Mining investment, resource governance and livelihood changes in Pek district, Xieng Khouang Province, Laos

By Oulavanh Keovilignavong


Mining investment is significant to Lao national economy by contributing to 8-11% of gross domestic product (GDP) and 20% of the government revenue, and would create jobs 5% of non-agricultural activities and about 10% per annual to GDP over the next 15 years. But, the experience of Phu Bia Mining Company (PBM) at Phu He mining site at Pek district, Xieng Khouang Province of Laos, reveals adverse environmental impacts, social and cultural disruption, and local economic instability. In resource governance aspect, I seek to understand how the local authorities and community perceive these adverse impacts on their resource uses, management and livelihood changes.

An illegal artisanal miner searching for gold nuggets

Photo 1: An illegal artisanal miner searching for gold nuggets

The local authorities described the drilling program of PBM at Phu Hea site caused resource degradation and impacted people’s livelihoods. After clearing forests, opening a large surface area and using chemical materials and hydraulic oil to drill numerous holes, rainwater eroded the soil and land surface, causing landslides of sand and muddy water into streams and rice fields of farmers in the foothills, causing unsafe for use and drinking, degraded and unfertile the rice fields, resulting in lower production of rice and other crops, and lower income for the farmers. They mitigated these environmental and social impacts by setting up a committee with the PBM community development unit to compensate the affected households, and proposed to the national governments to suspend the PBM activities at Phu Hea site.

The news of high-grade gold minerals found at Phu Hea encouraged several people from local areas and elsewhere rushing in to search gold nuggets in Phu Hea by using simple tools with improper techniques and dangerous and unsafe chemicals of cyanide and mercury to extract gold from stone. This artisanal gold mining became a serious issue when more than twenty people died during their ground digging due to land collapse. The local authorities issued an urgent order to close the Phu Hea area and assigned the Army and police in many sections along the Phu Hea to protect the areas. Since 2010, while illegal mining has reduced, they have still received a report on ongoing illegal mining and the use of chemicals at Phu Hea. At least three reasons are highlighted for the ongoing illegal mining: 1) the local authorities lacked technical and skilled staff, 2) unknown responsible parties, and 3) budget constraints, that have resulted in their weak local governance. In addition, the village development committees revealed key characteristics of illegal miners associated with their ambiguous origins, connection with the Army and police, poverty, unskilled unemployment, wealth status, and local relationships in their village. These characteristics have added further difficulties to the local authorities in stopping illegal miners.

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Photo 2: Sand and muddy water in rice fields of farmers at the foothills

In general, the rural women are posited as caretakers of nature and environment since they often take care local resources for their family livelihoods. However, the Pek and provincial women authorities found that local women had participated in illegal mining. They realised the local poor women opted for illegal mining because it is their only means to increase their income to support livelihoods of their family, suggesting a change of these local women from the caretakers to the abusers of natural resources.

Based on the interviews, the local community claimed that water, land and forest resources at Phu Hea remain degraded in both quality and quantity, which poorly managed and affected in their livelihoods. However, I observed that many households can still access the resources with their different livelihood strategies for their survivals. To maintain their livelihoods, the local community searched multiple alternatives. For example, the wealthier households earned incomes from non-farming activities, such as operating businesses, and opening shops in the town market. The non-poor practiced both farming and non-farming activities, while the poor households opted to artisanal mining as means to increase their income and sustain livelihoods.

After mining investment, the community livelihoods diverted to three interactive directions: better-off, the same and the worst-off livelihoods. As the number of household with better livelihoods is larger than that with worst-off livelihoods, it is arguable if mining investment has not necessarily to hurt all local livelihoods. In reviewing their social status, the households with better livelihoods are associated with the wealthier, and those with the same and the worst-off livelihoods associated with the non-poor and poor, respectively. Therefore, the poor households still remain as victims in mining investment site.

