Identifier
Created
Classification
Origin
09RANGOON445
2009-07-16 09:22:00
CONFIDENTIAL
Embassy Rangoon
Cable title:
BURMA: IVANHOE JOINT VENTURE RESUMES OPERATIONS
how-toVZCZCXRO8848 OO RUEHCHI RUEHDT RUEHHM RUEHNH DE RUEHGO #0445/01 1970922 ZNY CCCCC ZZH O 160922Z JUL 09 FM AMEMBASSY RANGOON TO RUEHC/SECSTATE WASHDC IMMEDIATE 9242 INFO RUCNASE/ASEAN MEMBER COLLECTIVE RUEHBK/AMEMBASSY BANGKOK 3017 RUEHBJ/AMEMBASSY BEIJING 2373 RUEHBY/AMEMBASSY CANBERRA 2154 RUEHKA/AMEMBASSY DHAKA 5292 RUEHLO/AMEMBASSY LONDON 2216 RUEHNE/AMEMBASSY NEW DELHI 5627 RUEHUL/AMEMBASSY SEOUL 9224 RUEHTC/AMEMBASSY THE HAGUE 0844 RUEHKO/AMEMBASSY TOKYO 6802 RUEHCN/AMCONSUL CHENGDU 1882 RUEHCHI/AMCONSUL CHIANG MAI 2261 RUEHCI/AMCONSUL KOLKATA 0730 RHHMUNA/CDR USPACOM HONOLULU HI RUEKJCS/JOINT STAFF WASHDC RUCNDT/USMISSION USUN NEW YORK 2602 RUEHGV/USMISSION GENEVA 4608 RUEATRS/DEPT OF TREASURY WASHDC RUEKJCS/DIA WASHDC RUEAIIA/CIA WASHDC RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000445
SIPDIS
STATE FOR EAP/MLS; WHA/CAN; INR/EAP; OES
BANGKOK FOR REO
DEPT PLEASE PASS TO DEPARTMENT OF COMMERCE, US GEOLOGICAL
SOCIETY
PACOM FOR FPA;
TREASURY FOR OASIA
E.O. 12958: DECL: 07/16/2019
TAGS: ECON EMIN PGOV PREL BM
SUBJECT: BURMA: IVANHOE JOINT VENTURE RESUMES OPERATIONS
REF: A. 08 RANGOON 763
B. RANGOON 20
RANGOON 00000445 001.2 OF 002
Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d).
Summary
-------
C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000445
SIPDIS
STATE FOR EAP/MLS; WHA/CAN; INR/EAP; OES
BANGKOK FOR REO
DEPT PLEASE PASS TO DEPARTMENT OF COMMERCE, US GEOLOGICAL
SOCIETY
PACOM FOR FPA;
TREASURY FOR OASIA
E.O. 12958: DECL: 07/16/2019
TAGS: ECON EMIN PGOV PREL BM
SUBJECT: BURMA: IVANHOE JOINT VENTURE RESUMES OPERATIONS
REF: A. 08 RANGOON 763
B. RANGOON 20
RANGOON 00000445 001.2 OF 002
Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d).
Summary
--------------
1. (C) Myanmar Ivanhoe Copper Co. Ltd. (MICCL) Acting
Managing Director Glen Ford confirmed that MICCL, a joint
venture between Canadian company Ivanhoe Mining and
state-owned Mining Enterprise-1, resumed operations in May,
after halting operations more than a year ago. According to
Ford, the MICCL has yet to sell its shares to a Chinese
consortium, although negotiations remain ongoing. Because
the sale has been delayed, MICCL officials chose to resume
operations to provide jobs to more than 1,800 local staff.
Ford urged the USG to lift sanctions on Burma, and asked why
MICCL is the only joint venture on the U.S. targeted
sanctions list. End Summary.
MICCL Resumes Copper Mining
--------------
2. (C) During a meeting with the Charge and Econoff on June
13, MICCL Acting Managing Director Glen Ford confirmed news
reports that MICCL resumed full copper extraction on May 18,
after halting operations in April 2008 (Ref A). MICCL
initially halted mining in 2008 anticipating the sale of the
mine to a consortium of three Chinese companies -- WanBo
Copper, Norinco Copper, and Aluminum Corporation of China
(Chalco). Despite over a year of negotiations brokered by
regime crony Tay Za, MICCL, joint venture partner Mining
Enterprise-1 (ME-1),and the Chinese consortium are no closer
to inking a final deal, Ford acknowledged. The Chinese
consortium has undermined negotiations by its unrealistic
demands, including provisions for below-market value sales of
copper and long term tax holidays, on the Burmese Government.
(Ref B). Ford also speculated that the Burmese Government
does not want "the Chinese to get their hands on" the
Sabetaung-Kyisintaung (S&K) copper mine, which can produce up
to 120,000 tons of copper annually. He said the deal is not
dead, but could not predict when or if the sale would go
through.
3. (C) In the face of ongoing delays, Ford and his staff
decided to resume operations in May to provide jobs to
approximately 1,800 local staff and two expatriates. He
observed that since MICCL has no debt, any profit would be
shared 65/35 with ME-1 based on the MICCL joint venture
agreement (Ref A).
MICCL Requests Removal from
USG Targeted Sanctions List
--------------
4. (C) Ford urged the USG to remove MICCL from the targeted
sanctions list, noting that MICCL does not provide political
support to the regime. He noted that many companies,
including Myanmar Tractor (the sole dealer of Caterpillar
products in Burma),are wary of working with MICCL because
RANGOON 00000445 002.2 OF 002
they are afraid of sanctions. He inquired why the USG
targeted only MICCL, since other companies, particularly from
China, Korea, Malaysia, and Russia, have joint ventures with
one or more Burmese state-owned enterprises. Charge informed
Ford that the Embassy could not advocate on behalf of MICCL.
