AFG Venture Group Dispatches

Corporate advisory and consultancy in Australia, South East Asia and India.

Is it time to pursue mining opportunities in Myanmar?

April 24th, 2013

MiningPeter Church writes: The below article by the Oxford Business Group by and large paints an accurate picture of the mining sector in Myanmar. No one can dispute Myanmar’s natural resource wealth but I would suggest foreign mining companies need to be very careful indeed before leaping in. Such potential investors should not only look at the policy and legal frameworks in Myanmar which need a major overhaul, but also look at the experience of foreign investors in the mining sector in other parts of the developing world in Asia. Recent years have seen many foreign miners in Indonesia become very disenchanted with the significant and frequent changes in policy and law in that country, including the Indonesian Government seeking to renegotiate legally binding long term contracts of work (“COW”) between the foreign miners and the Indonesian Government.

In fact, I believe these COW- essentially “cradle to grave” agreements covering from prospecting through to eventual closure of the mine- provide a excellent model for Myanmar to follow, provided that the Myanmar Government sticks to the agreement.

And we should be realistic about how long it will take the Myanmar Government to develop and implement the relevant policy and laws; not just for the mining sector but for the economy and society as a whole; particularly given its multi ethnic makeup. Despite the encouraging optimism shown by Myanama civil servants as to how quickly they will do this, it is a mammoth task that I believe will take years.

Whilst there are many Chinese companies operating in the mining sector without regard to the current legal environment, it is not likely that many western miners of any size will follow their lead. Mining is a risky business at the best of times.

The Oxford Business Group article is available here: http://www.oxfordbusinessgroup.com/economic_updates/myanmar-new-mining-law-set-open-sector

For further information on the Myanmar mining sector, please contact Peter Church.