the northernstates where gem mining is found), the regimehas become involved in protecting, profitingand encouraging the production and traffick-ing of heroin. Heroin production increaseddramatically in the decade after the cease-fireagreements were signed. The regime currentlyshelters heroin and drug producers, principallyfor the capital they bring to the nation’s largelyundeveloped economy. Moreover, the regimehas created legislation which helps launder theproceeds of illegal drug sales.350

One of the main areas of investment oflaundered drug revenue appears to be in min-ing ventures. Gem, gold and silver mines atMongyawn and Monghsu in Shan State, forexample, have been opened by the United WaArmy, an insurgent militia which has enteredinto a cease-fire arrangement with the re-gime.351

The military’s lack of enforcement againstheroin trafficking, and intravenous drug usewithin the country, has contributed to thespread of AIDS.352 Infection rates among thehalf million IV drug users are among the high-est in the world, according to the World HealthOrganization (WHO).353 Epidemiologist Dr.Chris Beyrer explains that with the ubiquity

of heroin and “tea shop” shooting galleries,the country’s short supply of syringes, andparaphernalia laws that make carrying needleswithout a medical licence a crime, needle shar-ing is common.354

Mining districts, some controlled by so-called cease-fire groups, are key areas for dis-semination of the virus within the country.Among the groups most affected by AIDS andIV drug use are the young internal migrantworkers who flood the gem and ruby miningdistricts in the mountainous northern statesof Kachin and Shan.355 When the monsoonrains cease, thousands of migrant workers de-scend on the gem hills to earn extra income.The ubiquitous presence of heroin dealers andbrothels in mining boom towns precipitatesthe spread of AIDS. Many young migrants be-come infected with the virus and carry itthroughout the country when they return totheir homes.

No small factor in the creation of the epi-demic is the role of the military regime whosepolicies and practices have generated a dan-gerous mix of insecurity, poverty, conflict, andlack of basic health facilities. Burma’s economyhas deteriorated to such an extent that it nowranks among United Nations’ list of least de-veloped countries. The rate of infant mortal-ity is 81 per 1000 live births, compared withneighbouring Thailand’s rate of 31 per 1000live births.356 Military expenditures constituteat least half of all state spending, while healthbudgets have fallen throughout the 1990s toreach 0.2% of budgetary expenditures by2000.357 The WHO 2000 World Health Reportranks Burma at 190 out of 191 countries.358

HIV/AIDS, Heroin and Mining in Burma


Inadequate health care and deterioratingeconomic conditions, together with the fail-ure of the Burmese regime to deal effectivelywith the production and widespread use of il-licit drugs bodes ill for their ability to copewith the HIV/AIDS problem.359


Appendix IV

Note: These interview notes are based on fourdays of interviews done 28/6/99 to 1/7/99. Thenotes have been reordered and edited for clarityand concision. At the time of interview, the Mawchitin-tungsten mine, in Kayah State, was a govern-ment-owned mine. For his safety, the identity ofthe man quoted here remains anonymous.

Q. Could you please tell us about your back-ground in mining?

In my last position, I was an engineer at agovernment mine and responsible for the“tributors”. These are people who operate pri-vate mining operations but sell ores they findto the government. While I had many respon-sibilities, I usually worked under a military-appointed mine manager. The mine manag-ers are mostly army officers, usually of cap-tain rank.

Q. What were some examples of serious pollu-tion you saw in your time?

In one case, we dumped magnetite powerinto the river at Mawchi during the summerof 1979. There was a lot of magnetite powder,used for the treatment of ores, imported dur-ing the time that the English were in jointventure with the Burmese. When the govern-ment took over the mine and the foreign repsleft, no one knew how to use it.

Tins that stored magnetite were becomingold and rusty. We felt this was harmful to ourmilling plant because the dust escaping fromthe rusty tins would blow around in the wind.So, I asked the labourers to go and dump it inthe river (Molo stream), which flows into theSalween river. Since it was shallow, it took awhile for the magnetite to flow away. Thewhole river became black with that powder.

Interview with a former mining engineeron mining conditions in Burma

All the fish and the animals that came to drinkor wallow in it died. Even the buffaloes diedquickly. It took two months for all the pow-der to wash away.

The other significant cause of pollutionoccurred when we dressed the minerals –crushing the ore and washing away waste rock.We used a lot of water. The river was alwaysdirty from the sand and dirt washed from theores.

When dressing minerals, we use a flotationcell with many reagents such as frothers andactivators. These included acids such asZenthat, and pine oil as a frother and activa-tor. After treating the ore, reagents were sim-ply thrown or washed into the river.

We used a lot of acids to analyze samples,around one 20 to 30-litre bottle of the hydro-chloric and sulphuric acid concentrate everythree days. The acid concentrate, together withall the chemicals in the flotation cells and thetailings, were dumped into the water. Further,in the actual mining, all the waste rock andmud taken out of the mine got dumped downthe mountain and into the river below. Molostream is now heavily silted. While it is badlypolluted in summer, mine wastes get washedaway in the rainy season.

Q. Was there ever any treatment of tailings?No, they just throw it away. I have never

seen a mine-tailing pond. It is the same at theother mines in Burma, especially the hydrau-lic mines at Heinda and Kyaukmaedaungwhere strong water pressure breaks up the rockinto sand and mud. Tailings and gravel spreadsout and covers the land and kills the plants,even if only one to two feet deep. The valleysare covered in silt and mine tailings.


