Gold miners fall behind on fees

Three large private mining companies at the Moehti Moemi mines owe hundreds of millions of dollars worth of in-kind payments to the Ministry of Mines, according to U Win Htain, Mining Department director general.

Fevered bidding in a 2011 tender may have seen the three firms overreach, as they offered high payments in the future to secure sites at the mines in Mandalay Region, despite little surveying work having been done.

“These companies have paid almost nothing to the government since they started working nearly three years ago. The latest we’ve heard is that each has paid only about 100 viss [160 kilograms],” officials at Pyidaungsu Hluttaw’s Joint Committee of Public Account said two weeks ago.

The three firms have agreed to pay the ministry a total of 13.5 tonnes, or 432,000 troy ounces, as part of their contracts. With a troy ounce fetching about US$1300 on international markets last week, the outstanding balance is worth some $564 million. The firms are required to pay in-kind each year over the five year-period of their contracts, said U Win Htain.

“I assume the ministry will not allow these deals to continue if the companies fail to meet their obligations,” said parliamentarian U Win Myint.

Mining department official U Win Htain added that the companies have already progressed through the exploration phase and are now mining gold.

The three mining companies – National Prosperity, Shwe Moe Yan [Golden Sky] and R Sha Kabamyay [Asia Global] – all work in the Moehti Moemi area in Mandalay Region’s Yamethin township.

National Prosperity, which is chaired by prominent businessperson U Soe Tun Shein, has the highest outstanding debt, worth 5.577 tonnes over the five-year contract, according to U Win Htain.

National Prosperity gold mining director U Maung Maung told The Myanmar Times the firm has not yet started production, which is coming in September, and disputed claims the firm is in arrears on the debt, adding it has kept up with the payments it owes the ministry.

“There is no debt between the ministry and our company up to the 2013-14 financial year,” he said.

“However we have a lot of struggles to meet the five-year contract requirement to pay 5.577 tonnes of gold,” he added.

Canadian firm Ivanhoe conducted surveys in the area before withdrawing from the country in 2007, though officials say little other surveying works has been done since.

The Ministry of Mines held a tender for the Moehti Moemi area in 2011, with 18 private companies bidding and five eventually allowed to operate, according to U Win Htain.

“The companies were in a hurry in the bid to get permission to start ahead of the others,” he said. “But they didn’t have any geological data about the gold mining sites.”

U Win Htain added that international companies would not have agreed to pay such a large amount of gold without in-depth advanced study.

“It was not systematic, it was not smart bidding as the local companies were planning to mine gold without much technology,” he said.

In addition to the in-kind payments, the companies had to place a K1 billion deposit each with the ministry to secure the plots between 5000 and 8000 acres. Two of the five miners have already returned their sites to the ministry, said U Win Htain.

Parliamentarian U Win Myint said he agreed the ministry should not allow the deals to continue if the companies fail to meet the payments they agreed on.


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