Tuesday, 31 August 2010 20:23 Thomas Maung Shwe
Chiang Mai (Mizzima) – Critics of Canada’s Ivanhoe Mines say that a recent report in Burma’s state-controlled media that Chinese weapons firm Norinco is to spend nearly US$1 billion to develop the Monywa copper project’s long-stalled second phase is further evidence that the notorious weapons firm has bought Ivanhoe’s stake in Burma’s largest mining project – a charge the Vancouver-based miner has repeatedly denied.
The Myanmar Times, Burma’s state-controlled English-language business weekly reported on August 16 that Norinco, or China North Industries Corporation, would spend US$997 million to develop Monywa’s Letpadaung deposit. The untapped cache is about four miles (seven kilometres) southeast of the three other deposits that have been the focus of the Monywa mine’s operations in northwest Burma’s Sagaing Division.
The Monywa copper project is operated by the Myanmar Ivanhoe Copper Company (MICCL), a joint venture formed in the 1990’s between Ivanhoe Mines and state-controlled Mining Enterprise No. 1. In February 2007, Ivanhoe placed its 50 per cent stake in MICCL in a secretive independent blind trust in preparation for sale.
Mizzima reported this year that Ivanhoe’s independent trust sold its stake in MICCL late last year to Norinco and Chinese mining giant Chinalco in a deal that involved Burmese cronies closely connected to junta leader Than Shwe who acted as middlemen.
Ivanhoe Mines adamantly denied that the independent trust sold the firm’s stake, despite a Nornico statement in early June announcing that it had reached a deal with the Burmese regime for access to Monywa’s copper. Ivanhoe led by chairman Robert Friedland refused to disclose who controlled the trust or show any proof that the trust still controls Ivanhoe’s stake in MICCL.
Canadian Friends of Burma (CFOB) executive director Tin Maung Htoo said that news of Norinco spending nearly a billion dollars to develop the Monywa mine was yet more evidence that Ivanhoe’s stake was sold.
He said: “We’ve known for months that Norinco and Chinalco bought Ivanhoe’s stake in Monywa. Now that Burma’s state media is reporting that Norinco is going to spend a billion dollars to develop the Letpadaung deposit, we have yet more proof that the Chinese bought Ivanhoe’s stake in Monywa. But Ivanhoe will continue to deny this sale has happened because they don’t want to admit sanctions may have been violated by the involvement of blacklisted junta cronies in the deal.”
Tin Maung Htoo calls the Ivanhoe sale an “open secret”, citing a web posting in March last year that outlined the deal on Australian business news commentary website Business Spectator by a Glenn Ford, the same name as MICCL’s present general manger. The posting stated: “Now Chinalco, in partnership with Chinese state-owned arms dealer Norinco, is buying the whole copper deposit of Ivanhoe and the Myanmar government.”
Norinco, one of the Chinese military’s biggest suppliers, has long been the subject of intense western scrutiny for its activities. The Bush administration alleged that Norinco exported missile technology to Iran and took steps to penalise the firm in 2003 and 2005.
Did Nornico’s billion-dollar figure include the cost of purchasing the Ivanhoe stake?
In March 2003 Ivanhoe said the Letpadaung expansion was going to cost around US$315 million. Though this estimate appeared seven years ago and the US dollar has fallen in value, the US$997 million that Norinco will reportedly spend on Letpadaung is still a significant increase in the cost of the expansion.
Tin Maung Htoo believes he knows why the cost has increased. He told Mizzima: “We don’t know the whole story yet but I strongly suspect that the billion-dollar figure quoted by The Myanmar Times includes the money that Norinco had to spend to acquire at least partial ownership of what was Ivanhoe’s stake in MICCL.”
In October 2007, some six months after putting its MICCL stake in a blind trust, Ivanhoe claimed that it had determined it was “prudent to record a US$134.3 million write-down” in the value of their 50 per cent stake, thereby reducing its value to nothing.
Tin Maung Htoo said it was very plausible that the middlemen connected to Than Shwe, said to be involved in Norinco’s Monywa deal, first took possession of the stake from the blind trust and resold it to Norinco, giving themselves a handsome profit in the process.
“A massive windfall for Than Shwe and his cronies was the inevitable outcome of Ivanhoe’s clever ploy to write down the value of its stake in MICCL to nil; the cronies get the stake for free and then in turn resell it to the Chinese for hundreds of millions,” Tin Maung Htoo said.
