MAC: Mines and Communities

Burmese student leader puts "cronies" on notice over Monywa mine

Published by MAC on 2012-10-08
Source: The Irrawaddy

"Resource curse" is already skewing country's future development

A prominent leader of Burma's pro-democracy movement has cited the country's biggest copper mine as a leading example of the type of "development" which must be eschewed at all costs in future.

Last month, a forum in Rangoon, attended by a wide spectrum of Burmese civil society, was told that over 7,800 acres of land have already been seized from 26 villages since the Monwya complex began expanding last year. See: Burmese Daze

Meanwhile, Glenn Ford, a former Monywa mine manager, is alleged to have conspired in robbing the country of 338 tonnes of copper, during the period that Canada's Ivanhoe Mines was in charge of operations.

(It should be noted that, at this time, Ivanhoe itself was substantially part-owned by Rio Tinto which now controls the Canadian company)

Jaded appetites

Whatever the future for large-scale projects such as Monywa,  the so-called "resource curse" already appears to be adversely affecting Burmese attempts to attract foreign investment, and to diversify the economy.

The country's current economic inequality is "typified by the jade trade", says Bloomberg's Daniel Ten Kate.

Following the 2008 U.S. ban on imports, jade sales boomed - thanks to Chinese demand. Revenues topped $1.75 billion in the 2010-2011 fiscal year, comprising a fifth of Burma's total export of goods. Traders sold another 527 million euros (US$681 million) of gems at a nine-day sale in March this year.

But, as the "jade millionaires" began buying up property for want of little else on which to squander their gains - so real estate prices escalated.

As a result, says Ten Kate, this became "a deterrent to foreign manufacturers who could bring jobs to Myanmar.

"With factory land selling for as much as twice the price of lots in neighboring Thailand, the millionaire miners are hampering the country's fledgling efforts to draw labor-intensive industries".

88 Gen leader puts cronies on notice over mining project 

The Irrawaddy

1 October 2012

Rangoon - Prominent Burmese student leader Min Ko Naing sent a strong message on Sunday to businesses that rely on government connections to steamroll over the rights of ordinary citizens, warning them that the days when Burmese felt too powerless to resist such abuses are over.

Speaking at a forum in Rangoon on "Saving the Natural Beauty of the Letpadaung Mountains and Chindwin River," the leading member of the 88 Generation Students group said that Burmese need to keep pushing back whenever cronies try to push the envelop in exploiting the country's resources.

He also said that the cronies' modus operandi of "mistreat first, negotiate later" was "out of fashion," and could lead to significant losses to companies that did not respect the will of the people.

"First, they try [to take what they want]. If people remain silent, they keep going and make big money. But if people start to retaliate, for example by staging protests, they tone down their approach and try to negotiate," he explained.

"So if the people are not smart enough to collectively defend their rights, you cronies hit the jackpot. But if they do stand up for their rights, you'd better be ready for major losses."

Held to discuss growing public concerns over a controversial mining project in Monywa, Sagaing Division, the forum highlighted the increasingly widespread practice of illegal land confiscation and other social and environmental issues as a feature of Burma's push to exploit natural resources.

The Monywa copper mine, a joint-venture between the military-owned Union of Myanmar Economic Holdings Ltd (UMEHL) and China's Wan Bao Company, has come under fire over the past month after more than 300 residents from 12 villages in the Letpadaung mountain range staged protests to demand its closure, citing environmental destruction, forced relocation and illegal land confiscation.

More than 7,800 acres of land from 26 villages under the shadow of the mountain range have been confiscated to make way for the project that began last year.

The forum attracted about 300 people, including environmental activists, lawyers, engineers, Buddhist monks and villagers from the project area.

"The authorities just told us to leave. But if we move, we have to leave behind the farmland we have been tilling for generations. When I asked them about the land, they just said there was nothing they could do," said Thwe Thwe Win, who was briefly detained for her participation in the protest last month.

"I wonder whether the authorities are protecting us or the UMEHL or the Chinese firm," said the native of Wet Hme, a village in the affected area. "What we want is the closure of the project."

Copper mining in Monywa dates back to the 1980s, when the former Burmese Ministry of Mining-1 had joint-venture projects with various investors, including Canada-based Ivanhoe Mines.

Aung Kyaw Zan, who was a project engineer for six months at one of the copper mines in the area in 1988, recalled how waste discharged from the mine where he worked exposed people living nearby to serious health risks.

"People had skin infections because acid discharged from the mine sank into the ground and contaminated the water that they used. In the end, the water was no longer drinkable at all," he said.

