Gov’t Nears Decision on Koh Kong Titanium

Mining firm says gov’t stands to earn billions; environmentalists doubt figures

To believe records obtained yesterday, the government stands to earn more than $3.3 billion in revenues over 13 years from the extraction of titanium by a Cambodian firm in Koh Kong province.

The document, which was produced by the Council of the De­velopment of Cambodia as an agenda for a meeting today be­tween officials from both the government and the mining company United Khmer Group, outlines the amount of revenue the government can hope to earn from the project on a yearly basis as well as a list of the investors involved.

Environmentalists said they doubted the revenue forecasts, as no exploration has yet been completed to determine the size of any titanium deposits.

The agenda showed United Khmer Group to be 37.5 percent owned by Cambodian national Chea Thavarakcheat. Four Singa­poreans and one Chinese investor also have 12.5 percent each. None could be reached yesterday.

It also showed exactly how much United Khmer Group ex­pects to pay to the government in taxes, royalties and fees should extraction ever commence.

In its first year, the company says a total of $48.96 million will be paid to the government. From the fourth year onward, $303.6 million will be paid to the government until $3.33 billion has been paid in total by the end of the 13 year.

“With this investment project, the company will restore the damage to the environment before moving on to dig in neighboring sites,” United Khmer Group said in the document.

United Khmer Group is exploring for titanium in a densely forested area covering more than 20,000 hectares. The land is home to 24 natural water sources and more than a quarter of Cambodia’s remaining wild elephants.

The area is also the site of a community-based ecotourism program established by Wildlife Alliance in January 2007. Environmentalists say a mine in the area would jeopardize all of that. The project has received high levels of public attention.

In November, Environment Minister Mok Mareth, Agriculture Minister Chan Sarun and Rural Development chairman Yim Chhay Ly visited Chiphat commune and promised the local community that the government would scrap the project if it was deemed a threat to the local environment.

But at one point, the investment appeared to be at the center of a conflict of interest when a government official represented the company during a meeting in Koh Kong province between all stakeholders in December.

If indeed the company’s claims of revenue are true, the amount of money flowing through government coffers will be beyond anything experienced by the Cambodian government so far.

In the largest known payment to date, the government announced in March last year that it had received 112.21 billion riel, or about $28 million, in revenues from the extractive industries. That payment is believed to be from French oil giant Total, who announced a payment of that size to the government the following month.

Environmentalists say the claim made by the company is completely unreliable, as no exploration work has yet been conducted in the area.

“United Khmer Group has not done the comprehensive exploration research needed to derive any revenue estimates,” John Maloy, chief communications officer for Wildlife Alliance, wrote in an e-mail. “So we cannot help but question any figures that the company might present for the value of this mine.

“The Royal Government has made the effort to listen to our concerns, and we hope that they will not be swayed by United Khmer Group revenue estimates until thorough explorations are made,” he added.

Youn Heng, director of the evaluation department at the Council for the Development of Cambodia, confirmed that today’s meeting was scheduled for 2:30 pm but declined to comment any further.

“Tomorrow, we discuss and we give the report to the prime minister,” he said yesterday.

United Khmer Group originally signed an agreement with the Ministry of Industry, Mines and Energy for exploration on April 26, according to the document. But the CDC suspended discussions on the matter after it was discovered that no environmental impact assessment had been carried out.

The document also reveals a list of concerns that have been raised by environmental group Wildlife Alliance that include mass deforestation, flooding and job losses for 375 families who earn a living from Chiphat’s ecotourism business.

According to Wildlife Alliance, 180 families directly involved with the tourism industry have earned a total of $66,000 during the past two years.

Also cited in the document are points raised by the Forestry Administration, which bring up concerns over the pollution of nearby waterways. The Forestry Administration also points out that it would be better to keep any titanium resources in the area in the ground until Cambodia develops the infrastructure to process the raw material.

“To make a basic decision, we need to have a thorough study and make a serious comparison about the potential earnings of the titanium exploitation,” the Forestry Administration says in the document. “The protection and conservation of the natural forest is fundamental in supporting Cambodia’s economic development.

“Based on the above description, the Forestry Administration has concluded that it does not need to rush into giving support to United Khmer Group,” the Forestry Administration adds.

 

 

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