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Burma's mining industry in doldrums

Rangoon: The mining industry in Burma is desperately trying to keep its head above water given the mounting taxes and fuel costs at the black market, sources in the mining industry said.

Talking about the ground situation in tin mining, an official belonging to one of Burma's biggest tin mine companies said recently that high costs and taxes are preventing the sector from flourishing. Rather there is a downslide, despite the fact that tin price in the world market is rising.

The official who requested anonymity said tin mining companies need to pay 30 per cent of their production -- 10 percent as export tax and pay tax to the internal revenue department.

"The government takes 48 percent as tax, so we have to make do with only half of what we produce," he said. Add to this the high cost of fuel and dynamite that is used in the mines.

Given the escalating taxes and skyrocketing costs, the number of tin mining companies has been significantly reduced to 45 from some hundred in the last three years to seven this year, he said.

The Bernama news agency quoted a dealer on October 25 as saying the price of tin in the Kuala Lumpur Tin Market (KLTM) is expected to see range bound trading next week between US$11,000 and US$12,000.

A couple of mining companies that produce tin-tungsten mineral in Tanintharyi Division also agreed and said higher taxes not only create difficulties for the local companies but also prevent foreign direct investment in the sector, which needs high technology and huge capital.

The companies said miners requested the government to reduce the taxes for the development of the industry despite myriad challenges such as fears and uncertainties in world metal markets.

"But there was no response from the government," the companies said in separate interviews. In the same tune, it added that the military government's abject failure to encourage locally-run industries was to blame.

Meanwhile, a senior government official compared the situation with ASEAN countries where the governments taxes four percent for mineral production plus profit tax, a policy that is quite dissimilar to the Burmese one.

However, local mines had enjoyed supply of government fuel and dynamite, export and other tax exemption in the past.

The state granted tax exemptions for the mines when it signed production sharing contracts with the Ministry of Mines.

"But, the tax exemption was annulled five years ago and we could not buy fuel and dynamite with government subsidy," he said.

A Rangoon-based business writer said there would be some negative impact on Burma's export sector as global demand has slowed down. The mining sector would also face problems as entire minerals are exported, totally relying on China and other neighbouring counties, which are scrambling to organise a unified defense system -- a multi-billion dollars fund.

Citing official statistics, the writer said Burma earned about US$ 8 million in the fiscal year 2007-08 from exporting concentrate and/or raw minerals including tin-tungsten and copper.

"The earning could be tripled or more if and when Burma refined and produced finished commodities," the writer said.

"That can be translated to the fact that Burma continues to miss better trade opportunities with those metal importing countries that are in need of different kinds of metals for their infrastructure development, he said.

Meanwhile, a mining geologist cited antimony mineral as an example, calling for miners in Burma to refine antimony before exporting to the world market as the pure mineral fetches better prices then selling just raw mineral.

Burma's mineral especially antimony, mainly used as a flame-retardant in plastics and textiles, is very strong and demand continues to grow. It is under valued when they export to the world market as all the antimony mineral is raw.

"If we can produce refined antimony, we will definitely get a higher price than the Chinese offer," the geologist said on condition of anonymity.

He described antimony as one of the common export minerals of Burma.

Even though Burma is not among the principal producing countries like China, France, Algeria, Mexico and Austria-Hungary, it has reserves that are considerable and production can be achieved at high levels.

The career-business geologist said Burmese miners need to try to build refineries to export pure antimony to the world market, where demand is higher for antimony.

Antimony mineral are exported to China, which is refined and resold to the world market at a higher price.
Last Updated ( Tuesday, 28 October 2008 14:14 )  
The Kachin’s last stand
Since October this year, Burma has been in a state of civil war, with fighting between Burmese military and armed ethnic rebels. The ruling junta started a crackdown on these armed groups.

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