At these mines, there is a lot of arsenic andother heavy metals. After dredging you getheavy metals along with the tin concentrate.They also release the wastes into the river therein Tavoy.

We had no instruction to control pollution,and there are no rules or regulations aboutpollution. The government provided no in-formation or training whatsoever, even up to1990.

The main production at Bawdwin is leadand zinc. Lead is a poison and often radioac-tive. All the people who work in that minearea die when they are about the age of 50.Only a few get older. People there look veryold at the age of 45 to 50. They look just asthough they are 75 or 80. Because people aremostly ignorant, the mine workers don’t knowabout the radioactivity.

With gold, people working in the goldmines handle mercury every day. They squeezethe mercury liquid to separate the gold fromit. I must also have breathed in a lot of mer-cury gas.

We have to cut down so many trees whenwe mine. They need hard timber to use in themines, especially the bigger tunnels. At theBawdwin / Namtu mine, they use a techniquecalled square set (digging block after block) tomake great cavities, not tunnels. It uses a verylarge amount of timber. There is no timbergrowing nearby any more. The mountains arebare, and there are no fish in the river.

We would weaken the steep mountainwhen we would dig. Veins inside are close to-gether and sharply sloped and it was in a criti-cal state of collapse all the time. It is very dan-gerous, but people have no other work, so theytake the risk, and many die.

The government has a safety policy, but asyou know they have no time to enforce it.They said, “it is your choice to risk your liveor not. You are the seller and we can’t takeresponsibility for you. We are just the buyers.People will die one day, now or later. When

you die, it will be in due time. There are manypeople, some die, some will continue to live.”

Q. Did you see many die?In 1973, there was a great mountain col-

lapse. Some were mining on the very steepface. On that day, I could see one rock fall,then another, then, on the point of collapse,we could see the whole area moving. Therewas about five minutes between the rock falland slide, so people had some warning.

When the solid mountain broke away, awave of rock came down the mountain fromthe very top. As it fell, the rockslide took 13houses with it, and covered the whole valley100 feet deep in rock. These were tributorhouses, not under the responsibility of thegovernment mine. To this day, those housesand the bodies of the people in them havenever been recovered.

There was another huge collapse with manydeaths around 1980-82, I am not sure of thedate. There were more than 30 who were work-ing in the mine.

These were the major collapses. Every yearthere are minor collapses with one or twodeaths. Some collapses occur inside the moun-tain, some outside. Rocks are falling all thetime because of the piles of loose rock thatminers throw just outside the tunnels. Theheavy monsoon rains adds to the risk ofrockslide.

If a place has stayed untouched and therehas been no rockslide for many years, peoplebelieve that it is basically safe. When peopleget a good place, they will often miscalculatethe risk. Newcomers face higher risks. No morethan 100 people per year die from the mineaccidents.

People are used to it, as it is part of dailylife. We all have to take care and get into thehabit of looking for the places to hide as wego along. For myself, I also pack my heart upevery time I go. If you are too afraid – it isshameful, people will laugh at you, call you acoward.


Q. Does the government have safety policies?There is no government regulation. The

government only makes laws for their ownbenefit. Since the miners are ethnic people,the government does not care what happensto them. Even if the government would saythat it is too dangerous, people would laugh.

In the Mawchi area, the women and chil-dren, along with some men, make their livingsifting through the waste rock at the base ofthe mountain. This is also dangerous becauseof rockfalls and collapses. Also, the womenwho dig on the mountainside bring it downonto themselves. The people working in theseareas always have big rocks and other placespicked out to hide behind for when the rocksfall. But when the big collapse happens – eventhe big rocks they hide behind are coveredover. Every year some women and childrendie.

Many more die from malaria and whileportering for the army. When mounting amilitary operation, the army often comes totake people from the mine area as porters. Theyjust take them and disappear. People have nochoice. Even workers in the government mineget seized as porters. The soldiers always say“the operation is the most important prior-ity” and that “to serve the army is the duty ofthe government servants.”

It is actually dangerous to complain becausethey get suspicious of you. It is dangerous tocomplain because they will accuse you of stir-ring up trouble against the army.

The military have no human spirit. Peopletaken as porters are not given enough food,they’re given no blankets, nor are they giventime to collect their clothes or blankets beforebeing taken away. They are tied up at night,tired, weak, cold and with no protection from

Campsite at Hpakant gem mine, Kachin State 1997 (Photo: Burma Centrum Nederland)


mosquitoes. In these conditions, it is easy toget ill. If they complain, they are beaten. Ifthey are so ill they can’t carry [their loads],and can’t complain, many just prefer to die.Soldiers do not care if someone gets ill, andthey never report the death to the relatives.People are so used to it that they don’t evenknow that it is a violation of their humanrights. They feel they don’t have any rights.

Q. What did you hear about the strike atNamtu-Bawdwin a few years ago?

Actually, it is very hard to strike, so theymust have had a very sound reason. It’s hardsimply because the government doesn’t allowthe people to get together to demand theirrights. It must’ve really been the last straw forthem to do it. It would’ve been a case of “Ifyou don’t strike you will die, and if you strikeyou may also die.” They would have had toaccept they would be arrested.

Even though my wife and I had top posi-tions, we didn’t have enough money to af-ford the travel costs to visit each other. Mysalary, even as a senior staff, was just enoughfor food. Her salary was the same, not enoughfor clothes or medicine. If any of us had gotreally sick it would be very difficult.

After 1988 up to 1990, my salary as a se-nior engineer in charge of a large dredgingoperation with 20 years of experience was only1,500 Kyats per month (US $33). The salary ofunskilled day labourers was 600 Kyats a month(US $13).

