MAC: Mines and Communities

Burma's extractive industries still need reform - reports

Published by MAC on 2013-07-23
Source: Democratic Voice of Burma, Irrawaddy

Commission approves contract giving govt larger share of Laptadaung profits

Democratic Voice of Burma

16 July 2013

The powerful Myanmar Investment Commission has approved a new draft contract that will give the government a greater share of the profits generated by the controversial Latpadaung copper mine, while reducing the amount of funds the project's Chinese partner will receive.

According to the new contract, 51 percent of the profits from the mine will be given to the government, while 30 percent will go to the Chinese-backed Wanbao Mining Company Limited. The military-owned Union of Myanmar Economic Holdings (UMEH) is set to receive the remaining 19 percent of the profits.

The previous agreement had allotted 4 percent to the state, while the Chinese mining outfit was set to receive 51 percent of the profits, with the final 45 percent going to UMEH.

The new contract follows recommendations etched out in a controversial report published in March by the Aung San Suu Kyi-led Latpadaung Investigation Commission.

The commission was tasked with investigating the social and environmental impacts of the project, along with a pre-dawn assault on 29 November where riot police dispersed demonstrators at the mine with water cannons and incendiary devices.

According to the new contract, US$ 2 million will be allocated annually to fund environmental preservation projects, while another US$1 million dollars will be used to promote corporate social responsibility (CSR) programmes.

"The [new contact] includes an agreement to allocate one million USD for CSR and two million for environmental preservation in addition to increasing the amount of compensation based on the market price," said Myint Thein, media coordinator of the Myanmar Wanbao Mini ng Company Limited.

"According to the agreement, both (UMEH) and Wanbao will be gaining less percentage of the profits - as recommended in the [Latpadaung Investigation Commission] report."

Myint Thein said Wanbao is planning to hold a press conference soon where they will inform the public about the revisions made to the contract.

The new contract is set to be signed this month.

While the committee charged with implementing the investigation commission's recommendations claims to be working on the ground near the mine's location in Monywa, locals said that they have not been contacted.

Thwe Thwe Win, a local resident and well-known Latpadaung activist, said she was unaware of the provisions in the new contract and claimed the officials affiliated with the committee had yet to contact locals.

"They only acknowledged the villages that accepted relocation, but sent us - villagers who remained in the old village - a letter informing us that we are no longer recognised as a village."

More than 7,800 acres of farmland and 66 villages have been displaced by the copper mine in Monywa's Salingyi township.

Burma's extractive industries not digging deep enough with reforms: Report

The Irrawaddy

17 July 2013

Burma's extractive industries remain plagued by transparency and governance shortcomings, a watchdog said on Wednesday as it released a report attempting to dampen the hype that has surrounded the country's opening up to foreign investment after decades of isolation and economic stagnation.

The report by the Shwe Gas Movement pummeled the existing regulatory re gime as woefully inadequate to address the social and environmental concerns facing Burma as its resource bounty is put up for auction, and said that pending major policy changes, further extractive projects "should be put to a halt."

With Burma's large untapped oil and natural gas reserves-and a new foreign investment law that has welcomed firms from abroad-the Shwe Gas Movement urged policy makers to handle newfound interest in the sector responsibly.

"Despite taking superficial steps towards reform, encounters with local populations show that little substantial change in terms of extensive environmental degradation, human rights, and government transparency is actually being witnessed on the ground," the report said.

The group urged an overhaul of Burma's legal and regulatory frameworks, including amending the 2008 Constitution to enshrine guarantees on freedom of expression and assembly.

A law forbidding unregistered pr otests was used in April to arrest and charge 10 people in Arakan State who were speaking out against the Shwe oil and gas pipelines, a project that served as the impetus for the Shwe Gas Movement's founding. That law, and others that have been used in Burma to stifle dissent, hamper the ability of affected communities to have a say in resource extraction issues, the watchdog said in the report.

Many of the proposed reforms would require engagement from Parliament and the administration of President Thein Sein. Wong Aung, coordinator for the Shwe Gas Movement, said he thought most lawmakers saw the need for the changes recommended in the report, but were not collaborating sufficiently with many of those most affected by the country's troubled extractive industries.

"They need to engage more with the various stakeholders like the ethnic communities, ethnic leaders and other political stakeholders in various parts of the nation," he told The Irrawaddy . "It's really important."

Ethnic communities concentrated in Burma's border areas are often disproportionately affected by extractive practices, because most of the country's remaining natural resources are also located on the fringes of the country. Wong Aung said a desire to secure access to those resources was one factor driving a government push to reach ceasefire agreements with armed rebel ethnic groups nationwide.

Environmental and Social Impact Assessments (EIA/SIA), mandatory in many countries before any project with potential effects on people or the environment is undertaken, are not required under Burmese law. Legislation containing mandatory assessments may be enacted "in the near future," Wong Aung said, but added that he worried the law might not contain strong enough provisions on public disclosure of EIA/SIA findings.

Another recommendation made by the report advises that Burma join the Extractive Industries Transparen cy Initiative (EITI), a global standard on transparency in the sector that Thein Sein says his government is actively working to join.

