Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Myanmar’s 1994 mining law is set for a major overhaul that could transform as much as 70% of current legislation, government officials from the Asian nation said on Sunday.
Mostly undeveloped, Myanmar also known as Burma is home to vast reserves of oil and gas and minerals and metals, including gold, tungsten, copper, nickel, tin, lithium and precious stones.
The former military regime has loosened its grip on the economy and politics over the past few years prompting intense interest in Myanmar from mining companies and oil explorers.
But much of the initial enthusiasm has waned due to a lack of administrative capacity within the country, a weak legal and regulatory system and crumbling infrastructure.
Last year a brutal crackdown on protestors at the country’s largest copper mine, Letpadaung, which is jointly by Myanmar’s military and Wanbao Mining, a subsidiary of China North Industries, an arms manufacturer, lead to widespread condemnation and civil action.
The Myanmar Times on Sunday speculates that deals like Letpaduang signed when military rule was still in place would probably not be affected by the proposed laws, but several other changes could make life easier for foreign investors in the resource sector:
One of the biggest stumbling blocks for potential foreign miners is Myanmar’s production sharing contract (PSC) between the private party and the Ministry of Mines.
Under the current Mines Law, the Ministry of Mines acts a non-equity partner but is still entitled to around 30pc of minerals extracted, plus the relevant income tax and royalties owed.
Yet another area of concern for foreign investors is the rule banning exports of ore, coal and gold, a protectionist measure meant to ensure that processing is done in-country.
There are also issues surrounding the ability of companies to move from one phase of an operation to the next, like from exploration to site development, without new contracts.
