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News Release

Canadian Mining Companies Profit from Burma's Misery

For Immediate Release — September 18, 2000

The largest single mining investment in Burma, Ivanhoe Mines Ltd., is a company registered in the Yukon to take advantage of Canada's generous tax breaks for foreign exploration and development.

Neither the mining industry itself, the Canadian stock exchanges, nor the laws governing corporations in Canada, currently provide any safeguards against the impacts of irresponsible mining on communities and the environment in conflict-torn countries like Burma, Sudan and Sierra Leone.

The military coup in Burma took place 12 years ago today, on September 18, 1988. Burma continues to be ruled by an illegal military dictatorship that continues to prevent Nobel laureate Aung San Suu Kyi's democratically elected NLD from taking office. This new report on mining in Burma, written by internationally renowned mining expert Roger Moody, is being simultaneously released in Ottawa and Whitehorse by Canadian Friends of Burma and MiningWatch Canada.

Entitled Grave Diggers, the report exposes the shocking state of mining in Burma, where regulations are lax and environmental standards absent. It is the first systematic investigation into mining in Burma, naming the companies involved, their relationship with the ruling regime, and in some cases, the situation of miners, local people and the general population.

"Grave Diggers makes it clear that Canada is complicit in maintaining the dictatorship in Burma, through its unjust tax and corporate laws," said Joan Kuyek, National Coordinator for MiningWatch Canada.

The report describes the particularly dangerous wastes associated with open pit mining and heap leach extraction of copper — methods employed by a subsidiary of Ivanhoe Mines Ltd.; incorporated in the Yukon and registered on the Toronto Stock Exchange, Ivanhoe's Monywa mines are the largest single mining investment in Burma.

Reports from people in the area indicate severe environmental damage and the use of forced labour in building roads to the mine. The repressive regime in Burma is a 50% owner of the Ivanhoe mines, and gains considerable income from them.

Canadian and Yukon tax rules support these mining companies in Burma. In the Yukon, there is no requirement for a corporation to have any directors resident in Canada.

Ivanhoe is eligible for Federal and Yukon Foreign Exploration and Development Tax Credits, which enables the company and its subsidiaries to pool all their expenses. Each year, they can deduct an amount up to their foreign resource income from this pool, and — if they have little or no foreign income — they can deduct up to 10% of the pool against their Canadian income. They are also eligible for the Capital Cost Allowance and Accelerated Capital Cost Allowance — a provision that can mean they pay no income tax at all.

The release of the report follows a historic resolution from the International Labour Organization (ILO) asking its members from business, government and unions to review all their activities and relations with Burma in light of the extent and severity of forced labour there.

The report is available here as a PDF file or on request from MiningWatch Canada.

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Roger Moody is available for comment today only at (613) 569-3439

For more information contact:

Joan Kuyek, MiningWatch Canada (613) 569-3439
Corinne Baumgarten, Canadian Friends of Burma (613) 237-8056