Weekly Business Roundup (Friday, September 26, 2008)

By WILLIAM BOOT

China Taps into Burma’s Nickel Resources

Further evidence of China’s increasing economic grip on Burma has emerged with the announcement that Chinese state-controlled mining companies are to tap the country’s nickel resources.

The military government has signed an agreement to allow the China Non-Ferrous Metal Group to develop mines in the Mandalay region to extract a massive 100,000 tonnes-plus per year.

Initial work on the development, at Tagung Taung, is due to begin by the end of this year, with full production beginning in 2011. All the nickel will be shipped to China for use in its metal industries.

Burma’s Ministry of Mines claims that the project will provide jobs for more than 1,000 Burmese, but observers note that China will be the main beneficiary.

“It’s reasonable to say that Burma is being systematically plundered for its natural wealth by its big neighbors, China, India and Thailand,” said one analyst with an economic development agency in Thailand, who spoke on condition of anonymity because he was not authorized to speak to media.

“The loss over time of gas, oil, timber, precious stones and now metals will further impoverish Burma’s economic development if and when the regime comes to an end.”

Lloyds’ Bumper Profits ‘Paid for in Blood’

Major international insurance company Lloyds has been accused of making blood-money profits out of Burma as it announces a 2008 first half year global profit of US $1.76 billion.

Despite calls by the British government for British-owned firms to end their business involvement in Burma to strengthen economic sanctions against the military regime, London-based Lloyds refuses to disclose the extent of its involvement in the country.

It’s believed to be associated with shipping and aviation—key transport in junta-linked exports.

The British human rights NGO Burma Campaign UK says its research shows that several Lloyds-linked businesses operate in Burma.

“Research has revealed that three members of the Lloyd’s market, Catlin, Atrium (owned by Ariel Re) and Kiln (owned by Tokio Marine), are involved in Burma. Despite repeated requests, Lloyd’s has refused to state how many other member companies are also involved,” campaigns officer Johnny Chatterton told The Irrawaddy this week.

“Lloyd’s secret Burma profits are paid for in blood and poverty by the people of Burma’” said Johnny Chatterton, a campaign Officer at Burma Campaign UK. “Lloyd’s should come clean about their involvement in Burma and stop insuring companies that fund the dictatorship.

Ironically, Lloyds profit margin for first half 2008 slumped 47 percent over the same period of 2007, due to “falling investment income and increased cost of claims,” the company said.

Some of these claims may well be linked to Cyclone Nargis which devastated Burma’s Irrawaddy delta in May.

Lloyds said in July it was not breaking British or European Union law by operating in Burma.

“Unless there are official international sanctions in place, we do not instruct the market where it can and cannot write business,” said Lloyds.

Junta Bid to Boost Arakan Trade with Bangladesh

Plans are reportedly being drawn up by the military to develop some form of trading center in Arakan state bordering Bangladesh to increase economic ties with the Bangladeshis.

The center will be built in Maungdaw, according to reports circulating among the local business community, with the aim of trading in agricultural and marine produce.

The project will be financed by the marine ministry but organized—and controlled—by senior officers of the army’s Western Command, according to the independent Narinjara News.

Arakan’s economy has been slumping for some years but suffered a significant blow when Singapore, under pressure from US sanctions policy, stopped importing shrimps.

Attempts have previously been made to sell shrimps to Bangladesh but a lack of facilities has hampered trade, according to Narinjara News sources in the local business community.

Oil Prospects Grow in Western Burma for Singapore Firm

Singapore-based Interra Resources says its subsidiary Goldpetrol has begun drilling an oil development well in the Yenangyaung field on the upper Irrawaddy River in western Burma.

The company said in a statement it was confident of striking oil in a location which already delivers small quantities of crude, but it will be another two months before it can say whether its new well will be commercially productive.

Yenangyaung has produced varying quantities of oil for many decades but many of its facilities are run down and output has declined.

Interra, via Goldpetrol, has a 60 percent share in a joint development venture in the field with the state Myanmar Oil and Gas Enterprise.

The last official figure for oil production in Yenangyaung was 1,800 barrels per day—compared with 16,000 bpd in 1918.

Retreating British army forces blew up earlier wells and a refinery in 1942 to prevent advancing Japanese troops from using them.