Indian Mining Firm Prepares to Dig Deep in Ratanakkiri

The Ministry of Mines and Energy is set to issue the country’s first commercial underground mining license to Indian company Mesco Gold in two weeks, despite opposition by residents of two villages concerned about compensation and environmental damage.

The company plans to break ground on its concession in Ratanakkiri province’s O’yadaw district in about six weeks, said Harsh Sharma, operations director for Mesco Gold, a Cambodia-based subsidiary of New Delhi-based Mesco Steel.

The Council for the Development of Cambodia approved the project about two weeks ago after a lengthy environmental impact assessment that an official at Angkor Gold, the Canadian company that previously owned the concession, said was conducted “to Western standards.”

But those living near the planned mine are not convinced.

Residents of O’yadaw’s Plong village plan to block the road leading to the mine site if Mesco Gold attempts to start digging, village chief Romam Moch said on Thursday.

“They absolutely will not agree to let the company enter; they face losing their land and receiving nothing in return,” Mr. Moch said.

Mesco Gold’s negotiations with three Jarai villages have spanned more than two years, starting shortly after it agreed to pay Angkor Gold $1.9 million and yearly production royalties for its license on 12 square km of dusty red hills in the province. The negotiations have been dogged by concerns about the mine’s potential health effects and the company’s promises to protect the environment and local population.

In an interview earlier this year, Mr. Sharma said Mesco Gold would set aside some $10 million to improve residents’ living standards over the 30 years the company plans to operate.

“They said that they would build us toilets and roads,” Mr. Moch said. “The people did not agree to it. They are afraid that if the company digs underground, the soil will collapse and there will be chemicals in their drinking water.”

None of Plong village’s 104 families of upland rice and cashew farmers have agreed to work for the gold mine, although company representatives have tried to recruit them. They would refuse, Mr. Moch said, no matter how much money Mesco Gold offered.

Families in Plong and neighboring Kong Thon village were told by residents of Pheak village, the only settlement that has negotiated with Mesco Gold, that “Angkor Gold didn’t fulfill its promises,” said Sovann Bunthai of the Ratanakkiri office of rights group Licadho.

Mr. Sharma said Mesco Gold had not yet met with representatives of Plong or Kon Thon only because it would first begin work elsewhere.

“We are not in their region yet,” he said. “We will not be in their region until our second phase of mining, 10 years from now.”

Residents of Pheak, meanwhile, fear for their future, said community leader Sev Jvil.

Mesco Gold has promised to build roads, wells and water storage tanks for the village, he said. “But so far, no one has seen them do it.”

The village initially agreed to sell Mesco Gold the 38 hectares the company wanted for its surface operation, but the transaction was not entirely consensual, Mr. Jvil said.

“Some people received money from the company; some didn’t,” he said. “Some have regrets because the company said that even if they did not agree to the compensation, they would take the land anyway.”

Representatives of Mesco Gold and Angkor Gold said they had been transparent in their negotiations with Pheak. The compensation that Mesco Gold offered—$1,500 per hectare—was what the villagers had requested, Mr. Sharma said.

“We had very open discussions with them,” he said. “We don’t hide anything…. We aren’t going to grab all their square kilometers. The rest of the land remains with them. They can do their farming.”

Mike Weeks, the CEO of Angkor Gold, said the project his company ceded would have little impact on the communities.

“This is not that big of an operation. And it’s underground, so it has a very small footprint,” he said.

The environmental impact assessment, which ran some 800 pages long, was thorough and completed “to Western standards—how it’s done in Canada,” Mr. Weeks said.

While Mesco Gold’s mine will be the first legal underground mine in Cambodia, a number of other mining projects are underway, he added, including one for Geopacific Resources, an Australian company partnered with Royal Group, a local conglomerate controlled by powerful businessman Kith Meng.

Angkor Gold also has six other exploration claims, two of which are developing into mining projects. Five are in Ratanakkiri; the other is in Mondolkiri’s Koh Nhek district—overlapping the Mondolkiri Protected Forest and a migration corridor for some of Cambodia’s last Asian elephants.

“When we took that license, we were never told it was a protected area,” Mr. Weeks said.

He claimed that Angkor Gold had no intention of mining in the protected area, but was keeping its concession to ensure that other companies with less stringent environmental standards don’t move in.

Just last month, however, the company announced in a news release that it had discovered “previously unrecognized significant precious metals” on the Mondolkiri claim, describing it as “yet another property that can add value to our shareholders.”

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