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Sepon brings sustainable development to Savannakhet

MMG LXML Sepon (LXML) has contributed significantly to economic and social development in the Lao PDR, especially in communities near the mine in Savannakhet Province. LXML is using its experience and procurement needs to promote skills and foster local business.

In February 2015, the Lao Government acknowledged that Vilabouly District, where Sepon mine is located, has been lifted from the list of 46 most poor districts in the Lao PDR. This is a significant achievement for Vilabouly and LXML. In 2012, LXML was awarded a First Class Labour Medal by the Lao Government for its contribution to community development.

Survey results confirm household incomes have multiplied tenfold since LXML commenced operations in 2002. Expanding road networks and electrification are enhancing access to markets and enabling new economic activity. In the past, it took days to reach Vilabouly by road or river; now it takes only a few hours from Savannakhet. Vilabouly is developing sustainable economic enterprises that will continue to prosper after the mine is gone.

UXO clearance

Sepon mine is situated in a remote area in one of the most bombed districts of the Lao PDR, bringing unique challenges to mining operations and agricultural production.  Approximately 260 million bombs were dropped on Lao PDR between 1964 and 1973. Of these, 80 million did not explode, leaving behind a deadly legacy.  UXO continues to claim lives and cause injuries. Since operations commenced, LXML has invested US$40 million dollars to clear around 2,900 hectares of land, destroying over 45,000 UXO items. LXML is cooperating with the Lao Ministry of Defence, UXO Lao, and National Regulatory Authority (NRA) to enhance technical capacity and improve clearance practices for future generations.

Local business development

Cooperative ventures to produce meat and vegetables to supply the mine have been highly successful. LXML purchases US$3 million dollars of local produce through 26 local businesses, delivering a combined income of around US$18 million dollars since the mine started. In cooperation with SNV (Netherlands Development Agency), LXML has increased rice yields for 1,300 farmers through improved farming methods and new varieties. LXML sources all its rice and most other agricultural produce sustainably through local sources.

Citrus bears fruit in Vilabouly

LXML is supporting the development of a citrus industry in Vilabouly through an Australian company, Ironbark Citrus, with 20 years’ experience exporting mandarins from Australia. Ironbark is assisting farmers to produce and export premium citrus. “With LXML’s strong ties with local communities, Ironbark’s experience growing and marketing citrus, and the enthusiastic participation of Lao farmers, we have all the ingredients for success,” said Susan Jenkin, Managing Director of Ironbark Lao. Projections suggest mature citrus trees could generate up to 65 million kip per hectare every year. 1,000 trees have been planted by the first 12 farmers, with a further 5,000 trees ready for planting in 2016. Other crops, including potatoes, are being considered. The key is linking suppliers to markets and diversifying agriculture to enhance sustainability.

Village development and community trust fund

In close consultation with community leaders in 42 villages, benefitting more than 14,000 people, LXML has invested millions of dollars to build schools, roads, latrines, fish ponds, and provide access to potable water. In addition, LXML invests almost $1 million every year in a community development trust fund in cooperation with the Poverty Reduction Fund and Vilabouly District’s socio-economic development plan.

Support for maternal and child health

Lao PDR is challenged by malnutrition, particularly for children under five in remote areas. LXML has therefore sponsored a US$1.5 million 1000 Day Project in partnership with the Lao Ministry of Health and UNICEF to address child malnutrition in four southern provinces. The project is supporting 180,000 children under five, and 67,000 children under two. MMG and UNICEF are fighting malnutrition by scaling up interventions, especially in health, water, sanitation and education.

Water supply for sanitation

LXML has invested millions of dollars in water systems for local communities and in partnership with the Lao Government, local contract partners, and the United Nations. Vilabouly has a population of around 37,000 people.  Households rely on wells and boreholes, which can run dry. Sanitation facilities are limited. These projects support the government’s plans to provide clean water and improve sanitation in rural areas.

Microfinance and banking services

Microfinance facilities established by LXML in partnership with GIZ (Germany’s Development Agency) and AusAID (Australia’s Agency for International Development) support 47 villages with 3,200 participating members and US$575,000 in capital. This program empowers villagers by providing access to savings and low interest loans.
Three years ago there were no banking services in Vilabouly. LXML encouraged several banks to establish branches, and there are now five branches in Vilabouly. People were initially hesitant and withdrew funds immediately. After a while, however, families started saving and taking control of household finances, changing the local economy.

Respect for cultural heritage

LXML is preserving Lao PDR’s rich cultural heritage by sponsoring archaeological research. Excavations at Sepon have uncovered a history of mining and settlement dating back 2,500 years. Evidence of ancient copper mining shafts and ingots traded across Southeast Asia in ancient times demonstrate the importance of mining in regional economic development. The archaeological research program is sponsored by LXML in partnership with the Lao Ministry of Information, Culture & Tourism and James Cook University in Australia.

“The project is preserving the legacy of ancient Lao culture for future generations. Socio-economic development must proceed side-by-side with conservation of national heritage. The Vilabouly Cultural Hall sponsored by LXML showcases one of the most valuable archaeological collections in the Lao PDR,” said Dr Viengkeo Souksavatdy, Deputy Director General, Department of Heritage, Ministry of Information, Culture and Tourism.

Important heritage finds include a Dong Son era bronze drum on display in Vientiane at the National Museum.  Crucibles, copper ingots, jewellery, ceremonial items, and other significant artefacts highlight Lao PDR’s pivotal place in the cultural history of the region.

Mining for progress

“I am very proud that Vilabouly is gradually achieving development indicators,” said Mr Bouasone Mahavong, Vilabouly District Governor. “This is an excellent example of how sustainable management of resources can offer long term benefits to communities.”

“At MMG we mine for progress,” said Mr Suresh Vadnagra, General Manager, MMG LXML Sepon. “We invest for the future, creating wealth by working with national, provincial, and district authorities and directly with local communities at the grass roots level. Our approach is founded on a deep respect for community aspirations, genuine development benefits, particularly for women and children, and the preservation of cultural heritage.”