60 too many companies are conducting mineral research and exploration across Cambodia

Cambodia touts gold, minerals

25/05/2010
Macau Daily Times

Cambodia said yesterday that Australian firm OZ Minerals had discovered around 8.1 million tonnes of gold on its territory, ahead of the international mining conference that kicks off in Phnom Penh tomorrow.

“We have been conducting research and we have obtained remarkable results,” said Sok Leng, head of the General Department of Mineral Resources at Cambodia’s Ministry of Industry, Mines and Energy, at a news conference.

OZ Minerals Limited had recently discovered about 8.1 million tonnes of gold in an area in the northeastern province of Mondulkiri, said Sok Leng.

Other minerals including gold, iron ore, and copper had been found elsewhere in the country, he said.

Some 60 local and foreign firms including companies from Australia, China, South Korea and Vietnam have been conducting mineral research and exploration across Cambodia.

The United Nations Development Programme, is co-organising the conference with the Cambodia’s Ministry of Industry, Mines and Energy.

Government officials expect pledges of international aid to Cambodia this year will surpass one billion dollars when the donors meet with the government next month.

BHP's 'tea money' missing in Cambodia [-Hun Xen was lying about social fund?]

May 15, 2010
BEN DOHERTY
The Sydney Morning Herald

Corruption in Cambodia's mining boom
Mining has the potential to drag the people of Cambodia out of poverty, but corruption means millions of dollars are going into the pockets of a powerful few.

PHNOM PENH: BHP-Billiton knowingly bribed the Cambodian government in 2006, anti-corruption campaigners say, paying $US2.5 million ($2.8 million) in ''tea money'' which never appeared on government books, and which never built a single school or irrigation channel as promised.

In September 2006, BHP-Billiton paid $US1 million to the Cambodian government for a mining concession to conduct exploratory drilling for bauxite on 100,000 hectares in Mondolkiri province, in Cambodia's far east. The world's biggest mining company also gave the government an additional $US2.5 million to go towards a ''social fund'' for development projects for local communities.

Despite promises from the government the social fund would be administered by the finance ministry, budget documents obtained by the Herald show none of BHP's money ever appeared on the government's books.

And while the money was variously promised, by both BHP and the Cambodian government, to start irrigation projects, and to build dams, schools and hospitals in the province, none was ever seen in Mondolkiri.

Anti-corruption campaigners and members of the Cambodian parliament say BHP knew the money it paid in September 2006 was a bribe and would never reach the communities displaced by its mining activities.

"No doubt BHP knew from the beginning this money is [sic] bribe, is bribery, they know from the beginning. They cannot ignore this reality by saying that the company believe that the money was just paid properly, legally, to the government," said Son Chhay, a 15-year member of the Cambodian National Assembly and outspoken anti-corruption campaigner. ''There is no excuse for BHP.''

BHP left Cambodia in 2009, after finding insufficient bauxite reserves to mine commercially, but the US Security and Exchange Commission is understood to be investigating the irregular payment.

And the company, while refusing to confirm its Cambodian payment is under suspicion, conceded in its latest quarterly statement that an internal investigation had uncovered evidence "regarding possible violations of applicable anti-corruption laws involving interactions with government officials".

The original deal between BHP and the Cambodian government was signed in 2006, during a visit by the Cambodian Prime Minister, Hun Sen, to Australia.

BHP's $US3.5 million, which government officials said would be received by the finance ministry, was paid into a Cambodian bank account in September 2006. It has not been seen, or accounted for, since. It appears nowhere on the government's books.

The Herald has obtained the Cambodian government's budget statement for 2006, which is not released publicly.

It shows revenue from mining concessions for that year of just $US443,000. The $US1 million for the mining licence, and the $US2.5 million for the social fund, do not appear anywhere else in the budget papers.

Quizzed on the deal in 2007, the Cambodian Water Resources Minister, Lim Kean Hor, told the national parliament the money was "tea money", a colloquial term for an undeclared bribe.


"The royal government got tea money, $US2.5 million, from the bauxite investment with Australia," he told parliament.

Mr Hor was backed up by another senior member of the ruling Cambodian People's Party, Cheam Yeap, who said "the money is just for friendship".

Both ministers refused interviews with the Herald.

There is continuing confusion over what the money was promised.

Defending the payment's legitimacy this month, Mr Hun Sen said: "I ordered to use this money to build the Charoek Dam in Pursat province, but later this company requested a part of the fund to build schools and hospitals in Mondolkiri province."

For its part, BHP-Billiton says it retained control of the money, which was to be administered by a committee over which it had veto. However, the company concedes it lost control of the money, with some allocated to a "social infrastructure project not approved by BHP-Billiton".

Former BHP employees say the money has never been seen in Mondolkiri province.

The miner's community official in Mondolkiri, Nok Ven, said no community projects were ever funded by BHP-Billiton's money.

"There's no such thing happen in Mondolkiri province. There's no school, there's no irrigation. There's nothing at all happened," he said.

