MYANMAR EXPLORATION AND MINING UNCHARTED TERRITORY Bawdwin Mine. Photo courtesy of Myanmar Metals. CONTENTS
Introduction 3 Stakeholders 14
Under-explored deposits 3 Government entities 14
Overview of Myanmar 3 Non-government entities 20
A track record of Tier 1 deposits 4 Case study: Bawdwin Mine 20
Demographics 4 Opportunities 25
Economic development and 5 Current opportunities 23 foreign investment Future opportunities 25 Legal and investment framework 6 Conclusion 26 Myanmar’s mineral deposits 11 How Austrade can help 28 Unexplored terrain 11
Known mineral belts 11
Disclaimer Copyright © Commonwealth of Australia 2019 This report has been prepared by the Commonwealth of Australia represented by the Australian Trade and Investment Commission (Austrade). The report is a general overview and is not intended to The material in this document is licensed under a Creative Commons provide exhaustive coverage of the topic. The information is made Attribution – 4.0 International licence, with the exception of: available on the understanding that the Commonwealth of Australia is • the Australian Trade and Investment Commission’s logo not providing professional advice. • any third party material While care has been taken to ensure the information in this report • any material protected by a trade mark is accurate, the Commonwealth does not accept any liability for any • any images and photographs. loss arising from reliance on the information, or from any error or More information on this CC BY licence is set out at the creative omission, in the report. commons website: https://creativecommons.org/licenses/by/4.0/ Any person relying on this information does so at their own risk. legalcode. Enquiries about this licence and any use of this document The Commonwealth recommends the person exercise their own skill can be sent to [email protected]. and care, including obtaining professional advice, in relation to their use of the information for their purposes. Attribution The Commonwealth does not endorse any company or activity Before reusing any part of this document, including reproduction, referred to in the report, and does not accept responsibility for any public display, public performance, distribution, dissemination, losses suffered in connection with any company or its activities. communication, or importation, you must comply with the Attribution requirements under the CC BY licence.
Using the Commonwealth Coat of Arms The terms of use for the Coat of Arms are available from the It’s an This report was researched and prepared by FMR Research & Honour website (itsanhonour.gov.au). Advisory (www.frontiermyanmar.com) and Austrade Yangon, with contributions from Valentis Group. 18-19-231. Published October 2019.
Myanmar Exploration and Mining Uncharted Territory 01 Marble Mine in Mattaya, Mandalay. Photo: Austrade. 02 INTRODUCTION
Myanmar is one of the last frontier mining areas in Asia. Having recently opened to foreign investors, its remote mine sites may be high risk for some resources companies – but they are also potentially high reward. There are large proven deposits of tin, tungsten and antimony, and vast unexplored mineral belts in northern and north-eastern Mynamar. Despite challenges, political risk factors are falling, and the time is ripe for mining companies to investigate valuable opportunities.
Under-explored deposits Overview of Myanmar
Myanmar’s mining industry has enormous potential. After decades of isolation and economic stagnation, With abundant resources – explored and unexplored Myanmar, formerly known as Burma, is liberalising its – the country occupies a geological sweet spot, at economy and embracing a more democratic system the intersection of the Indonesian Arc System and the of government. The previous military-led government Alpine-Himalayan Orogenic Belt. began to launch a series of reforms aimed at improving the economy in 2011, including floating the local With the mining sector closed to foreign investment for currency (kyat), introducing new fiscal regulations and many decades, large tracts of promising terrain have granting the central bank greater autonomy. It also remained unexplored by modern mining technologies. opened up sectors such as mining, telecommunications Most locally-owned mines use out-of-date mining and education to international investment, encouraged methods, and only upper-surface minerals are foreign direct investment, and liberalised trade. discovered and processed. The first open and credible elections in over half a In deeper layers, pristine deposits lie untapped, century were held in November 2015. The National requiring modern mining equipment and technology League for Democracy (NLD) took office on 1 April 2016 for proper exploration and economic extraction. For in a peaceful transition that at the time improved overall example, the June 2018 acquisition of a 51 per cent confidence in the long-term trajectory of the country. interest in the Bawdwin Mine in Shan State by Perth- based Myanmar Metals (page 20) shows Australian mining expertise can help to significantly raise the resource estimates of underdeveloped mines. “Myanmar is mineral rich and under-explored: an economy in transition after decades of isolation that This report highlights areas of opportunity for is undergoing major economic reforms, including Australian mining companies, including mining in the mining sector. Today, Myanmar companies equipment, technology and services (METS) are seeking skills, technology and investment to companies. With significant ongoing changes in how the Myanmar Government regulates mining, develop a productive mining industry.” 2020 is likely to see a major rise in overseas interest Jeff Turner, Senior Trade Commissioner, Austrade, Yangon. and investment.
