Friday, August 18, 2017

Three mining companies suspended after failing to pay

Three companies mining gold at Moehti Moemi in Yamethin township, Mandalay, had their mining rights suspended after failing to pay almost 200 viss (326 kilograms) of gold to the government by the deadline, said U Ohn Win, Union Minister of Natural Resources and Environmental Cconservation.

The National Prosperity Company won a tender to work 6105 acres in Block A and signed a contract to pay the government 5.577 tonnes of gold. Shwe Moe Yan Company won a bid to work 8484.59 acres in Block B at War Phyu Taung and agreed to pay the government 5.117 tonnes of gold, while Asia Kabar Myay Industry and Mining Company Limited won a contract to work 6726.20 acres in Block D in Shwe Minn Phone, Kalaw township, Shan State, and agreed to pay the government 2.2058 tonnes of gold.

U Saw Moe Myint, Amyotha Hluttaw MP, recently asked the minister what would be done about the three companies that failed to pay the government what they owed, and the minister replied that their mining rights had been suspended.

He said the ministry’s management committee met with the three companies on June 22 about their failure to pay and informed them that under the Myanmar Mines Law, their mining concessions would be suspended.

No.2 Mining Enterprise, under the ministry, took K1 billion of the security deposit posted by National Prosperity as a penalty for not paying 106.0157 viss of gold by December 2016 as per the contract, and the government also received 10.1483 viss of gold, the minister said.

Under the current contract, the company still owes 90 viss of gold through December 2016.

Regarding the 62.7536 viss owed by Shwe Moe Yan and 25.6982 viss of gold owed by Asia Kabar Myay through December 2016 under their contracts, the ministry asked the Ministry of Planning and Finance’s Budget Department to deduct K1 billion from each of the two companies’ security deposits.

The current gold price is more than K900,000 per tical, so the state loses K55 billion every time the companies running the three gold mining concessions fail to pay one tonne of gold, said U Saw Moe Myint.

During the suspension, the ministry will try to recover the gold that the three companies owe and check whether there were any other documents necessary for amending the contracts as suggested by the three companies.

The three companies proposed amending the contract to invite international technical expertise in order to establish a sustainable mining concession, because there is not enough time, and advanced technology and a lot of capital are needed to form a concession that meets international standards.

At the companies’ suggestion, the Union government ordered the gold payments to be extended to 8 years from 5 years without changing the amount of gold under the piecework system. The contract was revised in November 2013 to 8 years of lump-sum payments and 17 years of production sharing, totalling 25 years.

Contracts with the three companies for blocks A, B and D were revised a second time in September 2014 without changing the gold payment amount.

After that, 243.3604 viss of gold from Block A, 91.9187 viss of gold from Block B and 129 vises of gold from Block D – totalling 464.3748 viss – were received in FY2015-16.

The ministry is closely watching the three companies, and it has sought the advice of the Union Attorney General office regarding their difficulties in fulfilling their contracts.