Foreign gold producer closes Vietnam mine, owing locals millions of dollars

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People in Quang Nam Province gather outside the gold factory of Besra company Thursday to recover their dues. Photo courtesy of Tuoi Tre

A Canada-Australia joint venture in central Vietnam officially announced Thursday evening that they were shutting down a local gold factory, frustrating hundreds of residents who'd gathered since morning hoping to get their dues.

The Phuoc Son mine, operated by the Besra gold company in Phuoc Son District, Quang Nam Province, still owes locals millions of dollars for all kinds of expenses.

The company's creditors include small food vendors to business partners and mining royalties, Tuoi Tre (Youth) newspaper reported.

More than 200 people were seen outside the factory's locked gates since early morning Thursday, screaming that they want the money that have been owed for a month at least.  

They brought their motorbikes, cars, trucks and bulldozers to form a fence preventing anyone from the factory from leaving, as well as rice and instant noodles and tents, getting ready for a long fight.

Some had tried to break the lock pad with axes but they were prevented by local police officers sent to maintain security.

Bui Thi Lieu, a vegetable vendor, said she had sold goods worth VND25 million (US$1,186) to the factory on credit while banh mi shop owner Hoang Phung Thuy Anh is owed VND40 million for 20,000 loaves.

Pham Ngoc Tien, a noodle provider, took his little child along as he came to demand VND60 million.

Bigger creditors include hotel owner Le Thi Do, who said the company had not paid VND420 million in room rents incurred for visits by engineers and experts.

Do also contributed money with the local Quang An Company to build a VND4 billion road for the company.

"Now it is gone," Do said.

Nguyen Thi Thu Suong also invested more than VND3 billion into the Quang An Company to provide energy, machines and vehicles to the factory.

Pham The Quyen, mayor of Phuoc Son District, said he heard about the debts and had summoned the foreign owner to discuss the matter ten days ago but no one showed up.

The next contact was when the factory's deputy director Pham Quang Ngu called to tell him that they were shutting down.

"I heard that the owner is celebrating Christmas abroad, but I was not officially informed of this."

Quyen said the district's budget this year only met 56 percent of target as the company still owed VND190 billion in mining royalties.

Royalty payment is a unique feature of the extractive industries. It is not tax paid on profits earned from minerals but the price that mining companies must pay for the minerals if they want to take them out of the ground.

Quyen estimated that the company owes locals at least VND30 billion.

"The company has few assets here. They rented everything.

"I'm really worried this insolvency will severely hinder security in the area, especially when it's very close to Tet [Vietnam's Lunar New Year Festival]."

Ngu, the company leader, said the company has made plans to return people's debts, but their operation has been hindered by people blocking the road into the factory, and thus decided to shut it down.

He also accused locals of building an "illegal" blockade.

Besra, formerly known as Olympus Pacific Minerals, was founded by three Canadian brothers and opened the first gold mine in Vietnam, Bong Mieu, in Quang Nam's Phu Ninh District in 1993, and Phuoc Son five years later. The former factory also ceased operation after being damaged by the monsoons this year.

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