He added that: “Now is the time for Canadian authorities to investigate Ivanhoe’s questionable departure from Burma and determine if the firm violated Canadian sanctions by its actions. I urge Foreign Affairs Minister Lawrence Cannon to take action.”
Monywa and Nornico’s ‘arms-for-copper affair’
Burma’s respected opposition satellite broadcaster, the Democratic Voice of Burma (DVB), reported at the end of June that sources said several weeks before Norinco announced it had signed a deal to get copper from Monywa, 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 describes the SH-1 as 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. Tin Maung Htoo told Mizzima that he found the allegations over such exchanges credible, pointing out that Daewoo senior executives 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 China and Burma; the weapons maker 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.”
Monywa’s Letpaduang expansion long-delayed
Despite the fact that every year since the Monywa mine came online in 1998 Ivanhoe repeatedly claimed that the undeveloped Letpadaung deposit had massive potential, the firm was unable to secure external funding for its expansion, which Ivanhoe had claimed could increase Monywa’s overall production by a massive 450 per cent.
An Ivanhoe press release from March 2003 quoted then deputy chairman Ed Flood as stating that “Letpadaung is widely recognised as one of the best undeveloped copper projects in the world”.
It said the “total measured and indicated resources at Letpadaung are 946 million tonnes grading 0.43 per cent copper, using a cut-off grade of 0.15 per cent copper”.
In the same release Ivanhoe claimed that the Australian consulting engineers Ausenco had devised a plan that would involve only the expansion’s “capital costs of US$315 million over six years, of which only US$40.9 million in external funding will be required”. The rest of the capital would come from funds generated by the mine’s existing operations.
Despite Ivanhoe’s optimistic forecasts the firm was unable to secure the funds or the approval of the Burmese regime to expand work at the Kysingtaung deposit and begin work at Letpadaung. Referring to both deposits Ivanhoe concluded in a March 2006 update to its shareholders that “without a substantial increase in mining capacity it is doubtful whether these two deposits can be economically developed”.
Representatives of Ivanhoe Mines could not be reached for comment.
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Chiang Mai (Mizzima) – Critics of Canada’s Ivanhoe Mines say that a recent report in Burma’s state-controlled media that Chinese weapons firm Norinco is to spend nearly US$1 billion to develop the Monywa copper project’s long-stalled second phase is further evidence that the notorious weapons firm has bought Ivanhoe’s stake in Burma’s largest mining project – a charge the Vancouver-based miner has repeatedly denied.
The Myanmar Times, Burma’s state-controlled English-language business weekly reported on August 16 that Norinco, or China North Industries Corporation, would spend US$997 million to develop Monywa’s Letpadaung deposit. The untapped cache is about four miles (seven kilometres) southeast of the three other deposits that have been the focus of the Monywa mine’s operations in northwest Burma’s Sagaing Division.
The Monywa copper project is operated by the Myanmar Ivanhoe Copper Company (MICCL), a joint venture formed in the 1990’s between Ivanhoe Mines and state-controlled Mining Enterprise No. 1. In February 2007, Ivanhoe placed its 50 per cent stake in MICCL in a secretive independent blind trust in preparation for sale.
Mizzima reported this year that Ivanhoe’s independent trust sold its stake in MICCL late last year to Norinco and Chinese mining giant Chinalco in a deal that involved Burmese cronies closely connected to junta leader Than Shwe who acted as middlemen.
Ivanhoe Mines adamantly denied that the independent trust sold the firm’s stake, despite a Nornico statement in early June announcing that it had reached a deal with the Burmese regime for access to Monywa’s copper. Ivanhoe led by chairman Robert Friedland refused to disclose who controlled the trust or show any proof that the trust still controls Ivanhoe’s stake in MICCL.
Canadian Friends of Burma (CFOB) executive director Tin Maung Htoo said that news of Norinco spending nearly a billion dollars to develop the Monywa mine was yet more evidence that Ivanhoe’s stake was sold.
