Private firms swoop on mineral sector

The privatisation of Burma’s extractive sector took another step today as one more company signed a contract to mine lead in Shan state, maintaining a trend that has permeated the breadth of Burmese industry.

A wholesale shake-up of the Burmese economy is underway: the agreement between Burma’s mining ministry and the Top Ten Stars Manufacturing Co Ltd, announced today in the New Light of Myanmar newspaper, follows the auctioning off of swathes of state-owned businesses to private enterprise, and increasing foreign investment in the pariah state.

Top Ten Stars’ venture follows profit-sharing contracts signed at the beginning of this year by two other companies, DELCO and Ngwe Chinthae, to mine tin, tungsten and granite. The projects will be jointly shared with the Burmese government’s State Mining Enterprise-2 and -3.

The US-sanctioned Asia World Company already operates several mines in Kachin state, while a controversial deal struck last month will see the Chinese weapons giant, Norinco, mine copper at the lucrative Monywa site in Sagaing division.

Mining is one of the largest sources of income for the Burmese government, and the sector was given a boost last year by the privatisation sweep, which has appeared to favour Burmese companies with ties to the ruling junta, as well as Chinese, Indian and Thai firms.

Since the sector first opened to foreign investment in 1988, overseas companies have generated some US$1.3 billion, or around eight percent of the country’s total foreign investment. This comes despite US and EU sanctions that target Burma’s mining industry.

The deal with Norinco was shrouded in controversy after it emerged that the Burmese government had undertaken an apparent ‘arms-for-copper’ deal; Norinco had sold Burma heavy artillery prior to the deal, which was overseen by Burmese prime minister, Thein Sein.

At its peak, the Monywa mine had been producing some 39,000 tonnes of copper per year, and was among Burma’s most profitable assets. Meanwhile, coal mining in the north of the country last year produced some 234,000 tonnes, Xinhua reported, and is dominated by Chinese and Indonesia firms.

Despite Burma being a resource-rich country, poor infrastructure and mismanagement by the government has meant that the extractive industry had so far failed to realise its full potential.

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