Ant Maung, a famous poet from Monywa, said that shutting down the project on the Chindwin River basin was essential, not just socially and environmentally, but also spiritually.

However, UMEHL officials gave no indication that they intended to give in to the demands of the villagers.

"In the beginning, we had no problem with the locals. They accepted the compensation we offered. Now they are demanding the closure of the project," said Win Kyi, a senior UNEHL official.

"We don't have any plan to cancel the project. I think there is some political instigation behind the demand," he added.

Min Ko Naing said the 88 Student Generation group isn't rejecting all development projects, but wants to push the government to guarantee greater transparency.

"People have the right to know. They should be informed about things such as which countries want to do what here. They must know how the profit from those projects are going to be used. Why doesn't the government dare to share that kind of information with the people?"

The student leader added that most of the projects with some foreign investment in the country today are the legacy of the former military regime, and that people didn't know anything about them until they had started.

"Now I want to make it clear is that people are not happy with deals made with the military regime in the past, because they don't know whether those deals will bring them more harm than good."

Myanmar's jade millionaires fuel property surge

Southeast Asia - Daniel Ten Kate


3 October 2012 On a tree beside a crumbling road in Myanmar's biggest industrial estate, Thein Oo hangs plastic sheets, part of the trash he collects and sells for recycling to support his wife and five children.

Behind his pile of scavenged bags and cans, a gated empty lot, filled with weeds and stray dogs, is valued at more than $500,000 an acre, about 10 times the price of industrial land in Orlando, Florida.

The contrast of Thein Oo, 55, in his ripped shirt, dirt- stained shorts and red flip-flops, and the soaring price of the land by his makeshift thatch house illustrates the government's challenge in opening the country without leaving most of its population behind.

Lots in the Hlaing Thar Yar zone have risen more than 100-fold in the local currency since the park opened in 1995, driven by billions of dollars from jade miners who had few other investment outlets.

"The government needs to do more for us," Thein Oo said, surrounded by children playing among the rubbish. "There's no permanent work here."

President Thein Sein is trying to undo economic distortions caused by sanctions and military rule that resulted in $100,000 used cars, $500 SIM cards and the need to carry stacks of crisp, unblemished $100 bills. With foreign investors rushing into the country after the U.S. and Europe began lifting sanctions this year, office and residential rents are also soaring.

‘Rampant Corruption'

"Attempts to protect the little guy through rules, regulations, legislation usually just end up in rampant corruption and no protection at all," Sean Turnell, an associate professor who researches Myanmar's economy at Macquarie University in Sydney, said by e-mail. "There really has been very little in the way of implemented investment in areas that would employ large numbers of people."

The economic inequality is typified by the jade trade. After the U.S. banned imports of Myanmar jade in 2008 and tightened rules to hinder financial transactions among gem traders, the industry underwent a boom due to Chinese demand, according to Renaud Egreteau, a research assistant professor at the University of Hong Kong. Jade export revenues topped $1.75 billion in the 2010-2011 fiscal year -- a fifth of Myanmar's exports -- he wrote in a paper last year.

The resulting funds pushed property prices "to a point that is totally ridiculous," said Moe Kyaw, a member of a presidential advisory committee and an official in the Union of Myanmar Federation of Chambers of Commerce and Industry. Traders sold 527 million euros ($681 million) of gems at a nine-day sale in March, according to state-run Myanmar Gems Enterprise.

‘Not Clever'

"These are jade miners who are not that clever in how they part with their money," said Moe Kyaw, founder of Yangon-based Myanmar Marketing Research & Development Co., which conducts market research for companies such as Unilever NV and Nestle SA. "Because of the American sanctions, they can't even get a credit card, so they plow their money into property. They don't realize they can have a beautiful condo in Thailand or Singapore because they are just too scared to go outside the country."

The jump in real estate prices is a deterrent to foreign manufacturers who could bring jobs to Myanmar. With factory land selling for as much as twice the price of lots in neighboring Thailand, the millionaire miners are hampering the country's fledgling efforts to draw labor-intensive industries.

"It is a significant barrier to attracting foreign investment," said Cyn-Young Park, the Asian Development Bank's assistant chief economist, referring to high property prices. "Administrative measures wouldn't help in this situation. Provision of adequate infrastructure would help mitigate these pressures on property prices by allowing more land to function efficiently for any business purpose."

