Canada urged to probe Ivanhoe over ‘arms-for-copper’ deal

Wednesday, 30 June 2010 15:41 Thomas Maung Shwe

Chiang Mai (Mizzima) – The Canadian Friends of Burma has called on the government of Canada to investigate reports first made by Mizzima that Vancouver-based Ivanhoe Mines violated Canadian sanctions by allowing its 50 per cent stake in Burma’s largest mine, the Myanmar Ivanhoe Copper Company Limited (MICCL), to be sold to junta cronies closely connected with Chinese business interests late last year.

CFOB executive director Tin Maung Htoo told Mizzima his organisation was also calling on the Canadian government to probe Ivanhoe’s role in what CFOB called the “arms-for-copper” howitzer (artillery guns) deal. The deal was first reported by the Democratic Voice of Burma (DVB), in which the Burmese regime was alleged to have exchanged copper from Monywa for howitzers built by Chinese weapon’s manufacturer China North Industries Corporation (Norinco).

Norinco, revealed on its web site last week that early this month its chairman, Zhang Guoqing, had signed the “Monywa Copper Mine Project Co-operation Contract” with Major-General Win Than of the Union of Myanmar Economic Holdings, which Burma analysts document is a profit vehicle that provides secondary incomes for ruling military junta personnel and their families.

While the Norinco release omitted details of the Monywa agreement, DVB reported yesterday that it had learned from sources that several weeks prior to the official signing ceremony senior members of the Burmese regime visited China to “check on the shipments” of SH-1 155mm self-propelled howitzer cannons made by Norinco. The howitzer vehicles were then sent to Burma.

Jane’s Defence Weekly reported online that the SH-1 is a self-contained six-wheeled truck bearing the 155mm howitzer and a 12.7mm machine gun. It has a top road speed of 90km/h and the artillery piece has a maximum range of 33 miles (53 kilometres).

Analysts contacted by DVB speculated that the howitzers were exchanged for copper from Monywa. CFOB’s Tin Maung Htoo said these latest allegations were extremely disturbing but very credible, pointing out that senior executives from Daewoo were convicted in a Korean court for helping the Burmese regime build a weapons factory as part of a deal to pave the way for Daewoo’s access to Burma’s offshore gas.

“The Norinco arms-for-copper deal is a win-win for both China and Burma; the weapons manufacturer gets cheap copper and the Burmese regime gets howitzers to use against its own people,” Tin Maung Htoo said. “Sadly, more innocent civilians will die because of this; we can thank Ivanhoe Mines and its chairman Robert Friedland for building one of ‘the lowest-cost copper mines in the world’ for the Burmese regime.”

Tin Maung Htoo told CFOB that his organisation was preparing an official letter to be sent to the sanctions division at the Canadian Department of Foreign Affairs and International Trade. He added that it would also send a letter to Marketa Evans, the department’s recently appointed extractive sector corporate social responsibility counsellor. Evans’ office is mandated to investigate whether Canadian firms comply with a set of voluntary corporate social responsibility guidelines.

The exact status of the Monywa mine has remained unclear since February 2007 when Ivanhoe announced it had “sold” its 50 per cent stake in MICCL, the operator of Burma’s largest mine, to an “independent third-party trust” in return for a guarantee that when the trust sold the stake, Ivanhoe would then be paid.

As part of the trust deal Ivanhoe continued to receive money from the mine and by way of the trust remained owners of half of MICCL. Ivanhoe Mines spokesperson Bob Williamson told Mizzima last week that the secretive “independent trust” had not sold Ivanhoe’s 50 per cent stake in the mine. Mizzima learned however from a source close to Burmese commercial affairs that the “independent trust” had concluded a deal at the end of last year to sell its stake in MICCL to Burmese cronies of the military regime who have strong connections to Chinese business interests.

If indeed Ivanhoe’s stake in the lucrative Monywa joint venture was sold to junta cronies this would contradict Ivanhoe’s claim that the “independent trust” would not sell the stake to Burmese or American citizens. More importantly, such a sale would also violate US and Canadian sanctions.

In light of the apparent violation of Canadian sanctions Tin Maung Htoo also believes Canadian authorities must confront Ivanhoe and force the firm to publicly disclose everything it knows about Monywa and seriously examine whether any violation of Canadian sanctions has occurred. He added: “Ivanhoe can’t hide behind their secret trust forever; Canadian civil society and the Canadian public won’t allow it.”

Ivanhoe chairman ‘Toxic Bob’

Before he went into business with the Burmese regime, Ivanhoe chairman Robert Friedland was chief executive of Galactic Resources, a Canadian firm that operated the Summitville gold mine in Colorado during the late 1980s and early 1990s. Under his management, tens of thousands of gallons of toxic mining waste containing heavy metals and acid seeped from the mine’s ponds into creeks and the Alamosa River causing havoc with the area’s delicate ecosystem. The run-off from the mine killed all fish in the river for at least 17 miles (27 kilometres), thus earning Friedland the name “Toxic Bob”.

Friedland’s lawyers fought American officials for nearly 10 years before he agreed in December 2000 to personally pay US$27.5 million for his role in the disaster. The payment however represented a fraction of the mine’s total clean-up cost and the profits his company had made. The US and Colorado governments have so far spent a combined total of more than US$200 million on remediation at Summitville. It is often referred to as the most expensive environmental disaster in American mining.

Before it was closed, the mine had extracted at today’s prices, US$366 million in gold and about US$5.9 million in silver.

Friedland versus the Mongolian people

Ivanhoe is presently constructing a massive mine at its new project in Oyu Tolgoi, Mongolia. Because of the enormous ecological footprint the joint venture with Rio Tinto and the Mongolian government will create, many Mongolians are strongly opposed to it.

Friedland also earned the ire of Mongolians when the local media reported that while promoting Oyu Tolgoi at an international mining conference in Florida, he had boasted that Mongolia was a great location for a mine because it was devoid of people. According to Friedland: “The nice thing about this, there’s no people around … There’s no NGOs … You’ve got lots of room for waste dumps without disrupting the population.”

Unsurprisingly, he was later burned in effigy at an anti-Ivanhoe protest in the Mongolian capital in April 2006, one of the largest mass gatherings in the nation’s history.