Behind the Letpadaung Crisis, a Canadian Firm With a Dire Record

Canada’s extensive role in extractive industries is often overlooked. Many people may be shocked to learn that 70 percent of all global mining companies are registered in Canada, according to the Canadian stock market monitoring website tmx.com.

A 2009 report by a mining monitoring network noted how with the rise of the corporate social responsibility industry, many mining companies are becoming embroiled in public scandals, giving renewed impetus to mining accountability movements. The Canadian government was forced to appoint a commissioner to deal with the disputes.

Burmese opposition groups and activists in Canada remember well Vancouver-based Ivanhoe Mines—renamed Turquoise Hill Resources—that ran the biggest copper mine in Burma until 2010. Our campaign for divestment helped pressure the company to sell its stake in the Letpadaung mine in Monwe to Chinese weapons-maker Wanbao.

While there has been some good to come from the reform process, the voices of the growing protest movement against extractive industries cannot be silenced. Protests against the Letpadaung mine have since last year highlighted the exploitative nature of doing business in Burma, and the impact on ordinary people.

In November, police used smoke bombs containing phosphorus in a pre-dawn crackdown on protesters camped at Monwe, severely burning and injuring 108 people, 99 of whom were Buddhist monks. The assault brought the international media spotlight to Burma, as it was the biggest crackdown on peaceful protest since 2007, and prompted the government to launch an investigation.

The findings of the investigation team’s report released on March 12, disappointed many, and provoked an angry reaction from Letpadaung villagers. The team, which included ministers and a member of the Wenbao corporation, shed some light on what happened, but fell far short of calling for a halt to operations. It recommended the contract be re-written to address the issues raised in the report.

Daw Aung San Suu Kyi, who chaired the commission, promised the villagers their concerns would be addressed in a visit to Letpadaung the day after the report was released. She was met with anger and frustration because she argued the US $1 billion contract should not be scrapped because it would scare away foreign investors and strain relations with the slumbering dragon to the north—China.

The Letpadaung operation, one of two large mines in the area, is expected to produce 100,000 tons of copper a year, making the companies involved a tidy $4 billion over the lifespan of the mine.

The first mine was developed in 1996. Since then, complaints against the companies involved have only grown. Livelihoods have been ruined, land taken with little warning or compensation. Respiratory ailments and skin diseases caused by the pollution of water and air have increased dramatically.

The whole landscape around Monywa has changed. Sabetaung, a local township, has disappeared. Hills have been dug into like termite mounds and filled with waste products—out of sight, out of the mind of the companies and the government.

But local communities want none of this. We must ask ourselves this: what do local communities gain from the companies’ presence in the area?

Letpadaung Mountain will be gone in the coming years, eroded and gutted by Wenbao, and sites of historical and religious significance will be gone, too.

Already 3,200 hectares of land—mostly farmed by subsistence farmers and including 218 homes and three Buddhist monasteries—was expropriated. Compensation was made up to about $1,000 to cover the cost of rebuilding a house in the relocation zone, and about $1,200 for a hectare of land, $12 for a palm tree and $19 for a mango tree.

Since the publication of the commission’s report, the government has said it will increase the initial compensation offer.

Ivanhoe’s own environmental impact assessments admit that at least a quarter of land used by the mining concession was contaminated with dangerous byproducts.

The Canadian Friends of Burma has received evidence in the form of water and soil samples, photos and videos, which point to serious environmental destruction at the site. Farmers’ crop yields in the area near the mine have seen a sharp decline because of increased acidity in the soil.

But Ivanhoe denied it was responsible, saying instead that the damage was caused by state-owned Mining Enterprise No. 1 and former Yugoslavia’s Bor Copper, which controlled the mine from 1984 until Ivanhoe bought into the project.

In December 2007, amid pressure to raise funds for another project in Mongolia, Ivanhoe transferred its 50 percent stake to a third party, the Monywa Trust.

A murky deal was signed with China’s state-owned arms maker Norinco, which owns Wanbao. Ivanhoe was lucky to get out when it did to avoid the recent protests, and it was eager to remain part of the project, which its feasibility studies said was due to increase production fourfold.

It is a positive step that Canada hosted the World Economic Forum for Extractive Industries on March 2, with its commitment to “stimulate sustainable economic growth and reduce poverty in developing countries,” but there is much still to be done.

The ongoing crisis at Letpadaung should be a warning to the world of the need to exert caution when conducting mining operations in underdeveloped countries.

Tin Maung Htoo worked as executive director for Canadian Friends of Burma from 2005 to 2012.


2 Responses to Behind the Letpadaung Crisis, a Canadian Firm With a Dire Record

  1. You don’t dare to mention Tay Za’s role in this, do you? What about that guy Michael Hua Kyaw Myint who?
    So what good did this “divestment campaign” (pushing for sanctions) of your Canadian friends do for the poor phosphorous-bombed rural farmers of Burma? Things look different from Canada, don’t they? By the way the Chinese also bought Nexen in Canada, so is that also part of the “divestment strategy”?
    Think global but act local!

  2. Just a piece of correct info:the ground pollution around the mine was not apparent until wide-spread makeshift treatment and smelting of reject concentrates by local villagers, the raw material having been purchased from managers of No.1 Mining several years before the operations were transferred over to Ivanhoe. The ME1 managers became rich from the sales of the raw copper-rich material. The farm lands around the mine thus became badly polluted.

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