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After the gold rush

What is Zhong Xin?
It is not listed in the Cambodian Yellow Pages and appears not to have an office in Phnom Penh – the Chinese Chamber of Commerce in Cambodia has declined to acknowledge the firm’s presence in the Kingdom. So just what is Zhong Xin Industrial Investment Co Ltd, operator of three gold mines near Me Mang in Mondulkiri province? According to government mining concession maps, Zhong Xin has an agreement to explore an area covering Me Mang. The company, formerly known as Jinqu Mineral, was granted numerous mining concessions by the MIME and CDC in 2004, another one of which is in Sambo district, Kratie province. According to the 2009 Global Witness report “Country for Sale”, the agreement for the Kratie concession lists CPP Senator and Pheapimex owner Lao Meng Khin as a company director of the firm. Lao Meng Khin and his wife Choeung Sopheap jointly run Pheapimex, a company involved in numerous business activities including logging. London-based Global Witness, a target for Hun Sen’s wrath at Cambodia’s first international mining conference late last month, has alleged that Pheapimex has used the army to protect its logging concessions in Cambodia. At Zhong Xin mine outside Me Mang, there were three soldiers on duty on June 20 guarding the site. Chinese workers and Cambodian miners in Me Mang said that the company had been active in the town for about five to six years, but little else is known about Zhong Xin’s activities in Cambodia. On Saturday, Pheapimex Office Manager Som Bon said that he and his boss, who he did not identify, were busy and therefore unavailable for comment.
STEVE FINCH

MONDULKIRI PROVINCE
IT is 1pm, the start of another afternoon searching for gold, and Son Mary’s rock-crushing machine has stopped working. As his son tries to get the diesel engine going again, Son Mary tells how he worked his way up from employment in local Chinese-owned mines until he could eventually afford to invest in his own small-scale operation with his family.

Like just about everyone else living in Preah Mear, or Gold Forest, outside of Me Mang village, 50 kilometres northwest of the Mondulkiri capital Sen Monorom, Son Mary is a gold miner. But according to the government rules on artisanal, or small-scale mining, his operation is wholly illegal. He does not have state permission.

In many ways this gold-rush town surrounded by hills and thick forest is a microcosm that represents the main problems facing the Kingdom’s mining sector: namely tackling illegal practices and bringing in quality foreign investors while minimising the negative impact on the environment and local populations.

Last month, at the country’s first international mining conference in Phnom Penh, the government gave its first strong indication that it intends to address the issue of illegal mining in Cambodia, but the messages were mixed.

In his opening speech, although Prime Minister Hun Sen assured delegates that revenues from the sector would be used for poverty reduction and creating a system that would allow foreign firms to profit, he also called on authorities to crack down on what he termed “anarchic mining”, the unlicenced, small-scale operators within the sector he targeted for “eradication”.

It remains unclear exactly what this could mean for the likes of Son Mary and his family, along with thousands of others, as the government is still formulating policy to address illegal miners.

“The solution may include legalisation and [to] limit their operations to designated areas with low mining potential,” Suy Sem, the minister of industry, mines and energy told conference delegates in his closing remarks.

Whatever tack the government takes, illegal miners in Preah Mear, located seven hours by motorbike from Sen Monorom down a dirt track through the jungle, could be affected.

In theory, Chinese company Zhong Xin Industrial Investment (Cambodia) Co Ltd owns a concession that covers the whole area, according to local workers and government data, and is developing three mines up to 500 metres deep.

The size of the total concession area is unknown, as the agreement has never been made public, but locals say it is about 45 square kilometres bordering Phnom Prech Wildlife Sanctuary.

Unlicenced Cambodian shallow miners in the town are therefore living and operating on a Chinese concession. It is a cohabitation that has led to considerable tension over issues such as safety concerns and remuneration.

One illegal small-scale miner, who asked not to be identified except as a Kampong Thom native, said he had been living and working in Preah Mear for four years, and that conditions in the Zhong Xin mine are bad. He said, without providing evidence, that workers had died in mines as recently as last month.

Addressing these allegations with Zhong Xin and the local authorities remains difficult.

The largest Zhong Xin mine was guarded on June 20 by three Cambodian Army soldiers who denied entry and photography. According to one of the soldiers, the Chinese manager of the mine was offsite and unavailable for comment.

Jimmy Gao, head of the Chinese Chamber of Commerce in Cambodia, declined Tuesday to answer any questions regarding Chinese mining activities in Mondulkiri province, and Minister of Industry Mines and Energy Suy Sem was repeatedly unavailable by telephone last week.

Zhong Xin itself does not appear to have an office in Cambodia, and a representative from a firm belonging to its listed company director, Pheapimex owner Lao Meng Khin, declined to comment Saturday.

The only Zhong Xin employees who would discuss operations in Preah Mear were the miners themselves.
Pay proved a point of contention in the town.

One worker, who said he lived on site with his wife and children, had left southeastern China six years ago to work for Zhong Xin in Preah Mear. He asked not to be named, but said he earned at least US$2,000 per month from the company as an ordinary mine worker.

