Junta attempts to reopen steel mill once dismissed as debt trap

Myanmar’s military council is attempting to resume operations at a steel mill in Mandalay Region after production was suspended by the National League for Democracy (NLD) government due to heavy debt owed to China concerning the project and mounting losses. 

Work at the steel mill, located in Myingyan, will commence “as soon as possible” according to the military-appointed Minister of Industry Dr Charlie Than. Dr Than, the former rector of Myanmar Maritime University, visited the project site on August 16, according to the ministry and state-run media. 

The ministry has been instructed by coup leader Min Aung Hlaing to restart operations at the mill, according to a statement on the Ministry of Industry’s website. 

Military-run Myawaddy TV broadcast a story about the industry minister’s visit to the Myingyan steel mill, and in the footage, a sizable pile of raw materials could be seen outside the main facility. 

The Myanmar Economic Corporation (MEC)—under military control—initially established the steel mill project with the assistance of a 1.1 billion-euro loan from the state-owned China Development Bank (2.1 trillion kyat). The loan was granted in 2005, when Myanmar was under another military dictatorship headed by the State Peace and Development Council. 

MEC handed the steel mill over to the Ministry of Industry in 2012 after the project failed to complete even the first phase of project implementation, causing financial losses to accumulate in the years that followed. 

The mill’s lack of profitability during the five-year period from 2012 to 2017 caused it to lose more than 130 billion kyat in total, according to an auditor general’s report submitted to the Mandalay regional parliament—in which the NLD held the majority of seats. 

In 2017, the NLD formally suspended a total of 24 state-owned industrial projects including the Myingyan steel mill due to sustained heavy losses. 

U Zarni Aung, Mandalay’s electricity and energy minister currently detained in junta custody, told the regional parliament last year that the total debt still owed to the Chinese state-owned bank was more than 1.6 billion euros (more than 3 trillion kyat)—including accrued interest on the original loan—for the No. 1 steel mill, the formal name for the mill in Myingyan. 

A Yangon-based observer monitoring investment projects in the country told Myanmar Now that the coup regime is rapidly resuming debt-trap projects once paused by the NLD to prove that they can make the initiatives profitable. 

“They are doing that intentionally and for political purposes. They want to say that they are able to do it even though the previous civilian government suspended it,” the observer said. 

He described the coup council as pursuing industry development while lacking a realisation of the actual cost of the initiatives. 

“They are talking about the production of things like airplanes and electric cars, like they are leaping toward the sky. In fact, they have never even been able to cut themselves loose from the ground,” he said.