Even though I was the senior mining engi-neer I was still not in charge. They would bringin a young army captain who had never stud-ied geology, never worked, didn’t know engi-neering or mine management. They just giveorders. If it doesn’t work they put the blameon us, if it works they take the credit. In allthe mines: Heinze, Heinda, Mawchi, Bawdwin– military officers were in charge. They havethe authority to decide how to use the labour,the resources, etc.

The Burmese government prevents peoplefrom using machinery, making them onlywork by hand. If they use machines they willsue them and imprison them. The privateminers are only allowed to use hand tools.

The ban against machinery was a law. Theorder was a Mining Department directive is-sued by the Minister in 1975. It came fromthe main office when I was working in themines. The law was made to stop people get-ting the machines from Thailand.


Appendix V

This report was obtained first-hand from mi-grant Burmese workers who go to India to workfrom time to time. To protect the safety of thesepeople, we cannot give source names.

Mount Chezin Mining Project

Sources state that over the past ten years1000 acres of land has been confiscated fromlocal people without compensation for thismining project. In exchange, the military au-thorities have allowed the people minimal op-portunities to work at the mining project site.The enormous amounts of corruption in-volved in the hiring process have caused evenmore hardship for the people.

Apparently, the going rate of a bribe to geta job is between a 100,000 and 300,000 Kyats.In order to pay this price, people have beenselling all their belongings as collateral for aloan. The job positions at the mine are veryunstable. Once hired, people are often firedthree to four months later to be replaced byemployees from abroad, or members of themilitary.

Often the workers are fired before they havemade enough money to pay off their loans.Also merchants who make a living by sellingconsumer goods at the mining site have lostconsiderable amounts of money from work-ers who paid on credit but lost their jobs andcould not pay. Many people who have losteverything have suffered severely mentallyand emotionally.

The Letpantaung Mining Project

This project site is eight miles away fromthe Mount Chezin project. On June 6, 2000,Secretary 1 of the military regime, Major Gen-eral Khin Nyunt visited the site and told thepeople that many of them would have to berelocated to make way for the project. KhinNyunt said the following villages, totaling ap-proximately 1000 acres of land, would haveto be relocated immediately: Wathan, Zuasi,Letpantaung, Shwehle, Wethme, Phawngtaka,Kyuhphuithan, and Kyaw. The villages havesince received official orders of land confisca-tion from the military regime.

When Major General Khin Nyunt visitedWethme village, he promised the villagers thatthe government would provided them withall the necessary tools to rebuild their homesat the new location. So far, nothing has beenprovided.

The area allocated for the project is underthe control of the North West Command ofthe Burmese Light Infantry and has beenfenced off with barbed wire. Major Aung Soeand Capt. Thein Thut are in charge of the NWCommand and are responsible for the project.Apparently all the vegetables and other be-longings that were fenced off with the landhave been confiscated and sold off by thearmy. U Thaung Thun of Chinpih village wasdelegated to sell off the items for the army,but has since fled with the money and hiswhereabouts are unknown.

Observations from discussions with Burmese miners


ENDNOTES1 Financial Times, 1/9/952 New York Times, 4/5/98; see also Far East Economic Review 21/7/943 Mining Annual Review 1997. Mining Journal Publications. London. 1997.4 Mining Annual Review 1997, op. cit.5 Mining Annual Review 1997, op. cit.6 Here Australian-Myanmar Group Pty Ltd of Australia has been exploring for “white” diamonds

in small carats as a byproduct of tin mining (Mining Annual Review 1997), and a team of Russian

geologists has recommended “further evaluation” of their potential (Mining Annual Review 1999.

Mining Journal Publications. London. 1999).7 JV Guy-Bray. UNTCD, Unpublished Mission Report. UNTCD. New York. 1991.8 M Than Htay. “Supplement on Asia”. Mining Journal. London. August 19989 Mining Annual Review 1999; in comparison, for example, to new deposits in Australia grading

up to 60% (Mining Annual Review 1997, op. cit.).10 Union of Myanmar, Ministry of Mines data; Mining Magazine. December 1989.11 Htay op. cit.; Mining Annual Review 1999, op. cit.12 Htay op. cit.; Mining Annual Review 1997, op. cit.13 Union of Myanmar Foreign Investment Commission, 1990.14 Mining Annual Review 1997, op. cit.15 ILO report quoted in ICEM Update No. 69/1998. 20/8/98.16 Mining Annual Review 1999, op. cit.17 Htay op. cit.18 Htay op. cit.19 see Mineral Investment Conditions in selected countries of the Asia-Pacific region. United Nations.

New York. 1992.20 Mining Journal, February 1998; see also Appendix 1.21 Mining Annual Review 199922 see Mya Than and Joseph L. Tan. (eds.) Myanmar Dilemmas and Options. Institute of South

East Asian Studies. Singapore. 1990.23 This includes energy; electricity supply being a significant factor in the vagaries of mineral

production has been appropriated for military oppression (see US Embassy in Rangoon, Burma.

