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Pilot mining operations causing huge losses, impacts, top inspector tells NA 

Piloted mining operations have caused huge losses and harmful impacts, so the scheme should be ceased, the top state inspector has told the National Assembly (NA).

Installing scales to weigh trucks carrying minerals from mining sites is done by the operators, while officials in the finance, and energy and mining sectors merely check the figures stated and cannot guarantee the actual weight, the President of the State Inspection Authority (SIA), Dr Khamphanh Phommathat, said.

He added that the amount of minerals recorded at the mining site and at the end border checkpoints are different, suggesting the need for further investigation.

“The negative economic and social impacts from this piloted mining scheme are severe,” Dr Khamphanh told the ongoing 6th Ordinary Session of the NA’s 9th legislature recently.

“Overloaded trucks have severely damaged roads.”

Improper management of mining operations has led to encroachment into forested areas, including reserved and protected forests, as well as farmlands, he added.

To explore new revenue streams, the government authorised 89 companies to excavate and export minerals under a pilot scheme, which is part of the 3-year national agenda (2021-2023) to address financial and economic difficulties.

Since the scheme was inaugurated, it has generated revenue of more than US$97 million (more than 2,013 billion kip) and 548.87 billion kip for the state.

While recommendations from several sectors suggested extending the national agenda until 2025, Dr Khamphanh recommended that the pilot scheme be terminated, citing the losses and impacts caused.

Inspections of 76 companies out of 89 firms carried out so far also found that many had licences in the name of Lao nationals but were actually operated by foreign investors, he told lawmakers.

In this regard, the Lao authorities in charge find it hard to get information about the background of foreign investors, including their financial standing and technical expertise.

In addition, many of the projects authorised do not carry out social and environmental impact assessments or feasibility studies, or draw up plans to rehabilitate sites when mining projects are phased out. As a result, it is difficult to assess the relative costs and benefits of such operations.   

Dr Khamphanh said the legislation governing each type of mineral and its export was incomprehensive.    

Another problem is that the fees paid to the state in relation to the mining of rare earth and other minerals have not been defined.

Given that measures to monitor and follow up mining operations are still absent, transparent operation cannot be guaranteed, Dr Khamphanh said.

“This creates loopholes that open up paths for the approval of improper mining projects and wastes the nation’s valuable resources,” he told the session.

In light of this issue, the chief inspector recommended an end to the approval of any new pilot project, the cancelling of improper projects, and amending agreements that violate the relevant regulations.

Once the pilot scheme is phased out, the projects in question should be strictly regulated the same as normal ones in line with the relevant laws and regulations. However, pilot projects deemed to be effective might be selected to continue operating with special treatment the same as under the pilot scheme, he suggested. 

Dr Khamphanh stressed the need to amend regulations to make them more comprehensive to ensure proper management and maximise benefits.

By Souksakhone Vaenkeo
 (Latest Update November 10, 2023)

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