Myanmar Exploration and Mining Uncharted Territory 03 Figure 1: Myanmar’s administrative divisions
Name Population Size People per square km
Ayeyarwady Region 6,184,829 35,032 km² 177
Bago Region 4,867,373 39,402 km² 124
Chin State 478,801 36,019 km² 13
Kachin State 1,642,841 89,042 km² 18
Kayah State 286,627 11,732 km² 24
Kayin State 1,504,326 30,383 km² 50
Magwe Region 3,917,055 44,821 km² 87
Mandalay Region 6,165,723 37,946 km² 162
Mon State 2,054,393 12,297 km² 167
Rakhine State 2,098,807 36,778 km² 57
Shan State 5,824,432 155,801 km² 37
Sagaing Region 5,325,347 93,704 km 57
Tanintharyi Region 1,408,401 44,345 km² 31
Yangon Region 7,360,703 10,277 km² 716
Naypyitaw Union Territory 1,160,242 7,054 km² 164
Total 50,279,900 684,633 km² 125
Source: 2014 Population and Housing Census of Myanmar
A track record of Tier 1 deposits Demographics
Myanmar is in a unique position in the global exploration Myanmar has a total population of around 55 million. and mining industry, in that it has received relatively About 30 per cent of the population resides in urban little foreign investment in the past several decades. areas such as Yangon and Mandalay, Myanmar’s two The country has a long and successful mining history, largest cities and commercial centres, and mid-tier and contains a number of Tier 1 (world class) mineral cities Naypyitaw, Mawlamyine and Taungyyi. deposits of gold, copper, tin, lead and silver. The country comprises 14 administrative divisions – The potential to discover more Tier 1 deposits combined seven regions and seven states – and an administrative with the lack of recent western exploration positions area known as Naypyitaw Union Territory, home to the the country as the last frontier in Southeast Asia for a Union government. In Figure 1, italicised administrative resurgence of new investment and discoveries. divisions are areas with notable mining activity.
Local companies lack the technology and skills to turn their medium-scale operations into larger modern mines. Both local companies and the Government are encouraging foreign partnerships to assist in modernising the industry.
04 Myanmar Exploration and Mining Uncharted Territory Economic development and 6.3 per cent over the last three years. The World Bank foreign investment forecasts that growth in the Myanmar economy will accelerate to 6.7 per cent by 2021.
Myanmar is located at the heart of Asia, with China The country’s macroeconomic performance has to its north, India to its west and the rest of Southeast received a number of boosts over the last two years. Asia to its south and east. On a combined basis, these Efforts to encourage private sector activity have been countries hold half of the world’s population and are the detailed in a new long-term development agenda, fastest-growing economies in the world. This strategic and recent legislative reforms should further bolster location is expected to play a pivotal role in the business activities. Myanmar Government’s plans to increase international cooperation, trade and investment. While external economic headwinds and internal conflict pose challenges, the Government is making significant Myanmar has been one of the fastest-growing Southeast strides in its effort to continue reforms, foster reconciliation Asian economies since 2011, when transitional reforms and sustain overall growth. With great potential to be found began. Economic growth remains strong. According to in key sectors, such as energy, manufacturing, mining and World Bank data, the Myanmar economy grew by tourism, Myanmar is poised to remain one of Asia’s top 6.2 per cent in 2018, and has grown by an average of destinations for investment in the years to come.1
Figure 2: Myanmar GDP growth rates and projections
10.0
. 7.5 . . . . . . . . . . . 5.0 .
2.5 ■ GDP growth (%) ■ Projected GDP growth (%) [World Bank] ■ Projected GDP growth (%) [IMF]
0.0 -’ -’ -’ -’ -’ -’ -’ -’ -’ -’ Fiscal Year
Sources: World Bank, Myanmar Economic Monitor (June 2019); IMF, Myanmar Country Report (April 2019)
Figure 3: Total approved FDI (US$ million)
10,000
7,500
5,000
2,500
0 ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ mini ’ -’ Fiscal Year fiscal year (up to May)
Source: Directorate of Investment and Company Administration (DICA)
Myanmar Exploration and Mining Uncharted Territory 05 Figure 4: Total approved FDI in mining (US$ million)
40
30
20
10
0 ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ -’ ’ mini ' -' Fiscal Year fiscal year (up to May)
Source: Directorate of Investment and Company Administration (DICA
Legal and investment framework However, in the absence of implementing regulations, the 2015 amendments have had a limited impact on investment in mining in Myanmar. Mining laws and regulations The implementing regulations were issued in February Myanmar issued a new mines law in December 2015, 2018, and are called the ‘2018 Mines Rules’. These (the 2015 Mines Law). This law introduced a number rules provide clarification in respect to the operation of progressive legislative amendments intended to of the 2015 Mines Law. The 2018 Mines Rules further encourage international participation in Myanmar’s set out procedural and administrative measures to be mining sector. The amendments establish the applied by the Ministry. They specify criteria relevant roles and responsibilities of Myanmar’s Ministry of to permit applications and the duties of permit holders, Natural Resources and Environmental Conservation as well as rules related to mine closure, safety, labour, (MONREC), the fiscal regime, laws relating to mine accidents, inspection and environmental protection. operations and penalties for non-compliance. The 2018 Mines Rules provide certainty of tenure by The 2015 Mines Law amendments apply to the mining inclusion of an automatic right for investors to move of all minerals, including precious and heavy metals as from one licence type to the next if the investor has well as industrial minerals, but do not apply to the mining complied with the new amendments introduced in of gemstones which is governed by the Gemstone 2015 and the rules introduced in 2018. The process Law (1995). The 2015 amendments made some critical also allows for integration of the licences to include improvements to existing mining law, including: a single licence covering prospecting, exploration, feasibility, production, processing and sale – or a 1. Increasing the maximum mine life for large scale combination of three of those operations. production projects to 50 years Following issuance of the 2015 Mines Law 2. Providing a guaranteed right of production for amendments, the Ministry imposed a moratorium on investors who have carried out prior exploration new licence applications while the 2018 Mines Rules and feasibility were being drafted. This moratorium was lifted in June 2018 and since that date over 2,000 new mineral 3. The introduction of alternative Government licence applications have been submitted. participation mechanisms