Minerals Outlook Report. Rangoon. 1991). Most mines still rely on pre-WWII era fuel generators

left over from the British colonial period (personal communication, Federation of Trade Unions-

Burma, 2000).24 “Structural Problems plague Burma”. Business Vietnam. October 1997.25 Pipe Line & Gas Industry. no.11, vol.79. November 1996.26 Financial Times 19/8/98; Paung Laung is near Pyinmana27 Financial Times 10/9/98; US Embassy, Minerals Outlook Report. op. cit.28 Mining Annual Review 1997, op. cit.29 Mining Annual Review 1999, op. cit.30 see Myoi, Smith, Otto. et. al. (ed.). Mining Legislative Frameworks in Asian Countries. United

Nations and Mining Journal Books. 1998.31 Simon D Handelsman. Burma (Myanmar) Mining Investment and Country Risk Assessment: An

Executive Report. Southeast Asia Consulting Pty, Ltd. New York. March 1996.


32 Financial Times 19/9/9933 Financial Times 8/9/9734 Handelsman, op. cit.35 see “Japan: a house without a toilet”. Higher Values. no.11. London. Minewatch. 1997.36 Mining Annual Review 1997, op. cit.37 Financial Times 19/8/9838 Mining Annual Review 1997, op. cit.39 U Ko Ko, in Myoi, Smith, Otto, op. cit.40 see Ministry of Planning and Finance. Review of the Financial, Economic and Social Conditions.

Union of Myanmar. Rangoon. 1991; and Foreign Exchange Commission figures, 1991.41 Mining Annual Review 1998, op. cit.42 Htay, op. cit.,43 U Mya Soe. Overview of Mining Activities, Mining Legislation and Present Economic System in the

Union of Myanmar. No. 3 Mining Enterprise, Ministry of Mines. Union of Myanmar. Rangoon.

1992.44 Ministry of Mines Organization and Activities of the Ministry of Mines. Union of Myanmar.

Rangoon. 1990.45 see U Ko Ko, op. cit.46 Union of Myanmar, Procedures Relating to the Union of Myanmar Foreign Investment Law. Rangoon.

1988.47 Union of Myanmar, Types of Economic Activities Allowed for Foreign Investment. Rangoon. 198948 U Mya Soe, op. cit.49 UN 1991, J. V. Guy-Bray op. cit.50 M Than Htay. 1990. A Critique of the Myanmar Mines Law, enacted on September 6 1994 by the

SLORC (Law No. 8/94)51 see Roger Moody. Plunder! The story of RTZ. Partizans. London. 199152 Paragraph g53 see Roger Moody. The Gulliver File: Mines, People and Land, a Global Battleground. Minewatch,

WISE-Glen Aplin and International Books. Utrecht and London. 1992.54 Chapter II: Paragraphs k, l, m.55 Paragraph e56 Paragraph f57 Author’s note: This chapter constitutes perhaps the worst-worded statements of objectives I

have ever come across in mineral policy or law.58 as campaigners have discovered in the two years since democracy in Indonesia59 U Ko Ko, op. cit.60 Production Sharing Contract between Union of Myanmar Ministry of Mines, No. 2 Mining

Enterprise and....[left blank], undated.61 US Bureau of International Labour Affairs. Report on Labour Practices in Burma. United States

Department of Labour. Washington. 1998; Karen Human Rights Group. Summary of Forced Labour

in Burma: Submitted to the International Labour Organization Inquiry into Forced Labour in Myanmar.

KGHR#97-S1. Thailand. 1997.62 Karen Human Rights Group, op. cit.63 US Bureau of International Labour Affairs, op. cit.64 see “Ruby Hill or Ruby Hell?” SSA News, 26/11/99 (Appendix II).65 Mining Annual Review 1997, op. cit.


66 Annexure B, Invitation to Bid Instruction and Information for Bidders, Paragraph 3.67 Annexure B, Section 6.68 P J O’Rourke Eat the Rich: A treatise on economics. Atlantic Monthly Press. USA. 1997.69 Roger Moody, Extractive Empires. WCC, MIP. Geneva. 1997.70 Financial Times 25/3/98.71 Friedland’s Ivanhoe Capital Corporation being a good example, see chapter 3.72 Baines, David. Vancouver Sun 11/6/9673 see Roger Moody, “The Ugly Canadian”. Multinational Monitor. November 1994.74 NOSTROMO RESEARCH is happy to provide further monitoring of these companies and of

others that may come to invest in Burma’s mining and exploration. Contact: [email protected] Rito Tinto Corporation. The Way We Work. 1998.76 For an interesting and informative discussion of the “Australian experience” see various issues of

Mining Monitor, published by the Mineral Policy Centre, Sydney, 1998-1999.77 For a more detailed discussion of this point, see Appendix I.78 See International Exploration and Mining Ventures, published by Aird and Berliss. Toronto.

1997. The Canadian Dealing Network is an oversight body for inter-corporate deals.79 Mining Magazine 4/9480 Mining Journal 21/5/9981 Mining Journal 21/5/99; Financial Times 25/5/9982 Vancouver Stock Exchange. Canada’s Mining Exchange. VSE Report. Vancouver. 1996.83 David Baines. “The Sins of the Commission”. Equity Magazine. May 1994.84 Jennifer Wells. Bre-X. Orion Business Books. London. 1998.85 Financial Times 25/5/9986 Mining Journal 19/3/99; Financial Times 25/6/99; Mining Journal 25/6/9987 The Toronto Globe and Mail, 21/8/9988 When the company was first listed in April 1996, cash reserves were $41-million, and assets

were $43-million89 The Toronto Globe and Mail, 21/8/9990 Financial Times 25/5/9991 Forbes Magazine, 2/1/9792 see Forest Peoples Programme, Philippine Indigenous Peoples Links, and World Rainforest Move

ment. Undermining the forests. Moreton-in-Marsh. England. January 2000; also chapter 3.93 see Forest Peoples Programme, et.al., chapt 3, op. cit.94 Canadian pension funds are bound by law to invest the largest proportion of their members’

savings in Canadian-registered companies.95 Alan Young. “The Hazardous Waste of Speculation on the Vancouver Stock Exchange”.

