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

Income from mining declines despite rising output

Vientiane Times, March 10, 2015

The mining output in Laos continues to rise but the value of mining exports has declined due to the falling prices of mineral products on the world market. According to a report from the Ministry of Energy and Mines recently, the value of mineral products declined by 8.7 percent in 2013-14 due to falling prices on the world market, particularly the prices of gold, potash and copper.

The decline in commodity prices has affected national revenue and the socio-economic development of Laos because the mining sector is one of the main income earners in the country. The total value of mining exports in 2013-14 reached more than 12.56 trillion kip (about US$1.56 billion), according to the report. For instance, gold production attained over 30 tonnes in 2013-14, an increase of 36.8 percent compared to the previous year but its price decreased by 29.15 percent.

In the fiscal year 2014-15, the government set the target to export more mineral products with a total value of over 14.78 trillion kip, an increase of 12.5 percent compared to the 2013-14 fiscal year. So far the Ministry of Energy and Mines has approved 69 companies to invest in mining projects with total concession areas amounting to 274,663 hectares. Of the total, 50 companies have already operated the projects and the rest are in the process of setting up refineries and preparing for the excavation processes.

The mining sector is still top of land concession investment in Laos after constantly attracting investors to the field over the last years, according to the Ministry of Planning and Investment. Although the mining sector brought huge revenue to Laos, economists have warned that mining is not a sustainable source of income to maintain economic growth.

In 2012, the government announced a halt to consideration and approval of any new investment proposals in mining while also suspending rubber and eucalyptus plantations. This excluded the mining projects that aimed to supply the need of local industries and factories. The halt comes as the government wanted to review policies and assess the effectiveness of existing projects while speeding up the survey and allocation of land to identify which areas are suitable for investment, and which areas should be preserved. As some projects had impacted the country’s environment and livelihoods of local people the government said it would not consider any proposals on these kinds of projects until December 31 this year. Most of the investment projects in the mining sector have been foreign joint ventures. In 2013, the foreign joint ventures reached about US$1.07 billion out of a total of US$ 1.18 billion in the mining sector with domestic investment from the private and government sectors making up only US$103 million.

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