NORINCO, Chinese engineering and weapons company, signs agreement for Monywa Copper Project in Burma

Earlier this month, Chinese Premier Wen Jiabao traveled to Burma to meet with Prime Minister U Thein Sein and celebrate the 60th anniversary of Sino-Burmese diplomatic relations.  Over the last six decades, relations between China and Burma have varied greatly, ranging from the initial suspicious and mistrustful perceptions of each other in the 1950s to the strong “pauk pauw” (fraternal) relations China and Burma currently share.  In recent years, growing Chinese investment in Burma has only strengthened relations between the two countries.  For Burma’s military junta, maintaining good relations with a powerful and rich neighbor with UN Security Council veto power is extremely valuable; while for China, Burma is a strategic geopolitical ally for maintaining the stability of its border areas, securing access to natural resources for its western provinces, as well as providing trade and transportation access to the Indian Ocean, especially as construction begins on dual oil and natural gas pipelines linking Burma’s Arakan coast with China’s southwest Yunnan province. 

We documented China’s investment in the development of Burma’s natural resources in a 2008 report which identifies 69 Chinese companies involved in at least 90 hydropower, oil and natural gas and mining projects in Burma.  Given China’s vast investments in the development of Burma’s natural resources it comes as no surprise that during the one day celebration of the 60th anniversary of Sino-Burmese diplomatic relation, Premier Wen Jiabao and Prime Minister U Thein Sein were present for the signing of a new deal (in English; also available in Chinese) between China North Industries Co (NORINCO), a Chinese state-owned weapons and armament manufacturer, and Burma’s military junta for the Monywa Copper Project – a project which not only provides China with access to raw materials, but increases China’s growing influence in Burma.

According to the Chinese company NORINCO’s website, “Monywa…is abundant in copper mine resources with excellent mineral quality, which is of great significance to strengthening the strategic reserves of copper resources in our country, and to enhancing the influence of our country in Myanmar.”   

The Monywa Copper Project is located in central Burma’s Sagaing Division, and is the country’s largest mine with four large deposits: Sabetaung, Sabetaung South, Kyisintaung and Letpadaung. The first three (referred to collectively as S & K) are adjacent and have been developed as one project, while Letpadaung is approximately 10 km southeast of S & K, and remains undeveloped.  NORINCO is the second Chinese investor in the Monywa Copper Project, following China Nonferrous Metal Mining Co.’s earlier acquisition of a stake in the Letpadaung Copper Deposit.

This latest deal for the Monywa project is NORINCO’s first direct investment in a mining project in Burma, although it is also a stakeholder in the Mwetaung Nickel Deposit in Burma’s Chin State through its wholly-owned subsidiary Wanbao Mining Co. which created a 50/50 joint venture for the project with fellow Chinese company Gold Mountain (Hong Kong) International Mining Co, itself a wholly-owned subsidiary of the Chinese company Zijing Mining Co.  Kingbao (Jinbao) Mining Co. has signed agreements with Burma’s Ministry of Mining No. 3 to conduct exploration and feasibility studies for this laterite nickel mine. 

According to NORINCO’s website (in English; also available in Chinese), its subsidiary Wanbao Co.’s activities also include partnering with China Tianchen Engineering Co. to sign a design contract for a chemical engineering program in Burma, which makes use of preferential buyer loans provided by the Chinese government to Burma. 

Prior to NORINCO’s deal for the Monywa Copper Project, operations at the mines were run by Myanmar Ivanhoe Copper Co Ltd (MICCL), a 50/50 joint venture between Canadian company Ivanhoe Mines and Burma’s government owned Mining Enterprise No. 1.  After this, MICCL signed a copper sales agreement with Marubeni Co., Japan’s 5th largest trading company, giving Marubeni the exclusive right to market and sell the copper produced at the Monywa Copper Project.  Marubeni Co. also provided a US$ 90 million loan for the development of the mine and continues to sell copper products from the Monywa project to companies all around the world.

As with similar large-scale natural resource development projects in Burma, the effects for local communities and the environment are often devastating: project sites became increasingly militarized, human rights violations and forced labor became common occurrences, and the environment severely degraded.  One villager in the area, interviewed by EarthRights International, describes how his land was confiscated and source of income destroyed as a result of the development of the Monywa Copper Project:

“The government took our farmland from us to expand the mining area. My family and others lost all of our wheat, sunflowers, corn, and sesame crops to the government. My family paid 200,000 kyats for that farmland.  There is nothing that we could have done to get our land back...[and] the government did not give my family any compensation or money for our loss.”

Another villager from the area describes the environmental impacts of the copper extraction process at Monywa:

“The forest and trees are gone from the area where MICC is located. Trees are unable to grow in this area anymore. I think it is because there is a lot of acid in the soil surrounding the mine site. Some miners just throw away acid in the ground and just bury it with soil.”

Intense public scrutiny over Ivanhoe’s presence in Burma and its subsequent takeover by Australian mining giant Rio Tinto ultimately led Ivanhoe Mines to pull out from Burma and transfer ownership of its 50% stake in MICCL to an independent third-party trust in February 2007.

Now, with NORINCO signing a cooperation contract for the Monywa Copper Project, there are high probabilities that the previously undeveloped Letpadaung deposit will enter production, especially as the Sabetaung, Sabetaung South, Kyisintaung ( S & K) deposits continue to lose productivity.  If so, the expansion of the project would likely mean high profits for NORINCO and Burma’s military junta, and high suffering for the communities that live around the project site.

Meanwhile, NORINCO’s intentions remain unclear, especially considering that it is one of China’s premier weapons and armaments manufacturers.  Given Burma’s recently publicized nuclear ambitions and connections with Russia and North Korea, this recent investment from a Chinese weapons manufacturer makes it all the easier to imagine a Burma that is a threat not only to communities around project sites like at Monywa, but both regionally and globally as well.