Separately from the $US2.5 million social fund payment, BHP-Billiton did donate nearly $US470,000 to six non-government organisations working in Mondolkiri province.

Mr Chhay said it was common practice for tea money payments to be made over and above mining licence fees, and for the money to disappear.

"The tea money paid by BHP to the government … is just the same thing. We could not find where this money [went] … there is no doubt that this money was somehow paid to someone, but there's no evidence that they will be part of the government budget."

He said Cambodia was institutionally corrupt, with government officials bleeding the country's natural resources for their own profit, while international donors contribute fully half the country's budget to keep the state afloat.

UN figures show 68 per cent of Cambodians survive on less than $US2 a day.

"But there are so many rich people in Cambodia. You can look on the streets, there are a lot of LandCruisers, Lexuses and Mercedes … Cambodia receives more than half [its] budget from donor countries, but the officials are so rich and live in castles.''

More tea money went into the pocket of Hun Xen's corrupt regime?

Extracting the dollar figures

Friday, 14 May 2010
Steve Finch
The Phnom Penh Post

COMPANIES involved in Cambodia’s extractive industries have revealed further information about controversial payments to the government, as more detailed revenue figures showed the state received more than 9 billion riels (US$2.25 million) from the sector last year.

Following an announcement by Australian miner BHP Billiton that it was conducting an internal investigation of possible graft violations widely believe to have taken place in Cambodia, the French energy giant Total responded this week to revelations made by Prime Minister Hun Sen last month that it had paid $28 million as part of a deal for offshore Area III in October.

The figure appeared to contradict an official disclosure by a Ministry of Economy and Finance official in March that showed payments of $26 million were paid in January, but Total spokeswoman Phenelope Semavoine said by email Tuesday that the additional $2 million “will be made at a later date”.

She added that Total would co-manage a social fund programme for education and health in the Kingdom, without giving further details.

Total’s response comes on the heels of a report indicating that the government received $1.45 million from the mining sector and $800,000 from the oil and gas industry last year, the first year the government has made public official payments from the extractives industries.

Although the government still has not published complete 2009 revenues from the sector as part of TOFE (state financial operations notice) on the Finance Ministry website, the Post obtained a presentation from last month’s Oxfam America conference that showed the full-year payments.

Chevron spokesman Gareth Johnstone declined to comment Thursday on whether the US firm had made similar payments to the state as part of its involvement in offshore Block A, citing “contractual arrangements” and “commercially confidential information”.

Southern Gold, which is exploring for minerals in western Cambodia, said late Wednesday it had not made any payments to the government as part of its concession agreements.

“We have good relationship[s] with our joint-venture partners and have regular audits, doubled when we consider our JV partners audits and checks,” Cambodia representative Grant Thomas said by email.

“We at Southern Gold do not pay those types of payments [or] fees.”

BHP bribe scandal could involve Cambodian project

Cambodia's Minister for Water Resources, Lim Kean Hor, told the National Assembly BHP had paid $US2.5 million to the government to secure a bauxite mining concession. ''Lim Kean Hor is reported to have described this payment as 'tea money', an unofficial payment in Cambodia''

April 22, 2010
BARRY FITZGERALD AND MATHEW MURPHY
The Sydney Morning Herald (Australia)

BHP BILLITON'S blue-chip reputation has been tarnished by a foreign bribes scandal, believed to involve the group's abandoned bauxite exploration project in Cambodia where the payment of ''tea money'' to gain access to exploration ground is rife.

The scandal has been under investigation by the US Securities and Exchange Commission since August but only became ominous for BHP in a reputational sense yesterday when the Australian resources giant admitted the bribery claims could have merit.

BHP disclosed that its own internal investigation - a response to inquiries from the SEC - had uncovered evidence ''regarding possible violations of applicable anti-corruption laws involving interactions with government officials''.

It did not name the country or the now abandoned projects involved. While Cambodia was the popular tip by the non-government organisations that monitor the behaviour of the global miners in Third World countries, a nickel project in the Philippines was also mentioned by the organisations.

Either way, the revelations are a blow to BHP Billiton's need to maintain a squeaky clean corporate image while waiting on clearance from global regulators for its $US115 billion ($123 billion) iron ore production joint venture with Rio Tinto, a proposed deal that has angered the Chinese steel industry, the world's biggest. It was notable that while BHP would not name the country at the heart of the bribery scandal, it was prepared to volunteer that it was not China.

''We are limited in what we can comment on as the matter is still under investigation,'' it said.

''However, we can confirm that the SEC's requests for information primarily relate to certain terminated minerals exploration projects and not any activity in China, BHP Billiton's marketing activities or the sale of any of the company's products.''

Rio itself has suffered damage to its reputation in recent weeks. Last month China jailed four iron ore traders, including the Australian citizen Stern Hu, for accepting bribes and stealing commercial secrets. They were sentenced to between seven and 14 years' jail.

