Working towards greater community control over land, forests and natural resources

Laos seeks Chinese help to survey its mineral wealth

Vientiane Times, 15 May, 2013

Laos is seeking help from the Chinese government to conduct detailed surveys of its mineral wealth, aiming to use the information to help regulate the mining industry, according to a senior government official. Deputy Minister of Energy and Mines Mr Somboun Rasasombath said as quoted in the South China Morning Post this week that he would discuss the matter with Chinese Deputy Minister of Land and Resources, Mr Wang Min, at the China-Asean Mining Co-operation Forum in China.

“A lack of knowledge about our mineral wealth meant it was difficult for us to challenge our investors, even if we suspected some of them were lying about the amount of work they had done and the resources they had found,” Mr Rasasombath said. “My advice to would-be investors is that they’d better conduct their own geological work before purchasing any projects.”

The Lao government only has a rough idea of the locations of many mineral deposits, since it lacks the resources to conduct detailed prospecting and has to rely on preliminary geological surveys conducted many years ago by countries such as France, Russia, China and Britain. The government of Laos suspended approvals of new mine exploration licences in June last year until 2015 saying it needs to review the investment licences it has allocated to mining firms.

Mr Somboun said less than 5 percent of the 355 mining projects that have been granted mining licences in Laos have met their contractual exploration commitments to the government. Many of the companies are trading and investment firms, which are sitting on their exploration licences waiting for their projects to be bought out by others at a premium.

“Most of these firms have done a poor job in delivering their promises, while some have caused environmental damage and affected the livelihood of our communities,” Mr Somboun said.

Some firms have managed to extend the validity of their exploration licences to more than 10 years, although they are supposedly not extendable after six years, as Vientiane has taken an accommodative attitude in the past to encourage more investments. The existence of a large number of unexploded cluster bombs in Laos, dropped during the Indochina war, means investors have to spend money to clear them before mining.

“Our government has approved too many projects in the past, which our regulatory resources cannot cope with,” Mr Somboun said. “We also need to improve laws related to mining and better train our staff to thoroughly review all 355 projects on their progress.”

Laos has ample resources of gold, copper, iron ore, potash, lead, zinc and sapphires. Vice President Mr Hao Chuanfu of the state-owned China Minmetals Non-ferrous Metals, the parent of the Hong Kong-listed MMG, said MMG had no new exploration projects in Laos but would seek to expand on its Sepon copper mine. The mine’s output grew 7.1 percent last year to 85,150 tonnes. With sales of US$806 million and operating profit of US$491 million last year, it contributed 9 percent of Laos’ gross domestic product and 20 percent of the government’s revenue.

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