Sunday, December 02, 2012
The sale of a copper mine in Burma
From Wikileaks about the copper mine at the center of recent protests in Burma.
In the beginning, it was between a Canadian company and the Burmese mining enterprise:
Myanmar Ivanhoe Copper Co., Ltd. (MICCL), a 50/50 joint venture between Canadian-owned Ivanhoe Mines Ltd. and state-owned Mining Enterprise-1, began operations in Burma in 1994.
Canadians wanted out because of "the GOB's continued interference in operations, refusal to pay Ivanhoe its share of profits, and unreasonable demands for increased taxes" (I have no idea what GOB is; Government of Burma?):
Canadian-owned Ivanhoe Copper Co. continues to negotiate with state-owned Mining Enterprise-1 (ME-1) and a consortium of three Chinese companies - WanBo Copper, Norinco Copper, and Aluminum Corporation of China (Chalco) - for the sale of its joint venture company, Myanmar Ivanhoe Copper Co., Ltd. (MICCL). According to MICCL Acting Director Glenn Ford, Ivanhoe plans to sell its share of MICCL to ME-1 for $100 million, who in turn will sell the entire company to the consortium for $250 million.
Canadians wanted to sell directly to the Chinese, but was afraid that GOB would block the sale (again, I have no idea what GOB is here.) Finally, they sold it to the Burmese, who then sold it to the Chinese. Tay Za made $50 million dollars in consulting fees for his role as a broker between the Chinese and the Burmese.
According to Andrew Mitchell, Ivanhoe Representative in Burma, Ivanhoe agreed to sell its shares to ME-1 because the company is desperate to divest. While it would be easier and more profitable to negotiate directly with the Chinese, Ivanhoe is afraid the GOB would block the sale. In early 2008, Ivanhoe and ME-1 agreed on a USD 100 million purchase price. However, ME-1 lacked the money to pay Ivanhoe directly -- it needed to sell MICCL first (technically selling what it did not own). In September 2008, ME-1 began negotiating with the Chinese consortium over the purchase of MICCL, using regime crony Tay Za as a broker. Ford told us the Chinese agreed to pay USD 250 million for the mine and equipment, USD 50 million to Tay Za in consulting fees, and an additional USD 100 million to upgrade the mine.