CDB contributes to syndicated loan for Tagaung Taung Nickel Mine Project (Linked to Record ID#103195)

CDB contributes to syndicated loan for Tagaung Taung Nickel Mine Project On July 28, 2008, China Nonferrous Metal Mining & Construction signed a production sharing contract with Myanmar’s Ministry of Mines No. 3 Mining Enterprise for the Tagaung Taung Nickel Mine.

China Nonferrous Metal Mining Group and Taiyuan Iron and Steel Group created a joint venture in order to implement the Tagaung Taung Nickel Mine Project.

The total cost of the project was more than $870 million and it reportedly secured debt financing from China Eximbank and China Development Bank.

Previously in June 2007, the nickel mining project was approved by the government and reportedly secured the commitment of financial support from China Development Bank and China Eximbank. Construction was expected to begin later in 2007.

The purpose of the project was to develop a nickel mine within Tigyaing Township, Katha District, Sagaing Region (exact locational coordinates are 23.578243, 96.152611). The mine has a reserve of more than 30 million tons of high-grade nickel ore containing some 700,000 tons of nickel.

The average nickel content of the mine is 2%, which is likely to yield 800,000 metric tons (annual output of 85,000 tons) of ferro-nickel. On May 17, 2009, a formal groundbreaking ceremony took place. The mine was completed in June 2011. It reportedly employs more than 1,500 workers, both Myanmar and Chinese nationals.

The project faced various controversies and disputes.

According to a Myanmar Times report in 2016, a contract that China’s CNMC Nickel Company Ltd. (CNICO) signed in 2007 called for the seizure of more than 3,000 acres (1,200 hectares) of land and the payment of 50,000 kyats (U.S. $32) an acre in lost crop compensation for 122 farmers in five communities comprising the Maung Kone village tract.

Maung Kone residents later reported that the compensation they received failed to take into account the contamination of their fields and the nearby Irrawaddy River by the plant’s solid waste runoff, and they demanded additional payment.

The 500 acres of land on which the plant’s operators dumped coal waste were nearly full, villagers said, so that when it rains, the runoff flowed directly into the waterway and nearby cultivated fields.

Residents of Maung Kone village, which sits between the nickel-mining operations and a sugar-processing plant, also said that polluted air and solid waste from both operations affected their health, and they accused both plants of discharging wastewater directly into the Irrawaddy River.

When residents went to the village tract health department to discuss the situation, the medical officer in charge reportedly said he could not answer their questions because he did not have permission from his superiors.

According to the Myanmar Alliance of Transparency and Accountability, the July 28, 2008 production sharing contract has also proven controversial because it provides for the Government of Myanmar to receive only 1 percent of revenue, and the Chinese company 99 percent, when the price of nickel falls below $15,000 a ton.

The ratio is adjusted to 50:50 when the price of nickel is between $15,000 and $20,000 a ton. There are existing environmental, social, and governance challenges associated with the implementation of this mine. There have been efforts taken to mitigate negative social effects.

The Tagaung Taung nickel mine in Myanmar, operated by China Nonferrous Metal Mining Company (CNMC), has come under scrutiny for failing to fulfill its monetary commitments to Corporate Social Responsibility (CSR) activities, which are meant to mitigate social and environmental impacts on the local community.

The contract requires CNMC to spend $300,000 annually on CSR initiatives, but reports indicate that only K120 million (approximately $53,000) was spent in a recent year.

Moreover, part of the CSR funds—about K10 million—was diverted to government departments for unrelated purposes, such as building toilets and purchasing equipment.

Ko Tin Myo Tun, the head of the mine's basic labor union, criticized this lack of transparency, saying, “The company said it used about K200 million in its CSR activities, but we have discovered that the township General Administration Department took K6 million to build new toilets and buy a projector and the township Immigration Department took K4 million.” The mismanagement of CSR funds has frustrated local stakeholders, who argue that the money should directly benefit the affected communities.

Lawmaker U Thein Han also confirmed the misuse of funds and called for CNMC to fully utilize the agreed CSR budget as per its contractual obligations.

These concerns are compounded by broader criticisms of the mine’s operations, including labor disputes and an unequal revenue-sharing agreement that limits its contributions to the region's development.