Higher Values. No. 11. Minewatch. London. February 1997.96 for example from the Canadian Export Development Corporation97 Omai, the responsibility of Cambior and Golden Star; Marcher in the Philippine from 1996 to

the present which is responsibility of Placer Dome; and Aznalcollar (Los Frailes) in Spain 1998,

managed by Boliden which was registered on the TSE and 41.85% controlled by Trelleborg of

Sweden, see Forest People’s Programme, et.al., op. cit.)98 see Wells, op. cit.99 There are three types of Burmese owned mining companies: state-owned enterprises; those

owned by former drug lords who once ran the Wa state armies, who entered silver and gold

mining in Shan state as an alternate to the heroin trade after cease-fire arrangements with the


military regime; and subsistence mining, allowed to dig with primitive tools small deposits or

from the scraps of government mines (see Appendices II - IV).100 Southeast Asia Mining Letter 27/9/96101 Mining Journal 30/7/99102 M Than Htay, Mining Annual Review 1998, op.cit.; M Than Htay, Mining Annual Review 1999, op.

cit.; the notation 3/10 refers to: round number/ block number: 1/3 is block 3 in round 1, for

instance.103 Mining Monitor. Sydney. Mineral Policy Institute. September 1997.104 Mining Annual Review 1997, op. cit.105 The Burma Courier, 19/11/99106 see Moody, The Gulliver Files, op. cit.107 see Mining in remote areas: Issues and Impacts. Environmental Mining Council of British

Colombia. Victoria, BC. 1998.108 see “Interview with Dr Stuart Kirsch”. Higher Values. Minewatch and Minewatch Asia-Pacific.

London. January 2000.109 Agence France Press, 1/96110 Burma Courier, 15/9/99111 Asian Journal of Mining. November/December 1995.112 Xinhua General News Service, filed from Rangoon 13/10/99.113 Walter Isaacson. Kissinger: A Biography. Faber and Faber. London and Boston, 1992, quoting

Daewoo Annual Report 1990.114 see Ivanhoe Myanmar Holdings115 Financial Times 10/12/99116 Financial Times 23/1/2000117 Mining Journal 27/3/98118 Asian Journal of Mining, op. cit.119 East Asia Gold Corporation. Corporate Profile of East Asia Gold Corp. Toronto. 1999.120 11km long and 3km wide121 Mining Annual Review 1997, op. cit.122 M Than Hay, Mining Annual Review 1999, op. cit.123 East Asia Gold Corporation, ibid.124 see Down to Earth newsletter. Down to Earth. London. 1995-99, passim; and Parting Company.

Partizans, London. 1995-2000. passim.125 see D.L.O Mendis, Eppawala - Destruction of Cultural Heritage in the name of Development,

Sri Lanka Pugwash Group, Kandy and Colombo. 1999.126 Mining Annual Review 1997, op. cit.127 Mining Annual Review 1998. London. Mining Journal Books. 1988.128 see Moody, Gulliver File, op. cit.129 William Green. “Mining the suckers”. Forbes Magazine. 10/2/97130 Forbes Magazine, op. cit. Friedland changed the company name to Ivanhoe Mines, Ltd. in June

1999, and moved the stocks up to the Toronto and Australian Stock Exchanges.131 David Baines. The Vancouver Sun. 11/6/96132 see next chapter133 Mining Journal 27/3/98134 see Sumitomo, Marubeni, Chyoda, Nissho Iwai, and Daewoo135 Mining Journal 22/8/97


136 Mining Journal 11/6/99137 Asian Journal of Mining, November-December 1995138 Mining Annual Review 1997, op. cit.139 Roger Moody. “Out of Africa: mining in the Congo Basin”. in The Congo Basin/Le Bassin du

Congo. IUCN. Amsterdam. 1998.140 Mining Annual Review 1998, op. cit. See Appendix 1 for a discussion of the solvent extraction

and electrowinning (SW-EW) method.141 Mining Journal 20/9/96142 Mining Journal 22/8/97143 Mining Annual Review 1998, op. cit.144 U Ko Ko, op. cit.145 up to 7.7 grammes a tonne at one site146 Mining Annual Review 1999, op. cit.147 Mining Journal 1/4/94; Asia-Pacific Business Report, 29/4/94148 This project was brokered by the Marc Rich group of Switzerland, headed by the financier

whose interests are now merged into the Glencore group of companies; Mining Journal 31/5/97.149 PR Newswire, Indochina Goldfields Ltd. 17/10/9; The Burma Courier 15/9/99.150 Mining Journal 10/10/97.151 ibid.152 The Burma Courier, 15/9/99153 Mining Annual Review 1997154 see Moody, The Gulliver File, op. cit.155 Mining Journal 25/7/97156 The Burma Courier, 30/6/99157 Mining Annual Review 1999, op. cit.158 The Burma Courier, 30/6/99159 Mining Annual Review 1999, op. cit.160 Mining Annual Review 1999, op. cit.161 Mining Annual Review 1997, op. cit.162 See Appendix III163 Htay, Mining Annual Review 1998, op. cit.164 Mining Annual Review 1997, op. cit.165 Personal correspondence. Federation of Trade Unions-Burma. via email 7/2/98.166 Personal correspondence. Federation of Trade Unions-Burma. Vancouver. 4/2000167 Financial Times 21/2/95168 Financial Times 21/2/95169 Mining Journal 22/8/97170 Mining Journal 23/1/98171 Financial Times 1/12/99172 Moody, The Gulliver File, op.cit.173 Moody, The Gulliver File, op. cit.174 Mining Journal 12/1/98175 statement from Mindoro, 10/98176 Moody, The Gulliver File, op. cit.177 Mining Annual Review 1999, op. cit.178 Mining Journal 5/9/97