The overall of my findings suggests that the local authorities had attempted to address the issues related to local resources governance, livelihood changes and women role as impacted from both PBM and illegal mining at Phu Hea. As to how this attempt has generated significant impacts in terms of livelihood improvements remains to be discussed.

By signing its contract with the national government before the approval of mining law in 2008, PBM is only responsible to report to the national rather than the local authorities on its mining activities. While the Lao national governments assign power to the local authorities to monitor the mining activities, it is arguable whether, the former have transferred the real power to the latter in performing their tasks. This power is a fundamental link between decentralisation and resource governance, and important to ensure the good practice of local governance.

Besides the local authorities’ mitigations, actually PBM continues to be the main actor to provide human and financial supports to the local authorities to solve the problems caused by their drilling activities. Without these supports, it would be uncertain if the authorities can do so. In addition, PBM has improved some village infrastructures, which could help their drilling activities smoother in return. By viewing local authorities as politicians, the main interest of local government could be income sources, and need technical capacity and financial incentives to perform their resource management.

The management of Phu Hea area is blurred as allowing the illegal mining continuation. After enforcing the provincial order, the local villagers understood Phu Hea under management of the local authorities. But illegal mining is ongoing. When discussed this at provincial and district level, the authorities referred to the environmental and mineral laws in Laos and claimed the management of Phu Hea as everyone’s responsibility including the local villagers, which is completely opposite to the understanding of local community. Or the local authorities may let the situation as it is to help the poor earning their income. If any impacts on local environmental resources occur, they just blame the illegal miners rather than PBM. In this view, the allocation of the Army and police is just to reduce the pressure at Phu Hea and let people know that they have exercised their power to protect local livelihoods and resource while its impacts continue. Beyond this view, actually the authorities may be reluctant to address it because lacked sufficient budgets and technical staff to enforce rule and laws to solve the issues. In particular, the co-existence of poverty and illegal mining suggest that they need more budgets and knowledgeable staffs to address both two problems at the same time.

A local woman selling lemongrass in town market

Photo 3: A local woman is selling lemongrass in town market

The majority of the community still have practiced farming activities, while the number of households running businesses, trading or other service-providers is also increasing. In particular, the wealthier can turn to both farming and non-farming activities depending their wealth and social statues. But, the poor households and the local women have turned to illegal mining activities. Consequently, these poor women in illegal mining worked hard in risky environments where they can be further marginalised. In this view, the mining investment does not necessarily hurt all local livelihoods, particularly the wealthier because they can adapt their livelihoods, but hurts the poor because they cannot adapt their livelihoods, given the significant discrepancies between the rich and the poor in Laos.

As the local livelihoods still depended on local resources, regular consultations between the local authorities and the local community are important to identify the real needs and interests to improve both resource governance and local livelihoods. During my interviews, many of the local women showed their high interests in new agricultural techniques to double their agricultural products, and others interested in agribusiness and how to make business decisions. These local poor women can stay away from illegal mining if they have proper income alternatives to support their family. From this standing points, the local authorities need to emphasis technical trainings on both farming and non-farming activities to the local community. In this way, it would help improving the local resource governance, livelihoods, role of poor women and stop illegal miners.

Temporary man labours searching for additional income in town

Photo 4: Temporary man labors searching for additional income in town

In conclusion, while 2008 mineral law provides several measures and powers to the national and local authorities in protecting the local environment and livelihoods, the good practice of resource governance can be achieved if they seriously implement their power under this law. The overall decision-making process in approving mining concession can be more transparent than before when the national and local authorities effectively collaborate each other. To pursue this law, the local authorities need to strengthen their own capacity by learning hard on both theory and practice of resource management and effective investments to ensure their best practice of resource governance. They also need to emphasise technical trainings that meet the real needs and interests of the local community. The national governments should enforce the mining companies to align with principles of sustainable development and resource governance, and increase more local participation in the decision making. These ways can help improving the local resource governance, livelihoods, roles of poor women as well as stopping illegal miners in XKH and Pek district.