4. Enabling upgrading of small or medium scale licences to large scale in order to allow foreign joint ventures.
06 Myanmar Exploration and Mining Uncharted Territory The Department of Mines (DOM) is drafting a new Known deposits: national-level mining or mineral resources policy aimed Myanmar’s focus on enhanced transparency in at modernising the 1994 and 2015 versions of the Mines government processes has led to a preference for Law. Although it may seem counterintuitive to develop tendering in government procurement in most sectors. a new sector-wide policy shortly after the release of the The 2018 Mines Rules have adopted a policy of 2018 Mines Rules, a revamped sector-wide plan could tendering for areas that have sufficient geological data spur the development of less convoluted regulations, and have deposits that can be commercially mined. improve practices and ultimately provide more incentives to investors interested in the sector. In practical terms tendering is only likely to be used for old known deposits / mines, being those that Licence allocation method were mined in British times such as the Modi Taung Gold Mine. Greenfield areas:
The rules in place prior to the 2018 Mines Rules were Tenure not explicit on the method used for licence allocation once an application was submitted. In practice the The 2018 Mines Rules stipulate the maximum area licence allocation was done on a ‘first come, first and tenure periods for each category of licence. served’ basis. The 2018 Mines Rules now explicitly (See Figure 5, below) state that priority is given to the application first received for greenfield areas.
Figure 5: Licence sizes and tenure
Size – for large scale projects (Maximum)
1996 Mines Rules 2018 Mines Rules
Prospecting 4,200 km2 2,100 km2
Exploration 3,150 km2 2,100 km2
Feasibility n/a 2,100km2
Licence Tenure
1996 Mines Rules 2018 Mines Rules
Prospecting 2 years 2 years
Exploration 5 years 5 years
Feasibility 2 years 2 years
TOTAL 9 years 9 years
Production Up to 25 years 15 to 50 years
Myanmar Exploration and Mining Uncharted Territory 07 Figure 6: Dead rent (US$ per sq km)
5,000 Industrial Minerals 4,500 Iron, Zinc, Tin etc. Silver, Copper etc. 4,000 Gold, Platinum, Uranium 3,500
3,000
2,500
2,000
1,500
1,000
500
0 OLD NEW OLD NEW OLD NEW OLD NEW OLD NEW
PROSPECTING EXPLORATION FEASIBILITY DEVELOPMENT PRODUCTION
Converted from Myanmar Kyat at prevailing rate
Transfer of rights The 2015 Mines Law amendments made way for alternative contract-based state participation The former rules provided that the holder of a licence mechanisms in addition to dead rent and royalties. had the right to transfer the licence with the approval The 2018 Mines Rules do not provide any further detail of the Ministry or the Department. However, no on the applicability of these different mechanisms. guidance was provided on the basis upon which the In practice, it is anticipated that there will be a trend transfer was to be approved or rejected. The new towards negotiated profit-sharing mechanisms utilised 2018 Mines Rules provide the clarity required, which for larger investments and the production-sharing is procedural in nature, with the focus on ensuring the mechanism for small scale activities. transferee complies with the conditions of the licence.