179 Htay, Mining Journal Supplement, 17/7/98180 Mining Annual Review 1999, op. cit.181 Mining Journal 8/5/98182 Roger Moody, The Gulliver File, op. cit.; also information from the author183 See Down to Earth Newsletter. Down to Earth. London. 1998; also Mining Journal 8/5/98184 Mining Journal 21/7/95185 See Forest Peoples Programme et al., op. cit.186 Mining Journal 7/8/98187 Engineering and Mining Journal 8/97188 Htay, 1998, op. cit.189 Mining Annual Review 1999, op. cit.190 Mining Annual Review 1999, op. cit.191 Canada News Wire, 19/8/97; see also entry for ICC192 Mining Annual Review 1999, op. cit.193 The Burma Courier, 25/6/99194 The New Light of Myanmar, 10/12/99195 Mining Annual Review 1999, op. cit.196 The New Light Myanmar, 10/12/99197 In Indonesia, it has two operating gold mines employing the much-criticized STD method of

tailings disposal198 Mining Annual Review 1997, op. cit.199 Mining Annual Review 1999, op. cit.200 Mining Journal, 5/5/95201 not surprising - since this is a traditional alluvial mining area202 Mining Journal, 9/2/96; Mining Journal, 23/8/96 ; also Mining Annual Review 1997, op. cit.203 Htay, Annual Mining Review 1998, op. cit.; see also Mining Magazine 6/96 and Mining Annual

Review 1997, op. cit.204 Mining Journal 26/7/98205 Mining Journal 9/10/98206 Mining Annual Review 1997, op. cit.207 Mining Annual Review 1999, op. cit.208 Mining Annual Review 1999, op. cit.209 Mining Annual Review 1999, op. cit.; see also Forest Peoples Programme, op.cit. 2000.210 Palmer website211 Mining Annual Review 1999, op. cit.212 Mining Annual Review 1998, op. cit.213 Area 1: Tenasserim (Tanintharyi) township; and area 2 at Lenya in Bokpyin township (M Than

Htay, Mining Annual Review 1999, op. cit.)214 Mining Annual Review 1998, op. cit.215 Mining Annual Review 1997, op. cit.216 Southeast Asia Mining Letter 29/10/93217 Mining Annual Review 1999, op. cit.218 The Burmanet News 1/5/97219 Mining Annual Review 1999, op. cit.220 Advert in Mining Journal Supplement 17/7/98221 Mining Annual Review 1997, op. cit.


222 Mining Annual Review 1997, op. cit.223 owned by Sumitomo Group, Japan; itself owned partly by Sumitomo Trust and Banking Co Ltd224 Mining Journal 17/5/96225 Mining Journal 12/12/97; Mark Payne. Strategies of International Non-ferrous Metals Companies.

Mining Journal Books. London. 1998.226 Japan’s relatively stringent domestic environmental legislation has forced its own companies to

go overseas: a strategy which has often been dubbed “exporting pollution” (see “House with

out a toilet”, op. cit.).227 see various issues of Down to Earth, 1997-1999, and Forest Peoples Programme

Undermining the Forests, op. cit.228 Financial Times 1998229 Minewatch Asia-Pacific. Background briefing on Inco in Indonesia. London. 1999230 Mining Journal 5/6/97231 Seattle Times 20/4/90232 Philip Mattea. World Class Business. Henry Holt and Co. USA. 1992233 Mining Magazine 8/96234 The BurmaNet News 1/5/98235 Mining Annual Review 1997, op. cit.236 Information from Tiger Resources, 12/97237 Mining Annual Review 1999, op. cit.238 “Asian-Pacific profile boosted”. South-East Asia Mining Letter. 17/1/96239 Although this profile does not deal in any detail with Friedland’s non-mining assets, it should

be noted that he has interests in oilfields in Indonesia (including Kalimantan) and in the Dagang

oilfield being developed along with China’s National Petroleum Corporation.240 Forbes Magazine, 10/2/97241 Roger Moody, Plunder! op. cit.242 Mining Journal 30/8/9243 Mining Journal 25/1/91244 Roger Moody. “The Mercenary Miner.” Multinational Monitor. Washington, DC. June 1997245 Mining Journal 9/11/90246 The Toronto Globe and Mail, 5/1/2000247 Ibid.248 Thomas Hilliard, Mineral Policy Center, quoted in Moody, “The Mercenary Miner”, op. cit.249 “Hyping” in the context of the Galactic situation, could be a euphemism.250 For further details, see Five Minutes before Midnight, Minewatch Briefing on Omai. Minewatch.

London. 1995.251 Moody, “The Mercenary Miner”, op. cit.252 He later sold most his holdings; the world’s biggest mine royalties company, Franco-Nevada

now has the biggest single stake in Voisey’s Bay Nickel (VBN).253 Mining Magazine, 4/99254 see Moody, “Out of Africa: Mining in the Congo Basin/Le Bassin Congo, IUCN Netherlands.