U.S. Investment

Since Thein Sein took power in March last year, he has freed hundreds of political prisoners, eased media restrictions and started peace talks with ethnic minorities. The moves prompted the U.S. to allow companies to invest in Myanmar for the first time in 15 years and ease a ban on imports.

Opposition leader Aung San Suu Kyi, who met President Barack Obama last month on a trip to the U.S., backed the easing of sanctions. The former political prisoner joined parliament for the first time in May after reaching an agreement with Thein Sein in 2011.

The president has pushed policies to improve the investment climate, including a managed float of the currency in April. He is now working with parliament to pass a new law to encourage more foreign investment to lift the economy. The IMF estimates Myanmar's per capita gross domestic product this year at $855, compared with $5,851 for Thailand.

‘Rich-Poor Gap'

"Economic development must not lead to the widening of the rich-poor gap," Thein Sein said last month in a speech to the United Nations General Assembly in New York. "Citizens' rights are to be protected; the natural environment is to be preserved; our workers are to enjoy rights in line with international standards."

Tackling inflated real estate prices may be harder. Vacant lots in Hlaing Thar Yar, in western Yangon, have risen to about 450 million kyat ($523,000) per acre, from about 3.5 million kyat in 1995, according to Serge Pun, chairman of Yoma Strategic Holdings Ltd., a Singapore-listed developer of properties in Myanmar. That compares with $40,000 an acre for industrial land offered on the Internet last month by real estate broker The Barnett Group Inc. for a 171-acre industrial site in Orlando.

Not Easy

"It's not going to be an easy process to get prices to come down in a free-market economy," Serge Pun said. "If people build new developments, build new industrial estates and have a new policy, then maybe it will solve the problem."

Office rents have tripled from a year ago to $65 a square meter, and may rise to $150 in the next few years, according to Tony Picon, associate director of research at property broker Colliers International Thailand, who moved to Myanmar this year.

Poor states of renovation, transport and utilities will also be a deterrent, he said.

"This is going to be a serious hardship posting for expats who start to come to this country over the next few years," Picon told a group of more than 500 investors in Naypyidaw, Myanmar's capital, on Sept. 12. "For a family you don't want your electricity going out all the time."

Some respite may come from plans for new industrial zones near waterways with sea access to overseas markets. Japan aims to complete a feasibility study this year to build a port and industrial estate at Thilawa, 25 kilometers (15.5 miles) south of Yangon. Italian-Thai Development Pcl, Thailand's biggest construction company, is also trying to get Japan to finance an $8.6 billion deep-sea port and industrial zone in Dawei, less than 300 kilometers from the Thai capital, Bangkok.

Cars, Phones

Thein Sein's efforts have helped make some imported goods such as cars and phones more affordable for the country's 64 million people.

Bo Bo, the sales manager at a Yangon car dealership that opened a year ago, said he has "too many" customers after the government made it easier to import automobiles. The cheapest vehicles now cost about $14,000, down from about $100,000 a year ago, he said.

About 18 of every 1,000 people in Myanmar has a vehicle, compared with 250 in Indonesia and 370 in Thailand, the Asian Development Bank said in an August report.
Broadband Internet

While BlackBerry service isn't yet available, the government is inviting foreign investors as partners to help add 40 million new mobile-phone subscribers by March 2016, according to a report in September by research firm Paul Budde Communication Pty. Currently 1.3 percent of the population has access to fixed lines, and 0.03 percent have broadband Internet subscriptions, the ADB said.

SIM card prices have fallen to about $230 from about $580 a few years ago, said Ye Nyi, who mans a family-run shop in Yangon selling everything from $30 Chinese-made handsets to the latest models from Espoo, Finland-based Nokia Oyj. (NOK) The store has seen sales rise fivefold since last year, he said.

"I'm happy the government has opened up," Ye Nyi said. "I'd be even happier if they did more to bring down costs."

For foreigners and locals, one of the biggest hurdles to transactions is the money itself. At Radiances, a downtown store selling Lenovo computers imported from China, accountant Than Than Soe inspects a $100 bill, ensuring that it was produced after 2006 and has no marks, folds, creases, holes or mold.

Black Market

"If there is the slightest mark, the banks won't accept them," she said. "Then we have to sell them on the black market for a cheaper rate."

Seventeen banks set up a payment union last month that will allow citizens to pay for some goods with local debit cards. MasterCard Inc. and Visa Inc. are looking for ways to expand in the country, though cross-border transactions will probably wait until the U.S. fully lifts sanctions, Maung Maung Win, the central bank's deputy governor, said in a Sept. 14 interview.