BHP is being assisted in the investigation by the New York law firm Davis Polk & Wardell. BHP would not comment on whether any of its employees had been stood down pending completion of the inquiry.

The bombshell was contained on the third page of an exploration and development report to the stock exchange for the March quarter.

BHP believes it was not obliged to make an earlier disclosure on the SEC investigation. But it now considers it relevant information - at least in the context of announcing in the exploration and development report - following its more recent discovery of possible anti-corruption violations.

''The company is co-operating with the relevant authorities including conducting an internal investigation, which is continuing. It is not possible at this time to predict the scope or duration of the investigation or its likely outcome,'' BHP said.

Under the US Foreign Corrupt Practices Act, BHP could be fined up to $US2 million while ''officers, directors, stockholders, employees, and agents are subject to a fine of up to $US100,000 and imprisonment for up to five years''.

The laws were introduced in the 1970s after more than 400 US companies admitted making questionable or illegal payments to foreign government officials to secure favourable treatment.

In a report by the British advocacy group Global Witness, published in February last year, the group cites a 2007 article in The Cambodian Daily which says that Cambodia's Minister for Water Resources, Lim Kean Hor, told the National Assembly BHP had paid $US2.5 million to the government to secure a bauxite mining concession.

''Lim Kean Hor is reported to have described this payment as 'tea money', an unofficial payment in Cambodia,'' the report says.

BHP rejected the claim in a letter in November 2008 to Global Witness saying the money was used for a social development program. ''In … terms of the minerals exploration agreement with the Cambodian government, which granted BHP Billiton and Mitsubishi the right to explore for bauxite, an amount of $US1 million was formally paid to the Cambodian government in September 2006,'' BHP wrote.

''If the money appears elsewhere … it is not clear where,'' the Global Witness report said. ''This raises questions as to where BHP Billiton's $US1 million payment made in September 2006 has gone.''

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.”

Cambodians, be prepared: More land evictions coming up for Viet investments

Vietnam to increase investment in Cambodia

12/21/2009
VOV News (Hanoi)

"Currently, Vietnamese businesses are working on big mining projects in Cambodia"

A conference to promote Vietnam’s investment in Cambodia will be held in Hanoi on December 26, the Ministry of Planning and Investment (MPI) announced in Hanoi on December 21.

Vietnamese Prime Minister Nguyen Tan Dung and his Cambodian counterpart Hun Sen will co-chair the conference, said MPI Deputy Minister Do Huy Dong.

At the event, Cambodian officials will introduce their royal government’s foreign investment attraction strategy and incentives to foreign investors, including those from Vietnam.

The business communities of the two countries will share experiences and work out measures to promote cooperation in investment.

Vietnam has invested in 63 projects in Cambodia, with a total registered capitalization of more than US$900 million. In 2009 alone, Vietnamese businesses poured over US$400 million into Cambodia.

Vietnamese-invested projects have proved efficient in Cambodia, mostly in forestry, agriculture, mining, telecommunications, banking and insurance industries.

Currently, Vietnamese businesses are working on big mining projects in Cambodia.

Reported mineral exploration in national park raises concerns

Thursday, 05 June 2008
Written by Cheang Sokha and Tracey Shelton
The Phnom Penh Post

An Australian company exploring for minerals in Virachey National Park is reported to have asked villagers to build helicopter landing pads in the forests of the ecologically rich, ASEAN heritage-listed site, highlighting fears that Cambodia's nascent mining sector will undo conservation efforts in the country's fragile environment.

Yang Ke, 48, a member of the Proeu minority, said the request was made last month as he guided representatives of Indochine Resources Ltd., on a visit to the park, which straddles the borders of northeastern Ratanakkiri and Stung Treng provinces.

"We spent two nights traveling in the jungle from my home to the exploration site," Ke told the Post in an interview at his bamboo house in Taveng district, about 50 kilometers from the Ratanakkiri provincial capital, Banlung.

He said the company officials had asked villagers to clear four different landing sites for helicopters because of the difficulty of traveling through the thickly forested park.

An Indochine Resources spokesman, who asked not to be named, said the exploration work was taking place under a permit granted by Ministry of Industry, Mine and Energy in 2007, and with the permission of the Ministry of Environment.

The spokesman said that while he could not say when mining operations might begin, partly because of the difficulty of access, the company recognized that the project would affect the environment.

"But we will try to minimize the impact and our project is strictly monitored by officials at the park."

Environmentalists, however, worry that mining in the park could seriously damage the Se San River and its tributaries.

“The river system in Virachey is one of the most pristine and unique in all of Cambodia,” said David Emmett, the deputy regional director of Conservation International, which has conducted surveys in the park for the last three years.

"The river contains species that don’t exist anywhere else on earth," he said.

"If runoff from mining was to change the water's pH level the whole ecosystem could collapse.”

Emmett said camera traps and surveys have identified populations of rare otters, turtles and frogs, endangered water lizards and pythons and fish species previously unrecorded in Cambodia.