Environmental management Fiscal regimes Myanmar’s mining industry has historically suffered Myanmar’s mining fiscal regime consists of from a poor reputation with respect to environmental several elements: management. The 2018 Mines Rules attempt to a) Dead rent address this issue with the introduction of two new chapters relating to environmental impact-mitigation b) Royalties and mine closure. Investors are required to establish c) Three alternative contract-based Government two funds: one for environmental conservation and the participation options: production sharing, state other for mine closure. equity, or profit sharing Investors previously expressed concern about the d) Corporate income taxes, import duties and other 2015 Mines Law being at odds with the Environmental generally applicable taxes and fees. Conservation Law, with the relevant rules causing confusion for investors and community stakeholders. Myanmar’s dead rent/surface fees were considered to The 2018 Mines Rules assist in eliminating these be higher than many countries with active exploration inconsistencies as the new rules direct investors to the industries. In a move to encourage exploration and Environmental Conservation Law. investment, the new 2018 Mines Rules reduced the dead rents by over 65 per cent. The licence application process
The licence application process is as follows:
08 Myanmar Exploration and Mining Uncharted Territory Figure 7: Integrated licence application process
1. PROCESS 3. STATE/ 4. EMP/EOD 5. DGSE 6. FEDERAL START AND AREA 2. APPLICATION DIVISION 7. PERMIT APPROVAL AGREEMENT APPROVAL SELECTION APPROVAL a a a Application Township Approval DGSE Agreement Final Reviews Minister courtesy State Government preparation and letters Negotiation call review • Attorney General submission • EMP submitted to and • Agreement negotiated • Ministry of Commerce approved by State with DGSE • Central Bank of b b b Government ECD Myanmar Scruitinizing • Ministry of Planning and Field visits Forestry review commitee of Monrec Finance • National Economic Co-ordination Committee c c • Cabinet of Union Minister office Township approval Government Office requests State letters Government review • Township Administrative Department d • Township Land Record Department (Form 105) • Note: The State Government often • Township Agriculture and informally requiries investors Irrigation Department undertake community • Township Forestry engagement at this stage to Department explain “exploration”. • Township Security • Township letters are obtained by Department undertaking field visits together with the relevant township department administrator. d
Final Map Generation
e State Cabinet Approval
Figure 8: Mining permits by state/region (as at April 2019)
State/ Large-scale Small-scale Exploration Feasibility Artisanal Total Region study (official)
Ayeyarwady 2 1 – – – 3 Bago – 6 1 – – 7 Chin – – 3 – – 3 Kachin 4 84 25 1 – 114 Kayah 1 16 1 – – 18 Kayin 6 37 2 1 – 46 Magway 3 42 9 – – 54 Mandalay 41 270 29 2 11 353 Mon 5 14 1 1 4 25 Naypyitaw 3 – – – – 3 Rakhine 1 – – – – 1 Sagaing 24 176 14 15 2 231 Shan 39 243 34 10 2 328 Tanintharyi 18 50 20 4 – 92 Yangon – – – – – 0 Total 147 939 139 34 19 1,278
Source: Department of Mines
Myanmar Exploration and Mining Uncharted Territory 09 Myanmar Investment Commission
Established in 1994, the Myanmar Investment Commission (MIC) is the government body tasked with managing and enforcing the Myanmar Investment Law, in addition to evaluating economic and business proposals that require government involvement.
The MIC works closely with the Directorate of Investment and Company Administration (DICA) to oversee investment and company registrations. It generally holds at least one meeting every month to determine the fate of more extensive investment proposals. It also periodically releases statements and notifications relevant to enterprises operating under MIC approval.
The MIC plays a significant role in approving potential investments as it must evaluate mining projects with ‘notable’ impact on the environment and communities, such as extractive industries. Furthermore, the 2018 Mines Rules introduced additional environmental protection measures which require the MIC to assess
potential projects to ensure they meet specific Tiger Tunnel, Bawdwin. sustainability criteria. Photo courtesy of Myanmar Metals.
10 Myanmar Exploration and Mining Uncharted Territory MYANMAR’S MINERAL DEPOSITS
“The Myanmar mining sector has a lot of potential, but to date is largely under- developed. The sector is dominated by a large number of small and medium-sized local operators. There hasn’t be a a huge amount of large-scale mining investment to date.”
Sebastian Sahla, Associate, Natural Resources and Governance Institute, Yangon.
Unexplored terrain A list of significant mining operations by deposit is shown in Figure 10. Although Myanmar is famous for its vast reserves of jade and gemstones, the country is also endowed with Figure 9: Myanmar Geological Map significant deposits of coal, limestone, zinc, copper, tin and tungsten, gold and lead. For instance, Myanmar produced 10 per cent of the world’s mined tin in 2014.2
The true extent of this endowment is still not fully understood as much of Myanmar remains geologically unexplored and little geological data is available. This potential continues to draw interest from foreign mining companies. Many believe it is likely that world-class- sized deposits have yet to be discovered as the country is situated at the intersection of the Indonesian Island Arc System and the Alpine-Himalayan Orogenic Belt.3
Known mineral belts
A significant tin, tungsten and antimony belt stretches from Myanmar’s southern tip in Tanintharyi Region up to central Myanmar along the country’s eastern border. Largely untapped zinc, lead, silver and copper belts run from Mandalay to the Myanmar-China border areas in Kachin State and Shan State.