He said: “We’ve known for months that Norinco and Chinalco bought Ivanhoe’s stake in Monywa. Now that Burma’s state media is reporting that Norinco is going to spend a billion dollars to develop the Letpadaung deposit, we have yet more proof that the Chinese bought Ivanhoe’s stake in Monywa. But Ivanhoe will continue to deny this sale has happened because they don’t want to admit sanctions may have been violated by the involvement of blacklisted junta cronies in the deal.”
Tin Maung Htoo calls the Ivanhoe sale an “open secret”, citing a web posting in March last year that outlined the deal on Australian business news commentary website Business Spectator by a Glenn Ford, the same name as MICCL’s present general manger. The posting stated: “Now Chinalco, in partnership with Chinese state-owned arms dealer Norinco, is buying the whole copper deposit of Ivanhoe and the Myanmar government.”
Norinco, one of the Chinese military’s biggest suppliers, has long been the subject of intense western scrutiny for its activities. The Bush administration alleged that Norinco exported missile technology to Iran and took steps to penalise the firm in 2003 and 2005.
Did Nornico’s billion-dollar figure include the cost of purchasing the Ivanhoe stake?
In March 2003 Ivanhoe said the Letpadaung expansion was going to cost around US$315 million. Though this estimate appeared seven years ago and the US dollar has fallen in value, the US$997 million that Norinco will reportedly spend on Letpadaung is still a significant increase in the cost of the expansion.
Tin Maung Htoo believes he knows why the cost has increased. He told Mizzima: “We don’t know the whole story yet but I strongly suspect that the billion-dollar figure quoted by The Myanmar Times includes the money that Norinco had to spend to acquire at least partial ownership of what was Ivanhoe’s stake in MICCL.”
In October 2007, some six months after putting its MICCL stake in a blind trust, Ivanhoe claimed that it had determined it was “prudent to record a US$134.3 million write-down” in the value of their 50 per cent stake, thereby reducing its value to nothing.
Tin Maung Htoo said it was very plausible that the middlemen connected to Than Shwe, said to be involved in Norinco’s Monywa deal, first took possession of the stake from the blind trust and resold it to Norinco, giving themselves a handsome profit in the process.
“A massive windfall for Than Shwe and his cronies was the inevitable outcome of Ivanhoe’s clever ploy to write down the value of its stake in MICCL to nil; the cronies get the stake for free and then in turn resell it to the Chinese for hundreds of millions,” Tin Maung Htoo said.
He added that: “Now is the time for Canadian authorities to investigate Ivanhoe’s questionable departure from Burma and determine if the firm violated Canadian sanctions by its actions. I urge Foreign Affairs Minister Lawrence Cannon to take action.”
Monywa and Nornico’s ‘arms-for-copper affair’
Burma’s respected opposition satellite broadcaster, the Democratic Voice of Burma (DVB), reported at the end of June that sources said several weeks before Norinco announced it had signed a deal to get copper from Monywa, 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 describes the SH-1 as 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. Tin Maung Htoo told Mizzima that he found the allegations over such exchanges credible, pointing out that Daewoo senior executives 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 China and Burma; the weapons maker 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.”
Monywa’s Letpaduang expansion long-delayed
Despite the fact that every year since the Monywa mine came online in 1998 Ivanhoe repeatedly claimed that the undeveloped Letpadaung deposit had massive potential, the firm was unable to secure external funding for its expansion, which Ivanhoe had claimed could increase Monywa’s overall production by a massive 450 per cent.
An Ivanhoe press release from March 2003 quoted then deputy chairman Ed Flood as stating that “Letpadaung is widely recognised as one of the best undeveloped copper projects in the world”.
It said the “total measured and indicated resources at Letpadaung are 946 million tonnes grading 0.43 per cent copper, using a cut-off grade of 0.15 per cent copper”.
In the same release Ivanhoe claimed that the Australian consulting engineers Ausenco had devised a plan that would involve only the expansion’s “capital costs of US$315 million over six years, of which only US$40.9 million in external funding will be required”. The rest of the capital would come from funds generated by the mine’s existing operations.
Despite Ivanhoe’s optimistic forecasts the firm was unable to secure the funds or the approval of the Burmese regime to expand work at the Kysingtaung deposit and begin work at Letpadaung. Referring to both deposits Ivanhoe concluded in a March 2006 update to its shareholders that “without a substantial increase in mining capacity it is doubtful whether these two deposits can be economically developed”.
Representatives of Ivanhoe Mines could not be reached for comment.