At a local café, other Chinese employees waiting for their 5pm shift to start said that high-level migrant technicians from China could make up to $6,000 a month at the site. None spoke Khmer or English.

A question of legality for cambodia’s artisanal miners

ALTHOUGH many of Cambodia’s artisanal miners are illegal, as they are not licenced, there are provisions in Cambodian law that allow for small-scale mineral exploration. It seems many operators do not know what the rules are or how to navigate a process some deem overly bureaucratic. The application process includes going in person to the provincial or municipal office of the Ministry of Industry, Mines and Energy (MIME) to seek out the official responsible for the area in which the miner would like to explore. The ministry is then charged with approving or denying the request within a maximum 45-day period. According to domestic law, artisanal licences can only be issued to Cambodians. In the case of a company licence,
the process contains many more stages before the Council for the Development of Cambodia and MIME finally approve an operation. However, these procedures may be modified in the near future. The government is working with the Japan International Cooperation Agency (JICA) to formulate a 10-year plan to overhaul the industry. “Mining laws and regulations will be aligned with international best practices to further encourage international mining companies to work in Cambodia,” according to JICA’s 2010 guide to the Kingdom’s mining sector. But what this would mean for small-scale mining – both legal and illegal – remains unclear. STEVE FINCH

On the opposite end of the same table sat a lone Cambodian employee who said he made $250 per month as a worker in the same mine.
His Chinese extended to the words for “thank you” and “hello”. The cultural divide was clear.

It is a situation that has prompted many locals to operate by themselves – in other words shun work from a licenced company in favour of unlicenced self-employment.

“If people have no money to invest [in gold mining in Preah Mear], they work for the Chinese,” said the Kampong Thom miner from his shelter, a tarpaulin-covered open hut with a stone-crushing machine on one side next to a small stove that separated his mining equipment from a bamboo bed.

Working 7-11am followed by a 1-5pm afternoon shift would usually produce about 0.2 grams of gold per day, he said, which could be sold to one of three gold dealers in Preah Mear market for about $30, a price that is climbing as the value rises on international markets.

In total, he made close to $1,000 in an average month working each day for himself, four times as much as the Cambodian Zhong Xin miner. However, he must take into account the cost of diesel, chemicals and a stone cutter, and in some cases the land itself – which looks like the remnants of a nuclear holocaust. In unregulated Preah Mear much of the environment appears to have already been destroyed by illegal mining.

The unlicenced shallow miners in Preah Mear live and work on a pockmarked landscape of rubble, tree stumps and tarpaulins amid pools of metallic water. Hoses feed ramps down which a gold solution – derived from ore – flows before being sifted off.

Although it is unclear the extent to which dangerous chemicals form part of the extraction process in Preah Mear, their use is common in shallow mines in other areas of the world. Mercury, used separate the precious metal from its ore, is popular among small-scale gold miners in China and Indonesia. The most commonly used agent to complete this process, however, is cyanide – which allows the metal to be separated out during a final panning stage.

Clearing up the mess caused by corruption, environmental degradation, social inequality, mismanagement and a lack of respect for the few laws that currently govern the industry is therefore much more complex than simply moving out unlicenced operators. But where does the government start?

Samuel Spiegel, a Cambridge University researcher into the political economy of gold mining, says that those termed “illegal miners” should instead be considered part of the “informal sector” in a reform phase such as that taking place in Cambodia.

“In the majority of regions, there have not been any assistance programmes. The only interaction with authorities comes when problems arise,” he told delegates in Phnom Penh at last month’s mining conference.

Mondulkiri’s Keo Seima district, close to Me Mang, has turned into such a situation. Local authorities last week ordered more than 45 families to leave an OZ Minerals mining concession in what was the latest of numerous warnings.

“The Cambodian Government has indicated its desire to clean up illegal mining, logging and poaching in this and other areas,” company Spokeswoman Natalie Worley said by email Tuesday, adding that many of the local miners were thought to be from other regions of the Kingdom.

In many ways, getting the balance right between doing business and good business practice is a relatively new science in the extractive industry, and OZ Minerals has been handling the situation with care, she said.

It was only in February this year that the London-based industry group the International Council of Mining and Metals released pilot guidelines on working with small-scale artisanal mining, the first of its kind.

Although the report, “Working Together: How Large-scale Mining can Engage with Artisanal and Small-scale Miners”, makes recommendations for relocating local communities in relation to transparency, dialogue and compensation, it does not come to any satisfactory conclusions on the acceptable removal of influx communities such as those that exist in Preah Mear.

Many miners in the town say they would have few options for making a living, and although many admitted that they disliked the place, none wanted to leave.

A number said they were sending earnings home that represented many times the monthly average wage in Cambodia, and that offered by Zhong Xin.

“My uncle told me about Me Mang,” said one illegal miner who had lived and worked in the town with his family for two years.

He and a group of four other men banded together to dig for gold at randomly selected sites in Preah Mear. He did not have a licence, worked for no-one but himself and appeared ignorant of the rules about legalising his operation in the eyes of the government.

He had no desire to return home to a life that had previously offered few economic opportunities.

“Before I was a farmer in Takeo province,” he said.

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