Moreover, notable gold, copper and iron belts run north-south in areas such as Sagaing Region and Mandalay Region, while coal deposits are typically situated in pockets in southern, central, western and north-western Myanmar. Source: Myanmar Geosciences Society
Myanmar Exploration and Mining Uncharted Territory 11 Figure 10: Large-scale permits by deposit type (as at May 2019)
State/ Coal Limestone Marble Tin/ Gold Lead Copper All types Region tungsten
Ayeyarwady – 2 – – – – – 2
Bago – – – – – – – 0
Chin – – – – – – – 0
Kachin – – 2 – – – – 4
Kayah – – – 1 – – – 1
Kayin – 2 – – – – – 6
Magway 2 1 – – – – – 3
Mandalay 4 22 6 – 3 – – –
Mon – 4 – – – – – 5
Naypyitaw – 3 – – – – – 3
Rakhine – – 1 – – – – 1
Sagaing 19 1 – – 1 - 2 24
Shan 16 6 1 - 1 4 – 39
Tanintharyi 7 1 – 9 – – – 18
Yangon – – – – – – – 0
Total 48 42 10 10 5 4 2 147
Source: Department of Mines
To date, MONREC has issued nearly 150 large-scale Notable large-scale mines include the Bawdwin mineral mining permits, with the majority of large-scale zinc, silver and lead mine in northern Shan State, the operations located in mineral-rich divisions such as Mawchi tin and tungsten mine in Kayah State, and the Mandalay Region, Shan State, Sagaing Region and Letpadaung copper mine in Sagaing Region. Tanintharyi Region.
12 Myanmar Exploration and Mining Uncharted Territory Bawdwin Mine. Photo courtesy of Myanmar Metals. 13 STAKEHOLDERS
Multiple government entities oversee the mining sector in Myanmar, most of which operate within the Ministry of Natural Resources and Environmental Conservation or MONREC. The government entities most relevant to foreign mining investment are outlined below.
Government entities The ministry’s stated objectives are to conserve and protect Myanmar’s natural resources, extract and utilise natural resources for development projects, and MONREC was founded in 2016 when the former promote domestic and foreign investment in relevant Ministry of Environmental Conservation and Forestry extractive sectors. was combined with the former Ministry of Mines after the NLD-led government assumed office. Figure 11 is an organisation chart for MONREC, with specific focus on the mining and minerals sector. MONREC is tasked with overseeing policy and enforcing laws, rules and regulations for the mining, forestry and environmental sectors.
MONREC
Address Ministry of Natural Resources & Environmental Conservation Complex, Office No. 28, Ministry Zone, Naypyitaw
Phone contacts (+95) 067-405074, 067-405008, 067-405011, 067-405089, 067-403258, 067-405004, 067-405070
Email N/A
Website monrec.gov.mm
14 Myanmar Exploration and Mining Uncharted Territory Figure 11: MONREC organisational chart
mineral policy, regulation, Department of Mines royalty collection
Department of Geological Survey geological survey mineral and Mineral Exploration exploration laboratory
Forestry lead, zinc, silver, copper, iron, nickel, chromite, antimony, coal, limestone, No. 1 Mining Enterprise industrial minerals, manganese, decorative stones Mining and Minerals
gold, tin, tungsten, rare earths, No. 2 Mining Enterprise titanium, platinum
Environmental Conservation Environmental Conservation Environmental
Ministry of Natural Resources and Myanmar Gems Enterprise gems, jade, jewellery
Myanmar Pearl Enterprise pearl cultivation
Department of Mines (DOM)
Address Ministry of Natural Resources & Environmental Conservation Complex, Office No. 19, Ministry Zone, Naypyitaw
Phone contacts (+95) 067-409009, 067-3409017, 067-3409018, 067-409372, 067-409199, 067-409376
Email N/A
Website www.mining.gov.mm
Myanmar Exploration and Mining Uncharted Territory 15 The Department of Mines (DOM), under MONREC, is ›› inspecting safety measures at mining sites in regard responsible for implementing mineral-related policy, to the storage, carriage and use of petroleum, laws and regulations. The body must also carry out chemical gases and explosive materials control, safety and inspection measures for mining supervising companies to ensure compliance with projects across the country. ›› rules and regulations According to DOM,4 its principal responsibilities scrutinising mining operations, as well as the include: ›› rehabilitation and reclamation of land, to minimise ›› scrutinising proposed applications for mineral environmental degradation prospecting, exploration and processing licences ›› managing the allocated budget for mining and ›› issuing relevant permits under the Myanmar mineral operations, collecting royalty payments, Mines Law and inspecting the financial statements of relevant private companies and joint ventures operating in carrying out negotiations and relationship building ›› the sector. with international investors
›› conducting training aimed at promoting skilled labour and technical capacity building
Department of Geological Survey and Mineral Exploration
Address Myanmar Gems Museum, Ground Floor, Thabyegon Ward, Naypyitaw
Phone contacts (+95) 067-414427, 067-3414506, 067-3414425, 067-3414035, 067-414041, 067-414043
Email N/A
Website www.mining.gov.mm/DGSE/Default.asp
The Department of Geological Survey and The department regularly corresponds with mining Mineral Exploration (DGSE) oversees countrywide companies that have access to conflict areas which geological mapping, prospecting and exploration have yet to be geologically mapped. This enables using geological, geochemical, geophysical and DGSE to identify potential exploration opportunities exploratory drilling techniques.5 The department also in areas such as eastern Kachin State, northern Shan provides technical and advisory services to existing State and Kayin State. Its leadership predominantly and potential domestic and foreign investors in the comprises foreign-educated engineers and geologists. mining sector.
