Letpadaung Copper Mine Project (LCMP)
A freelance miner spreads gravel in his family’s filtration site as the evening rolls in - Photo by Lauren DeCicca for NRGI
Letpadaung Copper Mine Project (LCMP)
The Letpadaung Copper Mine Project, implemented by Chinese-owned Myanmar Wanbao Mining Company Ltd. (MWMCL) and the military-owned Myanma Economic Holdings Ltd. (MEHL), is a Sino-Myanmar joint venture between the two companies and the Myanmar state-owned enterprise Mining Enterprise No. 1 (ME-1). It is intended to fulfill domestic demand for raw mineral resources and promote exports while encouraging the development of heavy industries. The project is located in Salingyi Township of Sagaing Region in Myanmar and encompasses 32.73 square kilometers. The project budget is allocated to be USD 1.065 Billion (USD 2 million annually for CSR project)
The Letpadaung Copper Mine Project originated in 1992 as a joint venture between ME-1 and the Canadian Ivanhoe Company Ltd. In 1996, the two companies established Myanmar Ivanhoe Copper Company Limited (MICCL) on a 50-50 ownership basis. The Canadian firm divested its share to the ostensibly independent Monywa Trust in 2007, and in 2010 MICCL sold its share to Wanbao Mining Ltd, a subsidiary of the Chinese state-owned China North Industries Corporation (NORINCO). The original contract between China and Myanmar was signed during Chinese Premier Wen Jiabao’s visit to Myanmar on June 3, 2010, and Myanmar Wanbao Mining Company Ltd. (MWMCL) was founded that September to administer the Letpadaung Copper Mine Project. Construction began in 2011 amid allegations of land confiscation, forced relocation and failure to conduct social or environmental impact assessments.
Local communities protested at the project site, leading to a brutal police crackdown in late 2012. In the aftermath, a parliamentary investigation commission was established under Aung San Suu Kyi to investigate the incident. The commission’s report acknowledged problems including inadequate environmental protection measures and impact assessments but supported the continuation of the project. Local communities were outraged, accusing the commission of placing foreign policy interests over those of the local communities. Following the report, in July 2013 the project Production Sharing Contract was amended to give ME-1 51 percent ownership of the project, with MWMCL at 30 percent and MEHL at 19 percent.
The Letpadaung Copper Mine became operational in March 2016. By 2018, its output exceeded 100,000 tons per annum of cathode copper, rising to 120,000 tons in 2019. The Myanmar government receives in-kind payment for royalty, production sharing ratios, commercial tax, and income tax.
The initial project permit was granted for the period from March 5, 2010, to March 5, 2013; under the amended agreement, the permit period is for twenty-five years from March 4, 2013, to March 4, 2038.
ME-1 and MEHL are responsible for community consultation and all aspects associated with land acquisition, compensation, and resettlement. MEHL also contributed the mining rights. MWMCL is the operational entity responsible for project investment, development, and management. The MWMCL is also responsible for the design, operation, and closure of the project, and the completion of the Environmental and Social Impacts Assessment (ESIA).
The Letpadaung Copper Mine Project faces significant transparency and project governance problems, mainly related to wider issues with the governance of state-owned enterprises (SOEs) in Myanmar. Nearly 80 percent of Myanmar’s extractive-sector revenues are collected by SOEs, but under Myanmar law, SOEs are permitted to retain up to 55 percent of their net profit in “Other Accounts,” where it is not recorded in the national budget, while the government covers SOE expenditures. There is little oversight of the management or use of these accounts, and SOE managers are not held accountable for this money. The Myanmar Ministry of Planning, Finance, and Industry lacks the authority to properly analyze SOE financial data.
A 2019 government directive mandated the closure of the Other Accounts; however, due to the overall lack of public data on SOE finances, it is unknown whether this was actually carried out. The February 2021 coup d’etat has further complicated the matter.
There is no information available on the management of ME-1, and the selection process is unknown. MEHL, although privatized in 2016, is run by active or retired military personnel, some of whom have conflicts of interest. Two MEHL board directors, both retired military officers, are heads of the Port Authority and the Customs Department, respectively. MEHL is required by law to publish financial statements and shareholder information, but it has never done so.
To capture different practices, quality and level of transparency, researchers are asked to answer six related questions for each data point. 1 point is assigned for each question to which the answer is “yes.” Each data point therefore has a total score between 0 and 6, where “0” means no information was publicly available at the time of research (not transparent) and “6” means full transparency.
|Project & Contract Phase||Project Information||Score||Response||Link to Information|
|Project Identification||Project owner||No. 1, Mining Enterprise, Ministry of Natural Resources and Environmental Conservation||https://en.wikipedia.org/wiki/Letpadaung_Copper_Mine|
|Sector, subsector||Extractive Industry: Copper Mine||http://www.mining.gov.mm/DM_mm/1.DM_mm/Permits(July).pdf|
|Project name||Letpadaung Copper Mine Project|
|Project Location||28.1725 Sq Km wide Letpadaung Copper Mine, Salingyi Township of Sagaing Region|
|Purpose||1) To fulfill domestic raw material for mineral resources and promote export of same.
(2) To promote production of mineral raw materials which would initiate development of heavy industries leading to long-term national development.