Amsterdam 1998255 DFR had taken over Sunshine Mining’s diamond interests in Sierra Leone in early 1994 (Mining

Journal 8/4/94).256 in particular the Camatchia kimberlite pipe at Luo (Mining Journal 26/6/98).


257 They were confirmed in 1998 after Branch Energy was shown to have violated UN arms

sanctions against all parties in Sierra Leone.258 see Roger Moody. “The diamond dogs of war”. New Internationalist. Oxford. March 1998; Mary

Louise O’Callaghan. Enemies within: Papua New Guinea, Australia and the Sandline Crisis: The

Inside Story. Doubleday. New York. 1999; Abdel-Fatan Musah and J. Kayode Faymi. Mercenaries,

Pluto Press. London. 1999; Ian Smillie, Lansana Gherie and Ralph Hazleton. The Heart of the

Matter: Sierra Leone, Diamonds and Human Security. Partnership Africa-Canada. Ottawa. January

2000.259 see Mary Louise Callaghan, Enemies Within, op. cit.260 This was the first apparent connection between Friedland and the world’s biggest mining

company, a link-up later to flourish when Vengold bought into the British company’s huge Lihir

Gold project in Papua New Guinea in 1995. Several key Friedland personnel have been recruited

directly from Rio Tinto in the past six years, notably Marcus Randolph who became president of

First Dynasty and Gordon Toll, formerly an RTZ group mining executive.261 The Canadian Financial Post 11/6/95262 “Galactic founder resigns”. American Metal Market. vol. 98, no. 218. 1990.263 Ibid.264 The Nation, 13/12/96265 Mining Journal 1/4/94266 Mining Journal 22/8/95267 Mining Journal 16/7/99268 Canada NewsWire 21/6/99269 Nationwide General News, Finance Wire, 22/7/99270 Green Left Weekly, Sydney 2/7/97271 Australian Associated Press Company News, 17/7/99272 Through Ivanhoe Energy, formed in June 1999 after a merger between Sunwing Energy Ltd,

and Black Sea Energy (Canada Newswire 21/7/99).273 Canada Newswire, 18/8/99274 The Goldamere Pty Ltd. Agreement Act. Hobart. 1996.275 Ibid.276 Gordon Toll interview with Annie Warburton. ABC Radio 7ZR. 7/4/97; see also Mining Monitor.

Mineral Policy Institute. Sydney. June 1997277 quoted in The Canadian Financial Post, 17/5/96278 The Canadian Financial Post, Toronto, 14/6/96; Forbes Magazine, 10/2/97279 The Nation, 13/12/96280 David Baines, The Vancouver Sun, 11/6/96281 Mining Journal 31/5/96282 see Atu Emberson Bain. Labour and Gold in Fiji. Cambridge University Press. UK. 1994.283 Mining Journal 22-29/12/95284 Mining Journal 10/5/96285 Mining Journal 7/6/96286 Ivanhoe press release 1993287 Mining Journal 10/5/95.288 Mining Journal 7/6/96289 Australian Associated Press 19/8/99


290 see Carmel Budiardjo and Liem Soei Long. West Papua: Obliteration of a People (3rd edition).

TAPOL. London. 1988. West Papua was formerly called Irian Jaya and now officially “Papua”.291 Mining Journal 24/5/96292 Mining Journal 22-29/12/95293 Later ANTAM floated up to 35% of its shares on the Jakarta Stock Exchange (The Nation 13/12/

96).294 “Dead Miners worked illegally”, Jakarta Post, 21/10/97; “Hauruku Islanders reject mining”, Down

to Earth Newsletter. Down to Earth. London. August 1997.; “Hauruku islanders object to gold

exploration”, Down to Earth Newsletter. Down to Earth. London. February 1997.295 Mining Journal 27/11/98296 The flotation of Golden Star Resources, for example, was the most important single offering on

the Vancouver Stock Exchange in 1993, raking in more than C$30 million.297 see Roger Moody, The Gulliver File, op. cit.298 Indonesia’s Contract of Work system may be highly favourable to foreign miners, but Kazakhstan’s

is more circumspect.299 Mining Annual Review 1999, op. cit.300 Reuters 18/5/99 and Press Release from Ivanhoe Mines 10/7/99301 Associated Press 10/7/99302 Private communication, December 1997.303 Personal communication, November 1998.304 Indochina Goldfields Ltd. Press Release; Canada Newswire 8/8/97305 Ivanhoe press release 10/7/99.306 Private communication, Vancouver, September 1998.307 Financial Times 5/7/99308 Canada Newswire 8/8/97309 Mining Journal 30/8/96. Macleans Magazine 9/9/96. Vancouver Sun 29/8/96.310 Financial Times 9/9/96311 Clementine. Mineral Policy Center. Washington DC. Spring 1991; a useful summary of the

history of the Butte and Anaconda mines is contained in Jerome O Nriagu, “Part 1: Ecological

Cycling” Copper in the environment Jon Wiley, New York, 1979312 G Pickup and R J Higgins. “Estimating sediment transport in a braided gravel channel: the

Kawerong River, Bougainville, Papua New Guinea”. Journal of Hydrology. vol. 40. Amsterdam.

