After Long Wait, Cambodia Opens to Mining

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
18 March 2010

A handful of companies are on the verge of beginning mining parts of Cambodia’s northeast, a development that could bring much development to those areas, but could also increase poverty in an already marginalized area, experts say.

“Some companies with enough capital and high technologies have shown us positive signs that they could begin their extraction activities,” Energy Minister Suy Sem said earlier this month. “So in no more than six years, [we] will be able to get revenue from mineral resources.”

About a third of 20 licensed companies are expected to begin mineral extraction in around 2015, following exploration in the northeast provinces of Ratanakkiri, Mondulkiri and Kratie, Sok Leng, director of the ministry’s mineral department, told VOA Khmer.

He declined to name the companies, but since 2006, Cambodia has issued 104 licenses to 20 local and international mining companies, including Australian-owned Oxiana Cambodia, Liberty Mining, and Southern Gold; China’s Hang Seng Coal Mine; and Vietnam’s Vinacomin, along with other companies from Korea.

These companies are in the exploration stage in northeastern Cambodia, according to a 2009 report by the Ministry of Energy. Interest in mining has seen a swift increase, from $4 million in fixed investment in 2008 to $11 million in 2009.

Australia’s Southern Gold said on its Web site last week its tests indicate significant gold and silver in Kratie province, after seven drillings. It expects to do more in March and April.

Cambodia’s mineral potential has been well known since at least the 1960s, when geological mapping found 25 types of minerals at 145 sites.

The country has bauxite, copper, zinc, gold, iron ore, nickel, granite, gemstones and tungsten, mostly discovered in Pailin and the provinces of Kampong Thom, Kampot, Battambang, Pursat, Preah Vihear, Oddar Meanchey, Mondulkiri, Ratanakkiri and Kratie.

Small and traditional mineral extraction in gold and gemstones has taken place among Cambodian people for many years, as well as with non-metal materials like sand and stone used as construction material.

Were industrial mining to take off, it could follow lucrative revenue from oil and gas, which is expected to come in 2013 with an estimated revenue stream of $1.7 billion by 2021.

There are no such estimates for minerals, Suy Sem said. However, he said money from mining can help strengthen agriculture, education, health and infrastructure development.

Civic groups caution that weaknesses in the laws, management and transparency could dampen any gains mining might bring.

There are few controls to ensure companies are properly mining, said Mom Sambath, a member of the Extractive Industry Social and Environmental Impact Network.

If a company violates the law, “it will impact both the environment and revenue,” he said.

Already, some are warning of the impacts of mining. A 2009 study by the Cooperation Committee for Cambodia in Mondolkiri’s Keo Seima and Pechreada districts found that people are facing the loss of income and damaged forests, as well as internal disputes among indigenous people.

“I think mining extraction will be negative rather than positive if the problems remain,” said Chen Sochoeun, the researcher who conducted the study.

Beyond environmental concerns, revenue management is another problem.

“If the revenue isn’t effectively used, it will benefit to only a group of rich and powerful people,” said Chhet Sam Ath, Executive Director of NGO Forum. “As a result, social disorder will occur. The poor become poorer, and our society can’t develop.”

Civic groups have urged the government to discuss strategies related to mining to ensure revenue is used effectively.

To help manage the resources, the Cambodian government issued a law on mineral resource management and exploitation in 2001. But critics say the law is still weak and aims to protect the interest of private companies.

In 2009, the government established Public Financial Reform Committee to prepare an action plan to manage revenue from oil, gas and other mineral resources. But experts say transparency and human resources remain challenges.

Phan Phalla, deputy secretary-general of the Supreme National Economic Council, said human resource shortfalls remain, but the government has been transparent with mining.

“We continue to publish every piece of information we have on the Web site, and we have never hidden anything,” he said. “Moreover, we have been trying from day to day to effectively manage revenue from mineral resources. Our aim is to make everything transparent.”