We observed, however, that the Department of the Treasury's
Office of Foreign Assets Control has an appeal mechanism
through which Ivanhoe's lawyers could file an appeal.
Comment
--------------
5. (C) Although OFAC added MICCL to the targeted sanctions
list in late 2008, it took MICCL over six months to approach
the Embassy about filing an appeal. Perhaps Ford delayed his
request because he believed MICCL would successfully sell the
mine to the Chinese. In any event, we expect Ivanhoe will
likely submit appeal documents to Treasury within the next
month.
6. (C) Ford and his staff, who had been our key sources of
information in the mining sector, have been reluctant to meet
with us since OFAC targeted MICCL's operations. Ford
initially rebuffed our requests for a meeting after news
broke about MICCL's resumption of operations, and he
continues to encourage foreign businessmen, particularly in
the oil and gas sector, to not meet with Embassy personnel,
lest they end up on OFAC's targeted sanctions list.
DINGER
SIPDIS
STATE FOR EAP/MLS; WHA/CAN; INR/EAP; OES
BANGKOK FOR REO
DEPT PLEASE PASS TO DEPARTMENT OF COMMERCE, US GEOLOGICAL
SOCIETY
PACOM FOR FPA;
TREASURY FOR OASIA
E.O. 12958: DECL: 07/16/2019
TAGS: ECON EMIN PGOV PREL BM
SUBJECT: BURMA: IVANHOE JOINT VENTURE RESUMES OPERATIONS
REF: A. 08 RANGOON 763
B. RANGOON 20
RANGOON 00000445 001.2 OF 002
Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d).
Summary
--------------
1. (C) Myanmar Ivanhoe Copper Co. Ltd. (MICCL) Acting
Managing Director Glen Ford confirmed that MICCL, a joint
venture between Canadian company Ivanhoe Mining and
state-owned Mining Enterprise-1, resumed operations in May,
after halting operations more than a year ago. According to
Ford, the MICCL has yet to sell its shares to a Chinese
consortium, although negotiations remain ongoing. Because
the sale has been delayed, MICCL officials chose to resume
operations to provide jobs to more than 1,800 local staff.
Ford urged the USG to lift sanctions on Burma, and asked why
MICCL is the only joint venture on the U.S. targeted
sanctions list. End Summary.
MICCL Resumes Copper Mining
--------------
2. (C) During a meeting with the Charge and Econoff on June
13, MICCL Acting Managing Director Glen Ford confirmed news
reports that MICCL resumed full copper extraction on May 18,
after halting operations in April 2008 (Ref A). MICCL
initially halted mining in 2008 anticipating the sale of the
mine to a consortium of three Chinese companies -- WanBo
Copper, Norinco Copper, and Aluminum Corporation of China
(Chalco). Despite over a year of negotiations brokered by
regime crony Tay Za, MICCL, joint venture partner Mining
Enterprise-1 (ME-1),and the Chinese consortium are no closer
to inking a final deal, Ford acknowledged. The Chinese
consortium has undermined negotiations by its unrealistic
demands, including provisions for below-market value sales of
copper and long term tax holidays, on the Burmese Government.
(Ref B). Ford also speculated that the Burmese Government
does not want "the Chinese to get their hands on" the
Sabetaung-Kyisintaung (S&K) copper mine, which can produce up
to 120,000 tons of copper annually. He said the deal is not
dead, but could not predict when or if the sale would go
through.
3. (C) In the face of ongoing delays, Ford and his staff
decided to resume operations in May to provide jobs to
approximately 1,800 local staff and two expatriates. He
observed that since MICCL has no debt, any profit would be
shared 65/35 with ME-1 based on the MICCL joint venture
agreement (Ref A).
MICCL Requests Removal from
USG Targeted Sanctions List
--------------
4. (C) Ford urged the USG to remove MICCL from the targeted
sanctions list, noting that MICCL does not provide political
support to the regime. He noted that many companies,
including Myanmar Tractor (the sole dealer of Caterpillar
products in Burma),are wary of working with MICCL because
RANGOON 00000445 002.2 OF 002
they are afraid of sanctions. He inquired why the USG
targeted only MICCL, since other companies, particularly from
China, Korea, Malaysia, and Russia, have joint ventures with
one or more Burmese state-owned enterprises. Charge informed
Ford that the Embassy could not advocate on behalf of MICCL.
We observed, however, that the Department of the Treasury's
Office of Foreign Assets Control has an appeal mechanism
through which Ivanhoe's lawyers could file an appeal.
Comment
--------------
5. (C) Although OFAC added MICCL to the targeted sanctions
list in late 2008, it took MICCL over six months to approach
the Embassy about filing an appeal. Perhaps Ford delayed his
request because he believed MICCL would successfully sell the
mine to the Chinese. In any event, we expect Ivanhoe will
likely submit appeal documents to Treasury within the next
month.
6. (C) Ford and his staff, who had been our key sources of
information in the mining sector, have been reluctant to meet
with us since OFAC targeted MICCL's operations. Ford
initially rebuffed our requests for a meeting after news
broke about MICCL's resumption of operations, and he
continues to encourage foreign businessmen, particularly in
the oil and gas sector, to not meet with Embassy personnel,
lest they end up on OFAC's targeted sanctions list.
DINGER