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Quote: More Companies Look To Mine Cambodia's Wealth

The Cambodia Daily September 27, 2006

By Erika Kinetz and Kay Kimsong

Buoyed by little more than hope, sweat and rumor, smalltime prospectors once sought their solitary fortunes in the rough-and-ready gold mines of Mondolkiri province.

Now, growing numbers of companies are entering the gold rush in earnest, and mining in Cambodia—not just for gold, but also for iron and bauxite—is poised to shift from small-scale, often chaotic exploration to full-scale extraction in the next three to 10 years.

Southern Gold Ltd, an Australian mining company, is the latest foreign company to stake a claim in Cambodia.

On Thursday, the company announced that it had signed a memorandum of understanding with the Ministry of Industry, Mines and Energy, allowing it to search for gold in a 959-sq-km zone covering the eastern part of Kratie province and the western part of Mondolkiri province.

Southern Gold said in a press statement that it hoped to uncover a deposit in Cambodia that would rival the Chatree gold deposit in Thailand and the Sepon deposits in Laos, both of which they said hold resources worth more than $1 billion.

Officials at the Ministry of Industry, Mines and Energy declined to comment this week on the deal and Ric Horn, the chairman of Southern Gold, could not be reached for comment.

On Aug 26, Gold Metal Group Co Ltd signed a memorandum of understanding allowing it to search for gold in a 204-sq-km region of southeastern Mondolkiri that lies just inside the current boundaries of the Mondolkiri protected forest in Pech Chreada district.

In the last two months, some 100 people have moved into the area, borne along by rumors that the remote patch of forest holds gold and gems, said Hy Sophal, the director of the Mondolkiri provincial office of the Forestry Administration.

Three days after the deal with Gold Metal Group was signed, Hy Sophal ordered the people living and mining in the area to leave.

Hy Sophal said in a telephone interview Tuesday that he ordered the settlers to move by Sept 30 in order to protect the environment. He also said that he was unaware that the government had reached a mining agreement with Gold Metal Groups.

"They dig up many holes. And the chemical that they have used has affected the natural lake," he said of the settlers.

"If the people won't leave on the date, I will cooperate with the provincial authority to clear off their homes and business activity," he continued.

Gold Metal Group could not be contacted for comment.

Though there is no comprehensive inventory of mining activities available publicly, it is clear that Southern Gold and Gold Metal Group are not the only firms interested in prospecting in Mondolkiri and other parts of Cambodia's northeast.

Villagers in Mondolkiri have also documented exploratory mining activity undertaken by a company called Oksan in the northeastern part of the Phnom Prich wildlife sanctuary. And early this year, miners in O’Kvav Village, near Memang commune in Keo Seima district, which is also within the Phnom Prich wildlife area, told reporters they had been pushed off a gold mine by a Chinese firm and its Cambodian partner.

So far, according to industry observers, all mining in Cambodia remains small-scale. In 2004, the sector accounted for only 0.27 percent of the nation's GDP.

However, Prime Minister Hun Sen in a speech earlier this year identified mineral resources as one of the nation's top development priorities.

Environmental groups acknowledge the economic importance of the nation's natural resources, but they also caution that growth must be properly managed.

"Big companies are better managed," said Teak Seng, Cambodia Country Director for the World Wildlife Fund.

"But it has to be done in the proper way. You need to first do social and environmental impact assessments, and you have to study how the benefit can be shared," he added.

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