China slow down hits Burmese mining

http://www.mizzima.com/news/inside-burma/1613-china-slow-down-hits-burmese-mining.html

by Moe Thu
Wednesday, 28 January 2009 14:40


Rangoon (Mizzima) -- Like most other sectors that earn Burma hard currency, the mining sector is likely to crash given the slow down in China, which has dramatically brought down mineral and metal prices.

The price of refined tin and lead went down to US$11,000 a ton in the second week of this month in the world market, a 27 percent drop compared to early November 2008.

"We are inevitably planning to stall the operations of mining in Tanintharri Division," said one of the local miners, adding that decreased prices of minerals provided a very limited option to sustain. It is a reflection with mines across the country.

The operation would suffer more losses, if it continued in addition to higher operation costs here, the miner said. Most miners came up with a decision to stop production and to shift to maintenance works at their sites.

Another miner, who mines for mineral and gem stone, said he began to struggle carrying on production of mineral and gems stone. However, he said he reduced the volume of production as the prices started declining.



China is buying nearly all the mineral and jade stones produced in Burma. According to official figures, China is the second biggest trade partner of the Southeast Asian nation after Thailand.

"I think the sale at the up-coming emporium, Burma is planning to stage in March, will not be good as the Chinese economy is slowing down," a miner said.

The miners said some small mining companies were likely to sell their businesses due to the decrease in mineral and gems prices.

Burma exports jade, raw mineral, fishery products and teak to China and imports electronic products and machinery from China.

China's economy slowed to 6.8 percent in the final quarter of 2008 and 9 percent for the whole year, which was down from 13 percent growth rate in 2007, the National Bureau of Statistics reported, confirming the world's third-largest economy was severely hit due to the burden of the global financial crisis and domestic constraints.

Another miner said another reason of closing down of the mining companies is due to the higher operation costs and government's tax policies.

Mining companies need to pay 30 per cent of their production, 10 per cent for export tax and need to pay tax to the internal revenue department.

"The government takes 48 per cent as tax, so we only get half of what we produce," he said adding that plus there is high cost of fuel and dynamite that is used at the mines.

There are some 30 local mine operators, who are primarily involved in metal mining, most of which are no longer competitive in the unfortunate face of the on-going financial turmoil.

"As they are not in a competitive position, they could not survive like a few other foreign companies such as Ivanhoe and China Nonferrous Metal Mining company (CHMC) CNMC Nickel company," said a Rangon-based business writer.

Apart from them, there are 60 local miners that are involved in gems and jade mining.