DGSE is also responsible for laboratory studies within the ministry, using petrological and mineralogical labs to identify ore and mineral assemblages.
16 Myanmar Exploration and Mining Uncharted Territory No. 1 Mining Enterprise
Address Ministry of Natural Resources & Environmental Conservation Complex, Office No. 19, Ministry Zone, Naypyitaw
Phone contacts (+95) 067-409161, 067-409011
Email N/A
Website www.mining.gov.mm/ME-1/Default.asp
No. 1 Mining Enterprise, the first of two state-owned The state-owned enterprise is thought to possess enterprises under MONREC, oversees the production some of the most accurate mining production data and marketing of nonferrous metals such as lead, in the country, though it is often reluctant to publicly zinc, copper, silver, iron, aluminium, cadmium, cobalt, disclose the data. The overall transparency of the antimony, chromium, tellurium, mercury and arsenic, enterprise is open to question. as well as by-products such as antimonial lead The production and export data for nationwide and copper matte. The enterprise also leads the operations under No. 1 Mining Enterprise during the privatisation process of state-operated mining projects, 2016–17 financial year is shown in Figure 12. having facilitated the privatisation of seven large-scale projects and 82 small-scale projects across Myanmar.
Myanmar Exploration and Mining Uncharted Territory 17 Figure 12: Production and export data for No. 1 Mining Enterprise (FY16–17)
Production (FY16–17) Export (FY16–17)
Mineral Volume Value Volume Value (metric tons) (MMK millions) (metric tons) (MMK millions)
Antimony concentrate 425 213 1,080 2,906
Antimony ore 2,780 973 1,138 838
Bentonite 600 5 – –
Barite 3,215 39 – –
Barite powder 1,252 125 – –
Bauxite 8,791 70 – –
Cathode copper 30,858 92,573 59,825 363,635
Chromium ore 750 60 – –
Clay 75,934 87 – –
Coal 549,838 8,520 – –
Copper ore 8,616 431 4,455 170
Dolomite 2,200 10 – –
Ferro nickel 64,462 275,769 37,089 460,536
Fire clay 3,000 42 – –
Granite 305 5 – –
Gypsum 338,489 4,062 – –
Iron ore 8,405 588 2,500 194
Lead concentrate 2,850 228 2,150 889
Lead ore 20,322 1,219 18,200 2,844
Limestone 6,002,241 7,193 300 32
Limestone (decorative) 3,990 251 – –
Manganese-dioxide 1,870 57 51,882 1,477
Marble 9,380 350 302 228
Ochre 7,860 51 – –
Petrified wood – – 133 892
Quartz 5,700 80 15,455 288
Zinc concentrate 754 113 4,900 2,501
Zinc ingot – – 8,820 23,002
Zinc ore 72,640 5,811 11,415 1,277
Total 7,227,527 398,925 219,644 861,709
Source: 4th Myanmar EITI Report
18 Myanmar Exploration and Mining Uncharted Territory No. 2 Mining Enterprise
Address Ministry of Natural Resources & Environmental Conservation Complex, Office No. 19, Ministry Zone, Naypyitaw
Phone contacts (+95) 067-409387, 067-409011
Email N/A
Website www.mining.gov.mm/ME-2/Default.asp
The second of two state-owned mining enterprises, Similar to No. 1 Mining Enterprise, No. 2 Mining Enterprise No. 2 Mining Enterprise, specialises in the production is thought to possess some of the most accurate mining and marketing of gold, tungsten, titanium, platinum, production data in the country. However, the enterprise rare earth minerals, tin concentrates, wolfram lacks transparency and has recently been hampered by concentrates and tin wolfram scheelite mixed corruption issues. concentrates. The enterprise is currently a partner The production and export data for No. 2 Mining in multiple joint ventures with both local and foreign Enterprise’s nationwide operations over the last three mining companies in Kachin State, Kayah State, Shan financial years is shown in Figures 13 and 14. State, Mon State, Sagaing Region, Mandalay Region and Tanintharyi Region.