(3) To emphasize exploration and production of important mineral resources.
|Project description||In cooperation with the Union of Myanmar Economic Holdings Ltd. (UMEHL), Myanmar Wanbao Mining Copper Company Ltd. (MWMCL)—a subsidiary of China North Industries Group Corp. or Norinco, a large arms manufacturer, bought the project from Ivanhoe—a Canadian mining company in 2011. The final agreement with Wanbao reached the Product Sharing Contract in 2012. Original Product Sharing Contract signed in July 2013 was amended by Mining Enterprise No. 1 under Ministry of Mines. Under new terms, the Government of Myanmar enjoys 51% of the benefit and Myanmar Wanbao Mining Copper Limited and UMEHL will retain 49%.||https://www.myanmarwanbao.com.mm/en/about-us/about-mwcml-mining.html|
|Project Preparation||Project Scope (main output)||Expected 100,000 tons of Copper per annum|
Environmental impacts: Groundwater supply and contamination, Change in landform and landscape character, soil contamination, lowering of groundwater level, contamination of groundwater resources, contamination of rivers and watercourses, exceedance of health screening guidelines from ground level concentration of dust.
Social impacts: resettlement, loss of catchment yield, loss of traditional livelihood, social problems, impacts on living standards, cultural heritage
Mitigation measures: zero-discharge site, a series of monitoring stations around the site, 2% community development, public consultation, and health monitoring.
|Land and settlement impact||Land compensations/subsidies to project-affected villagers were three times the amount including the first subsidy, which is three times the market price of the compensation for the crops (between 525,000 and 552,000 Kyats), as guided by the regional government. A total of 3,442.55 acres of land have been taken up by related villagers so far, which totals more than 3.56 billion kyats. Approximately 874 villagers had taken up the subsidies for 2,435.16 acres of land by 13th March 2014.||https://www.myanmarwanbao.com.mm/images/pdfs/final_esia_rev6_update.pdf|
|Contact details||Myanmar Wanbao Mining Company Ltd., Yangon Office
70 (I) Bo Chein Street
Pyay Road, Hlaing Township
Tel +951 654757, 507239
|Funding sources||Wanbao Mining Company which runs the mineral business of NORINCO, China North Industries Corporation (Central Govt. SOE)|
|Project Budget||USD 1.065 Billion (USD 2 million annually for CSR project)|
|Project budget approval date||Project permit was given for the period of 5th March 2010 to 5th March 2013 first and then 4th March 2013 to 4th March 2038|
|Project Completion||Project status (current)||Production stage after amendment of Product Sharing Contract in July 2013 and ESIA done by Australian Consulting Firm|
|Completion cost (projected)||USD 1.065 Billion (USD 2 million annually for CSR project)|
|Completion date (projected)||The first permit period is from 2010 to 2013 and the second term mining permit is given for 25 years from 2013 to 2038. However, because of protests by residents, the project agreement was amended in 2013 and the copper could be produced beginning March 2016.||https://www.mmtimes.com/national-news/mandalay-upper-myanmar/24953-letpadaung-copper-project-to-bring-in-us-20m.html|
|Scope at completion||Original agreement with Wanbao – Investment – USD 997 million (Capital Cost – USD 912 million) 4% Royalty, 8 % Commercial tax 8% and Income tax 15 % then, amended project gave a 30% share of the eventual profits, 19% going to UMEHL, a massive military-owned company and 51% to Myanmar’s government. A later agreement gave 2% of profits to local development. The project is reported to have cost approximately USD 1 billion to develop.||https://my.wikipedia.org/wiki/%E1%80%9C%E1%80%80%E1%80%BA%E1%80%95%E1%80%B6%E1%80%90%E1%80%B1%E1%80%AC%E1%80%84%E1%80%BA%E1%80%B8%E1%80%90%E1%80%B1%E1%80%AC%E1%80%84%E1%80%BA%E1%80%A1%E1%80%85%E1%80%AE%E1%80%9B%E1%80%84%E1%80%BA%E1%80%81%E1%80%B6%E1%80%85%E1%80%AC|
|Reasons for project changes||After protests by the villagers and recommendations by investigation committee led by Daw Aung San Suu Kyi, Wanbao agreed to amend the agreement.|
|Reference to audit and evaluation reports||Only ESIA report and Letpadaung Taung Investigation Commission Report||https://www.business-humanrights.org/en/latest-news/letpadaung-copper-project-a-brief-on-the-draft-esia-report/|
|Procurement||Procuring entity||No.(1) Mining Enterprise, Ministry of Natural Resources and Environmental Conservation|
|Procuring entity contact details||Office Building No.(19), Nay Pyi Taw, [email protected]|
|Procurement process||Ivanhoe, Canadian Mining Company sold its share to Wanbao citing the impact of the negative stigma of working with the military government on its other business throughout the world in 2011||Link to Information|
|Contract type||Design and Build, Construction|
|Contract status (current)||active|
|Number of firms tendering||One|
|Cost estimate||USD 1 billion|
|Contract administration entity||During the website’s latest update, no information was available publicly.|
|Contract title||The Letpadaung Copper Mine Project|
|Contract firm(s)||During the website’s latest update, no information was available publicly.|
|Contract price||During the website’s latest update, no information was available publicly.|
|Contract scope of work||Royalties, production sharing ratios, Commercial tax, Income tax from the product|
|Contract start date and duration||4th March 2013 to 4th March 2038|
|Implementation||Variation to contract price||During the website’s latest update, no information was available publicly.|
|Escalation of contract price||During the website’s latest update, no information was available publicly.|
|Variation to contract duration||Initial project period was given 3 years|
|Variation to contract scope||Ivanhoe did feasibility study and EIA/SIA in 1994/1996 and MWMCL bought the share. After protests by local villagers, investigation report recommended MWMCL to do ESIA. At present, MWMCL claims that they practice all the measures recommended in ESIA report and uses USD 2 million per year for CSR activities.|
|Reasons for price changes||During the website’s latest update, no information was available publicly.|
|Reasons for scope & duration changes||During the website’s latest update, no information was available publicly.|