Myanmar junta set to reopen second major plant in its bid for steel

Once operational, the iron mill in Pinpet, southern Shan State is expected to provide feedstock by railway to a steelmaking facility Myingyan, Mandalay Region

Correction: An earlier version of this story referred to a company called Shan Yoma as one of the entities involved in mining coal for use in the Pinpet iron and steel plant. We have clarified that this company was identified by a source as Shan Yoma Naga Co., Ltd. The earlier version also wrongly stated that Shan Yoma is under the Kanbawza Group. This has been corrected, as of November 22, 2023.

The junta’s No. 2 Steel Mill in Pinpet, southern Shan State is close to being fully operational, a local civil society organisation said on Monday.

Representatives of the Pa-O Youth Organisation (PYO), which is active in Taunggyi, where the mill is located seven miles southeast of the state capital, explained in an online press conference that the Pinpet facility is expected to open “as soon as possible,” with iron already being produced in the “testing phase” and 19 out of 22 melting pots functioning.

Pinpet, located next to one of Myanmar’s biggest iron ore deposits, is jointly operated by the junta’s Ministry of Industry and VO Tyazhpromexport, a subsidiary of Russia’s state-owned Rostec conglomerate, and was closed in 2017 by the now ousted National League for Democracy government after they declared it unprofitable.

VO Tyazhpromexport is overseeing the Russian “romelt” process at Pinpet, which allows the site to produce pig iron. It requires coal mined from thousands of acres of land in Ke See (Kyethi) Township seized by local military-linked companies, another local network, the Shan State Frontline Investment Monitor, reported in February.

Citing a local source, PYO staff said that some 60 to 70 trucks filled with this coal are being transported to the No. 2 Steel Mill daily, allegedly mined by the internationally sanctioned and military-controlled Myanmar Economic Corporation, the Shan Yoma Naga Co. Ltd., and the Hay Hein company, reportedly all working under the protection of the Myanmar army’s Infantry Battalion 286. 

Since the 2021 coup, the junta has prioritised the No. 2 Steel Mill’s reopening, alongside the No. 1 Steel Mill in Myingyan, Mandalay Region, which is linked to Pinpet by railroad and started producing steel from scrap metal after it opened again in March. Once it too is operational, Pinpet is expected to provide iron feedstock for the Myingyan facility.

“The railway is now ready to use and they have also increased security in the area,” PYO spokesperson Khun Oo said.

The Myingyan People’s Defence Force has recently been attacking junta outposts in the area around the No. 1 Steel Mill seemingly in conjunction with Operation 1027, the most coordinated attack on military positions by ethnic armed organisations and their allies since the beginning of the coup.

The junta has declared that the Myingyan and Pinpet plants will play a major role in meeting Myanmar’s iron and steel needs—which it has cited as amounting to 2 million tonnes annually. There is widespread concern that steel produced in Myanmar could feed an established domestic arms manufacturing industry that currently relies largely on imports.

In 2009, PYO named Italian steel giant Danieli Co., Ltd. as having helped set up the Pinpet plant. Myanmar Now revealed in June that the company was covertly involved in recommissioning the Myingyan steel mill, with its staff photographed accepting a fruit basket at the site from junta chief Min Aung Hlaing.

“In the past we believe Danieli was involved [in Pinpet],” Khun Oo said on Tuesday. “It seems that Danieli has focused on Myingyan since the coup, but the whole project between Pinpet and Myingyan is interlinked.”

Activists in Italy recently called on the multinational to be transparent about its activities in Myanmar, and for the authorities to investigate the extent of Danieli’s relationship with the regime.

Khun Oo said that the steel projects will “only benefit the military,” and have wreaked havoc on the local population, particularly around Pinpet and in the Hopone valley where it is located.

In total, the military has confiscated more than 11,000 acres of land to accommodate the No. 2 Steel Mill, often not paying compensation and, at other times, paying just 5,000 kyat (less than US$2.50) per acre to its owners, who are mostly farmers.

Unable to grow crops, many disenfranchised locals have been forced to leave the area and seek employment as migrant workers abroad, PYO’s staff explained, playing audio testimony from several affected individuals.

Also affecting the surrounding Hopone valley and beyond is the toxic waste dumped into the Tabat stream from the iron mill—a primary water source for more than 100 villages that meets the Pawn River and flows into Karenni State, later joining the Salween.

There was no environmental or social impact assessment regarding Pinpet, according to PYO. The organisation’s staff explained that personnel from the junta’s department of environmental conservation had carried out a “consultation” in November 2022 by announcing to area residents that they were going to resume operations at the No. 2 Steel Mill but did not take any questions.

“They only came and said that they would implement this project,” Khun Oo said.

Providing security at the plant are not only Myanmar army soldiers, but troops from the Pa-O National Organisation/Army (PNO/A), PYO staff noted. They pointed out that PNO committee member Khun San Lwin, who is a member of the military council, may have ties to or interest in the Pinpet project, emphasising his militia’s strong relationship with the junta.

In their opposition to the Pinpet facility, PYO emphasised the need for seized land to be returned or compensated, for the Tabat stream to be protected from further degradation, and for the adoption of a future federal land policy that is based on community control and management and customary practices.

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