Figure 13: Production for No. 2 Mining Enterprise
Production value in MMK millions
Mineral FY14–15 FY15–16 FY16–17
Gold, tin, tungsten, tin tungsten mix, tin tungsten scheelite mixed 67,129 85,445 69,140
Other minerals 411,164 331,730 398,925
Total 478,293 417,175 468,065
Source: 4th Myanmar EITI Report
Figure 14: Exports for No. 2 Mining Enterprise
Export value in MMK millions
Mineral FY14–15 FY15–16 FY16–17
Gold, tin, tungsten, tin tungsten mix, tin tungsten scheelite mixed 5,172 3,398 –
Other minerals 188,427 9,525 861,709
Total 193,599 12,923 861,709
Source: 4th Myanmar EITI Report
Myanmar Exploration and Mining Uncharted Territory 19 Non-government entities
Myanmar Federation of Mining Associations
Address N/A
Phone contacts (+95) 09-2019173, 09-5407151, 09-455794717
Email [email protected], [email protected]
Website www.mfma.org.mm
There are two principal mining associations in private sector investment in the mining industry. It is Myanmar that represent the interests of the mining also tasked with overseeing state- and regional-level industry. The Myanmar Federation of Mining mining industry associations across Myanmar in areas Associations (MFMA) is Myanmar’s largest industry with notable mining activity. association for local mining companies and represents
International Investors for Mineral Development Association
Address 18th Floor, Room 1805, Sakura Tower, 339 Bogyoke Aung San Rd, Kyouktada Township, Yangon
Phone contacts +951225330
Email N/A
Website Coming
The International Investors for Mineral Development Case study: Bawdwin Mine Association (IIMDA) was formed in 2017 with the goal of presenting a case for sustainable mining reforms to The Bawdwin base metal mine in Namtu, northern State Counsellor Daw Aung San Suu Kyi. Following a Shan State, is a world-class mineral site with significant meeting with the State Counsellor in December 2017, zinc, lead, silver and copper deposits. The mine is also IIMDA decided to transition into a fully-fledged industry expected to produce some nickel and cobalt. association with the aim of increasing transparency in the mining sector, decreasing bureaucratic red tape The deposit was first discovered around 600 years and promoting international best practices. ago by Chinese miners, and large-scale production at the site began in the early 20th century after it was A December 2017 release from IIMDA claimed its redeveloped by the Burma Corporation. investment in the country is projected to be between US$50 million and US$100 million in coming years. The mine subsequently became the world’s largest lead and silver mine throughout the 1920s and 1930s The association is made up of foreign investors and until part of the mine was destroyed in World War II. local joint-venture partners. It is currently building a website, and plans to increase industry engagement and marketing initiatives.
20 Myanmar Exploration and Mining Uncharted Territory increasing transparency in the mining sector, decreasing bureaucratic red tape and promoting international best practices.
A December 2017 release from IIMDA claimed its investment in the country is projected to be between US$50 million and US$100 million in coming years.
The association is made up of foreign investors and local joint-venture partners. It is currently building a website, and plans to increase industry engagement and marketing initiatives.
3.3 Case study: Bawdwin Mine
Although local and state-owned mining companies were The Bawdwin base metal mine in active at the site during the ensuing 70 years, production Namtu, northern Shan State, is a world- class mineral site with significant zinc, plummeted to a fraction of the production volumes seen lead, silver and copper deposits. The in the early 20th century. mine is also expected to produce some The mine saw signs of new life in 2017 when Perth-based nickel and cobalt. Myanmar Metals paid local company Win Myint Mo Industries a $1.5 million deposit for the option to acquire an The deposit was first discovered around 85 per cent interest in the project. At that time, Myanmar 600 years ago by Chinese miners, and Metals owned the concession to operate the mine. large-scale production at the site began in the early 20th century after it was Myanmar Metals later exercised the option in June 2018, redeveloped by the Burma Corporation. acquiring a 51 per cent participating interest in the project. The company ultimately formed a joint venture with Win The mine subsequently became the Myint Mo Industries and East Asia Power (Mining) known world’s largest lead and silver mine as the Bawdwin Joint Venture (BJV). The project site is throughout the 1920s and 1930s until approximately 38 square kilometres. part of the mine was destroyed in World War II. Deposit Although local and state-owned mining The polymetallic deposit has a JORC resource of 94Mt companies were active at the site during the ensuing 70 years, production plummeted to a The relatively high grades found at the site thus far at 4.2 per cent Pb, 107g/t Ag, 2.1 per cent Zn and 0.2 per fraction of the production volumes seen in the early 20th century. cent Cu, according to the latest deposit estimates made could put the mine in the first quartile of all large- at the site. Resource estimates at the site have continued scaleThe mine saw signs of new life in 2017 when Perth underground and open-pit mines in the world,-based Myanmar Metals paid local to trend upwards over the past two years. incompany Win Myint Mo Industries terms of grade and resource size. a $1.5 million deposit for the option to acquire an 85 per
Figure 15: Bawdwin Mine mineral estimates (as at May 2019) 26 Austrade Yangon - Myanmar Mining: Uncharted Territory August 2019
Classification Tonnage (MT) Pb (%) Ag (g/t) Zn (%) Cu (%)
Proved – – – – –
Probable 18.4 6.4 169 3.4 –
Total ore reserves 18.4 6.4 169 3.4 –
Indicated 37.2 4.3 114 2.4 0.2
Inferred 56.9 4.1 103 1.9 0.2
Total mineral resources 94.2 4.2 107 2 0.2
Source: Myanmar Metals
Status Implications
The JV between Myanmar Metals, WMM and East Asia The Bawdwin Mine project could be a game changer Power (Mining) completed a pre-feasibility study for and demonstrate to foreign mining companies not only the starter pit at Bawdwin, the first phase of the project, the viability of JVs, but the Myanmar mining sector as in May 2019. a whole.