1979.313 Ronald Boon, Mining and the Environment: A Case study of Copper Mining in the south of Peru.

Wageningen University. The Netherlands. 1998.314 Association Civil Labor, 1993, quoted in Boon, op. cit.315 Boon, op. cit.316 Clementine, op. cit.317 Boon, op. cit.318 see study by Richard Compton, Keith Pritchard, Patrick Unwin, quoted in Jim Blagott

“Limestone is no remedy for acid lakes”. New Scientist. 13/1/90.319 see James Gusek, “Constructed Wetlands: Passive Treatment of Mine Drainage” in

Mining Journal Supplement. 22/2/94320 Clementine, op. cit.321 Mining Magazine, 01/96322 formerly West Papua/Irian Jaya


323 “Interview with Dr Stuart Kirsch”. Higher Values. Minewatch. London. January 1999.324 Kirsch, op. cit.325 see Minewatch Asia-Pacific. Discussion paper on Submarine Tailings Disposal. London 2000.326 Kirsch, op. cit.327 R B Clarke. Marine Pollution. Clarendon. 1997. p.70.328 Hettler and Lehmann. Environmental Impact of Large-scale Mining in Papua New Guinea: Mining

Residue Disposal by the Ok Tedi Copper-Gold Mine. Berliner Geowissenschaftliche Abhandlungen

and UNEP. Berlin. 1995. p. 49.329 Hettler and Lehmann, op. cit.330 Clarke, op. cit.331 see Geoffey M Mance. Pollution threat of heavy metals in aquatic environments. Pollution

Monitoring series. UN. 1986.332 Indeed one of the early controversies between the Papua New Guinea government and BHP

centred on the company’s intention to exhaust the gold cap at Ok Tedi without necessarily

going on to mine the copper, thus boosting profits but shortening the economic life of the

mine.333 In this case Nicolet Minerals Co, a subsidiary of Rio Algom, which wants to open up a copper-

zinc mine; see “Group asks Department of Natural Resources (DNR) to enforce mine law”, Wis

consin State Journal, 16/7/98334 see Roger Moody, Plunder!, op. cit.335 Colin Macaulay, president of Rio Algom, quoted in The Toronto Globe and Mail, 25/3/94.336 Mining Journal Supplement, 12/9/97; see also Electrowan Copper: The Current Status.

CRU International, London. 1996.337 Mining Journal 20/11/97338 The Burma Courier, 25/6/99339 Mining Journal 23/10/98340 The company initially laid out US$7.5 million for 32.2 million shares and equivalent share

warrants. Mining Journal 27/11/98.341 Mining Journal 27/11/98342 Mining Magazine, November 1989343 see for example Engineering and Mining Journal, February 1991344 Engineering and Mining Journal, October 1989345 The Toronto Globe and Mail, 1994, op. cit.346 see Moody, The Gulliver File, op. cit.347 This account is based on “Ruby Hill or Ruby Hell”, a report by Ngao Seng, Mong Hseng (Rubyland)

23/11/99 in the SSA News, Shan State 26/11/99.348 Beyrer, Chris. (1999). War in the blood: Sex, politics and AIDS in Southeast Asia. White Lotus

Books. Bangkok.349 Some villagers could count on labour intensive jobs, such as portering or logging. Once

numerous, water-carriers lost their jobs with the arrival of water pumps.350 Adrian Levy & Cathy Scott-Clark. (1998, May 10). Junta forces farmers to grow opium. The

Sunday Times of London. Given that nothing in this tightly controlled country moves without the

permission of the regime such a volume of production could not occur without its involvement.

(personal communication, Federation of Trade Unions-Burma, April 2000). “The magnitude of

the drug industry in Burma’s Northern border areas would be impossible to maintain without

the cooperation of the region’s army units” (Desmond Ball. (1999). “Burma and drugs: The


regime’s complicity in the global drug trade”. Asia-Pacific Magazine. 14.). The Canadian Dept.

of Foreign Affairs has stated that 80 per cent of the heroin sold in Canada comes from

Burma (R. Pateyaseri, & K. Chongkittavorn. (1999 Aug. 1). “Canada engages Burma on drugs”.

(The Nation). Comparable data from the US estimate that around 60 percent of heroin entering

the US is exported from Burma.351 “Wa seeking alternative to drug trade”. (2000 June 6). Bangkok Post. “Shan writers take a dim

view of the loss of natural resources”. (2000 May 12). Shan Herald Agency for News.352 Chelala, C. & C. Beyrer. (1999 Sept 25). Drug use and HIV/AIDS in Burma. The Lancet352 Chelala, & Beyrer, op. cit.354 Beyrer, War in the Blood, op. cit.355 Beyrer recounted meeting with a doctor who worked in the northern mining towns of Burma.

The doctor said that most of his patients have three things in common: “they’re young, they’re

addicts, and they’ve worked in the jade and ruby mines in Shan and Kachin States”, Beyrer, C.

(1999). War in the Blood: Sex, Politics, and AIDS in Southeast Asia. White Lotus Books. Bangkok.356 UNICEF. (1999). The State of the World’s Children 1999. Geneva. UNICEF.357 Babson, Bradley (Senior Advisor, World Bank). (1999 Dec. 16). Myanmar: An Economic and

Social Assessment, Talking points for Burma Roundtable at Human Rights Watch;

“Extra Burmese budget big on army spending”. (2000 March 21) The Nation. p. A7.358 World Health Organization, June 2000. http://www.who.int/asd/first.html359 With one of the highest HIV infection rates in the world, Burma is currently struggling with a

serious AIDS epidemic. There are an estimated 530,000 people in the country living with the

virus, according to UNAIDS executive director, Dr. Peter Piot, and the rate of adult infections is

third highest in Asia, trailing close behind Cambodia and Thailand (Chelala & Beyrer, op. cit.)

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