"We cannot export our foreign currency notes because of sanctions," he said. "That's why our banks and our money changer counters don't like old and marked notes. If we can export the U.S. dollars to other countries, then we can manage the problem."

At a Kanbawza Bank Ltd. branch near Yangon's Shwedagon Pagoda, daily exchange rates have been displayed on a digital board since the currency was floated in April. Zaw Lin, who works at a trading company, said the government's new policies have made it easier to exchange cash at banks.

Other than that, for him, and for Thein Oo scratching a living from garbage in Hlaing Thar Yar, the government's policies have yet to make much difference.

"Things are changing a lot here, but at the local level it's pretty much the same," Zaw Lin said outside the bank as he waited for the monsoon rains to subside. "The rich seem to benefit just as before."

Copper Mine Conspiracy Alleged

By Nyein Nyein

The Irrawaddy

25 September 2012

A brother of the detained deputy operations manager at Monywa copper mine has called for justice, claiming that his brother and a colleague have been wrongfully arrested in relation to the illegal production of 338 tonnes of copper when, in fact, they were only following orders from their boss.

Deputy operations manager Aung Law Har and supply officer Kyaw Swe of Monywa's Sabetaung and Kyaysintaung copper mines were detained at the Sarlingyi police station near Monywa in Sagaing Division in the last week of August.

"We know that he [Aung Law Har] is accused of omitting to provide information to the state during that period," Aung Law Kee said of his brother. "But he was just following orders from his boss."

Aung Law Kee told The Irrawaddy on Tuesday that he had submitted a letter of appeal to Burmese President Thein Sein, as well as to the Hong Kong-based Asian Human Rights Commission, various House committees including Aung San Suu Kyi's Rule of Law and Stability committee, the Myanmar Human Rights Commission, and the 88 Generation Students Group.

The two detained employees have been charged under the 1963 Public Property Protection Law, accused of failure to report data relating to the processing and transportation of a huge quantity of copper during an interim period in January 2011 when the company's ownership was being transferred between a joint Canadian-Burmese firm to a joint Chinese-Burmese firm.

Aung Law Har and Kyaw Swe work for the the Myanmar Jiangxi Copper Limited, which is a joint venture between military-owned Myanmar Economics Holding Company Ltd and the Chinese Jiangxi Copper Co, the largest producer of metal for China. They had previously worked at the Myanmar Ivanhoe Copper Co Ltd (MICCL), a joint venture between state-owned Mining Enterprise 1 and the Canadian-owned Ivanhoe company. Jiangxi Copper bought the shares from Ivanhoe in 2010.

Sixty-four-year-old ethnic Chin Aung Law Har is scheduled to appear at a Sarlingyi court on Wednesday, his first hearing since he was detained four weeks ago.

His brother said that Aung Law Har had worked in the mining industry for many years, including 12 years at MICCL before he became process superintendent as well as deputy operations manager at the Monywa mine in 2010.

The letter said the accused did not attempt to conceal any information nor did he make a mistake with the data-he was simply following the orders of acting General Manager Glenn Ford of Ivanhoe in arranging for the transport of the 338 tonnes of copper to Rangoon.

A total of four people-Glenn Ford, executive officer Ms Thiri, Aung Law Har and Kyaw Swe-are all accused of conspiring to conceal data; however Ford and Ms Thiri have supposedly disappeared.

"Mr Ford told Aung Law Har to disregard the production records, the meeting minutes, and the record of the mine's activity in the one-week period when it should have been closed during the transfer of ownership," said Aung Law Kee in his letter. "The [illegally extracted 338 tonnes of] copper was subsequently diverted to an address under the ownership of executive owner Ms Thiri and not to the regular storage facility in Rangoon."

Speaking to The Irrawaddy, Aung Law Kee said, "My brother is responsible for all the copper processing and transportation to Rangoon, and he kept all those details in personal records. However, the decisions about storage and the sale of the copper were outside his remit."

The Sabetaung and Kyaysintaung copper mines are located to the west of Monywa. Local residents have suffered from environmental and health problems for more than four decades which they allege is due to the chemicals and polluted air from the mines, said Myint Thein, a lawyer in Monywa.

Myint Thein recently told The Irrawaddy that the residents who live nearby face a shortage of clean drinking water, drought in their wells, damage to their homes and crops, and many cases of ill health.

Meanwhile, the residents at the new Latpadaung copper mine have recently held protests urging a closure to the project, saying they are witnessing similar health defects and environmental destruction as residents at the Sabetaung and Kyaysintaung projects.

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