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Tropical rainforests, like the above in Borneo, are exceedingly diverse: some forests may have over 400 species of tree in a single hectare. The rainforest that arose on Ascension Island over the past 150 years has considerably fewer species than an older ecosystem. Nevertheless, scientists were surprised by how quickly a complex forest took root on the island.
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Fasting-growing man-made rainforest may change leading ecological theory
Laos Is Looking
Like a Gold Mine
To Foreigners
Boom in Commodity Prices Draws
Investments by Mining Companies
Straining to Find New Deposits
By PATRICK BARTA
Staff Reporter of THE WALL STREET JOURNAL
September 16, 2004; Page C1
SAVANNAKHET, Laos -- This little, landlocked country has never been a gold mine for foreign investors.
It has fewer than seven million consumers, no railroads and only a few paved highways. Its economy is managed by aging Communists. Worst of all, it is honeycombed with unexploded bombs from the Vietnam War.
But thanks to a global boom in commodity prices, Laos is starting to look good to the world's mining companies.
One of them, Australia's Oxiana Ltd., is pouring $330 million into a gold and copper mine along the Ho Chi Minh Trail. On a recent day, some 3,000 laborers worked through monsoon conditions to build and man the mine's conveyor belts and crushers. Crews of as many as 300 people at a time clear unexploded ordnance left by U.S. forces trying to stop North Vietnamese soldiers from moving equipment along the network of roads to South Vietnam.
Further north, another Australian company, Pan Australian Resources NL, has started work on a two-stage, $165 million gold and copper project near the so-called Plain of Jars. That region, a sparsely populated area covered with stone jars of mysterious origin, is also riddled with bombs.
But it is virgin mining territory compared to the U.S., Australia and Latin America, where mining companies are straining to find new deposits.
"Geologists' hammers have hit on an awful lot of rocks in those regions, but that's not the case" in Laos, says Joe Walsh, manager of corporate development at Pan Australian. "We see it as a very good address to have."
An Oxiana employee checks rock samples for signs of copper. Below, a lump of gold.
The two projects are among the largest foreign investments ever in Laos. Moreover, Laos is only one of several off-the-beaten-track Asian countries that are attracting mining investment, now that commodity prices are at their highest levels in nearly a decade. Many mineral-rich Asian nations, such as Mongolia, Myanmar (home to large deposits of jade) and Vietnam, weren't extensively picked over by Western companies during past booms, in part because they discouraged foreign investment.
Many of these countries have opened up more. They are close to China and India, two of the markets that are driving the recent commodity run-up. Ivanhoe Mines Ltd. of Vancouver, Canada, for example, is developing a large gold and copper mine in Mongolia. "There will be significantly more [minerals] found in these countries," says John Santul, a mining analyst at Macquarie Bank in Perth, Australia.
Interest in harder-to-reach places signifies a new phase of the commodity boom, as companies become more aggressive. Although deposits in places like Laos normally aren't big enough to have an impact on world prices, new projects will add more supply to the world, easing the upward pressure on prices and possibly setting the stage for the next downward cycle.
Mines in places like Laos pose substantial risks. Laotian mining laws remain immature, and investors have less assurance that officials won't change rules on a whim. It is unclear how extensive Laos's mineral deposits are, in part because the country hasn't been mapped and surveyed to the same degree as other countries. Indeed, until recently, much of the best information about Laos's terrain came from books written by foreign explorers.
But the rewards can be great -- if all goes well. Mining experts believe Laos has more minerals yet to be discovered, in part because of its position near other countries with sizable mineral resources. When its operations are in full swing in 2006, Oxiana expects to produce 230,000 ounces of gold and 60,000 tons of copper a year.
The impact on host countries is uncertain. Clear-cutting and the use of chemicals can cause severe ecological damage, though the mining companies insist that they take precautions to limit problems. On the other hand, in its peak years, Oxiana's operation should yield as much as $15 million in royalties and taxes for Laos.
"We need some revenue," says Simone Phichit, director of the mining concession division of the Ministry of Industry and Handicraft in Laos. "That means we need to develop more mines."
After the country liberalized Communist investment rules in the late 1980s, major mining companies, including Australia's CRA Ltd., decided to take a look. The Ho Chi Minh Trail region was rumored to have big deposits, but the geology of the area was largely a mystery and Laos didn't have workable mining laws.
The Australians helped Laos craft some rules. Then before CRA could develop its project, it merged with another company to form the global mining giant Rio Tinto Ltd. The larger company thought the Laos venture was too small, so it decided to sell. The project was snapped up by Oxiana, a company whose managing director was a former Rio Tinto executive. That executive, Owen Hegarty, says he was convinced the Laos project could work, even though some people he spoke to couldn't place Laos on a map. Some thought it was in Africa.
Ramping up the project wasn't easy, either. In the earliest days, before Oxiana built an airstrip, it took as long as three days to travel from Laos's capital to the mine. Even today, operating the site is a gargantuan task. Mine officials ship in 10 tons of food each month, much of it by dirt road from a city that's hours away. The site treats more than 10,000 gallons of water a day. Its three doctors see an average of 30 patients a day, many of them suffering from dysentery and malaria.
The teams clearing ordnance use metal detectors and magnetometers to locate suspect metals. When they find something, they use small shovels to chip away at the dirt until they determine if it's a bomb or a fragment. They then use plastic explosives to detonate the ordnance -- an event that occurs about once a day.
Options for entertainment are limited. Workers hang out at the "Hard Stool," an on-site bar where they drink Laotian beer and watch rugby or movies such as "Flipper," starring Paul Hogan. "Laos is not everybody's cup of tea," says Mr. Hegarty at Oxiana. But "looking out 10 or 20 years, you're going to see [this is] just one of many large projects" in Laos.
Write to Patrick Barta at [email protected]
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