The Shwe Gas Movement said Wednesday that despite the president's stated EITI ambitions, the sector remains far from meeting the initiative's governance and regulatory requirements.

The opacity of accounting for resource revenues has helped foster military entrenchment in the extractive industries, according to the report. It pointed to state-owned Myanmar Oil & Gas Enterprise (MOGE) as a primary vehicle through which revenues end up in the military's pockets.

In May, Revenue Watch Institute ranked Burma dead last among 58 nations evaluated for resource governance, receiving an average score of just four out of 100 across four aspects of the industry assessed.

Burma's natural resource endowment is substantial, including more than 8.1 trillion cubic feet of proven natural gas reserves and nearly 490 million tons of estimated coal reserves, according to a June report by the Asian Development Bank (ADB) and the consultancy Accenture. The country has 37 oil blocks in operation, with 66 more having been offered up over the last two years, the ADB report said.

Last year Burma's government took in US$3.5 billion in natural gas exports alone, and that revenue is expected to grow in the coming years.

Shwe Gas Movement was formed in response to work on the dual Shwe oil and gas pipelines in Arakan State. China National Petroleum Corporation (CNPC) has been widely criticized for its handling of the project, accused of forced evictions, inadequate compensation and environmental degradation as it laid the 800-km pipeline, which passes through 21 townships across Burma before terminating in China's Yunnan Province.

The pipelines have already been constructed and are now undergoing testing, but Wong Aung said oil and gas was not expe cted to start flowing from the Bay of Bengal until early next year because work on the Chinese side of the border remained.

Chinese companies are the largest investors in Burma's extractive industries, and their operations have frequently faced protests from local communities. As public discontent has mounted, Chinese executives have sought to assuage the concerns, with some implementing social programs in Burma that have included the provision of schools and medical facilities. Representatives from Chinese companies and the government held a press conference earlier this month at the Chinese Embassy in Rangoon, where they sought to convey their work in the country as mutually advantageous.

"The current Chinese investments in Burma are very important investments for the two countries-these are very beneficial for the development of the countries," China's Economic and Commercial Counselor Jin Honggen said.

This week Burma's government s aid the Chinese firm Wanbao would renegotiate its contract for the controversial Letpadaung copper mine in Sagaing Division, with a new deal-which has not yet been signed-giving the government a 51 percent share of profits from the venture. The government receives no share of profits under the current contract, which splits earnings between Wanbao and the Burmese military-owned Union of Myanmar Economic Holdings Ltd (UMEHL).

Gao Mingbo, a Chinese Embassy spokesman, told The Irrawaddy that "the Chinese side keeps close contact with the Myanmar side regarding the implementation of bilateral projects."

"The Embassy has always asked the Chinese companies to strictly follow relevant laws and regulations in Myanmar," he wrote in an e-mail. "On the other hand, we are happy to see that the Chinese companies have over the past few years stepped up their efforts to fulfill their social responsibilities.

"We would also like to see further outreach efforts by relevant companies to better engage the local community so that the Myanmar public will have a more comprehensive understanding of the win-win cooperation projects between our two countries."

Burma's extractive and Environmental Governance in Need of Overhaul

Press Release

17 July 2013

RANGOON, BURMA - A new report released by Shwe Gas Movement today reveals glaring weaknesses in Burma's legal framework regarding the extractive industries, resulting in human rights abuses, environmental damage and poor revenue distribution. A panel of experts was convened today to present the findings of the report.

Good Governance and the Extractive Industry in Burma examines the current laws and conventions in place, measuring what's missing in Burma against international standards. Research for the report shows major shortcomings in the areas of environmental conservation, human rights, revenue transparency and natural resource management. The report further suggests that new investments should be halted until these gaps in governance are mended.

"Natural resources should be used to benefit the country, not to enrich a select few at the expense of the environment and human rights of the affected communities," said Wong Aung, Coordinator of the Shwe Gas Movement. "Our country has an opportunity to learn from past mistakes, but instead abuses are continuing in connection to the extractive industries. This must be stopped."

Calling on civil society, international institutions, transnational corporations and the government of Burma to take equal responsibility in implementing the Extractive Industry Transparency Initiative (EITI), mandating Environmental and Social Impact Assessments (ESIAs), ensuring human rights and local benefit sharing, the report offers specific recommendations to each of these four audiences on how to achieve good governance.

"Human rights and good governance are closely intertwined. Without human rights, good governance will be meaningless. And without good governance, human rights will not prevail," said Aun g Myo Min, Executive Director of Human Rights Education Institute of Burma, at the report launch today. "Good governance is the basic principle for every citizen to enjoy their right to participation, right to information and government's responsibility to protect and promote its citizens' rights. The government must similarly hold companies in the extractive industries responsible to protect and promote both good governance and human rights."

The release of the report comes just before completion of controversial major extractive pr ojects in Burma such as the Shwe Gas and oil pipelines, and as 30 additional coastal natural gas blocks are currently up for foreign bidding. It follows the May 2013 announcement by Revenue Watch Institute that Burma's resource governance is the worst in the world.

Contact: Wong Aung - global[at]

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