China contractor has no rights to minerals, says ECRL project owner

Objects of interest or value found on the construction site will become the absolute property of the government, says the ECRL project owner.

KUALA LUMPUR: Malaysia Rail Link Sdn Bhd (MRL) has refuted reports that China Communications Construction Company Ltd (CCCC) will be able to state their claim on minerals or objects of interest during the construction of the 640km East Coast Rail Link (ECRL) project.

“We would like to point out that the construction of the ECRL project, which now connects the states of Kelantan, Terengganu, Pahang, Negeri Sembilan, Selangor and Putrajaya, must comply with the National Land Code 1965.

“Among others, Section 40 of the National Land Code clearly provides for the respective state authorities to have vested interest in any mineral and rock minerals which may be found within their respective territories of their state,” it said in a statement here today.

MRL denied news reports which suggested that CCCC may be able to extract minerals such as gold or silica and take ownership of such minerals during construction of the rail network.

Like other major construction contracts, the Engineering, Procurement, Construction and Commissioning (EPCC) contract for the ECRL project contains a clause on “Antiquities”, in which objects of interest or value found on the construction site would become the absolute property of MRL.

MRL also reiterated that it would have full ownership of assets in the 50:50 joint venture company to be established with CCCC for the operation and maintenance (O&M) of the ECRL to ensure such assets are within the control of the Malaysian government.

MRL, a wholly owned subsidiary of Minister of Finance Incorporated (MOF Inc) pointed out that the appointment of the board of directors together with the post of chief executive officer in the joint venture company would be solely at the discretion of the government.

As project and asset owner of the ECRL, it said there was no truth in recent commentaries and news reports suggesting that Malaysia risked ceding assets and sovereignty to China as a result of the joint venture company.

“The JV Co between MRL and CCCC is purely for technical support and sharing of operational risk, as Malaysia stands to leverage the O&M expertise for the ECRL through the Chinese government-backed conglomerate,” it said.

MRL said the memorandum of understanding with CCCC did not require the government to undertake any guarantee on the revenue or profit for the joint venture company with regards to its operation and maintenance.

“Hence, the distribution of profit and losses during the operations of the JV Co would be as agreed upon under the MoU. Should the JV Co incur losses, it would be split 50:50 between MRL and CCCC.

“However, if the operations are profitable, 80% of the profits would be taken up by MRL while the balance 20% would be for CCCC,” it said.