The Bawdwin project’s JORC compliant mineral The early estimates concerning tonnage and grade resource estimate stands at 100.6 Mt at 4.0% Pb, indicate the mine could be one of the largest of its kind 3.1 Oz/t (97 g/t) Ag, 1.9% Zn and 0.2% Cu. in the world. Myanmar Metals estimates the mine is set Moving forward, Myanmar Metals claims the JV intends to become the third-largest producing lead mine in the to carry out further mine expansion studies and world, as well as a top 10 producing silver mine. hoped to start an exploration drilling program at the site in October 2019. Operations at the starter pit are expected to begin in late 2021.
Myanmar Exploration and Mining Uncharted Territory 21 Open-pit mine, Mogok. Photo: Austrade. 22 OPPORTUNITIES
The sheer scale of Myanmar’s unexplored mineral belts offers the greatest opportunity for Australian mining companies. As the restrictions on exploration permits ease, the opportunities for prospecting will increase dramatically – especially in Kachin.
The lack of a contemporary mining cadastre and Current opportunities mineral licence registry has also exacerbated many of the obstacles hampering exploration and the development of the mining sector overall in Exploration Myanmar. It has inhibited the creation of a streamlined Of all the mining sectors, exploration is the one most permitting process, dis-incentivised foreign investment likely to benefit from an increase in government in exploration, and delayed the improvement of capacity. overall transparency.
In the recent past, gaining an exploration permit has typically been a lengthy and complicated process. A national-level cadastre MONREC is now improving the process, driven However, a national-level mining cadastre is currently in part by an appreciation that for most mining slated for a late 2020 or early 2021 release – if the companies, exploration is only a preliminary step in the procurement and development processes for the development and extraction process. cadastre are completed within the estimated project As the permit process improves, MONREC will likely timeline. The World Bank-financed Myanmar Extractive lift some of the restrictions it places on exploration Industries Transparency Initiative (EITI) Implementation permits. As a result, there will be more opportunities Project comprises the development of the national- for foreign junior miners to enter the market. level mining cadastre. A design consultant for the project is expected to be selected by the end of Officials from MONREC claim roughly 70 per cent 2019, according to international non-governmental of Myanmar is geologically mapped. However, organisations and private sector stakeholders with most industry players believe less than 50 per knowledge of the procurement process. cent of Myanmar is actually mapped, at least to an international standard. It is believed that state- and regional-level cadastres will be created in the years following the release of the Unexplored areas with vast potential include eastern national-level cadastre. Kachin State (copper, gold, tin and tungsten); northern Shan State (copper, tin and tungsten); eastern Kayin Foreign exploration companies will greatly benefit from State (tin and tungsten); and eastern Tanintharyi increased transparency, which will provide a clearer Region (tin and tungsten), although these areas understanding of risks and opportunities, and more have historically been hampered by conflict and efficient permitting processes. poor infrastructure.
Myanmar Exploration and Mining Uncharted Territory 23 Mine Camp, Bawdwin. Photo courtesy of Myanmar Metals.
This strategy is especially relevant to brownfield “The geological potential is there ... projects in Myanmar, many of which are colonial- There is a huge amount of small-scale and era mines whose operators require financing and advanced technology. medium-scale activity, and [we] are seeing an increase in the amount of exploration by larger There are risks associated with this approach companies ... and foreign investors taking an due to the opaque nature of the sector and the interest in the country.” nascent corporate governance structures found in local companies. Sebastian Sahla, Associate, Natural Resources and Governance Institute, Yangon Whether or not a foreign mining company should enter the market as a wholly foreign-owned enterprise is still unresolved, as it is almost universally recommended that foreign companies engage a local service provider Mergers and acquisitions or adviser.
Many private sector mining executives believe mergers and acquisitions (M&A) is currently one of the more strategic avenues for foreign investment in Myanmar’s mining sector. It allows foreign investors to hurdle or sidestep some of the convoluted and time-consuming licensing and permit processes. This strategy can be carried out by either acquiring stakes in companies with licences, farm-in agreements or undertaking joint ventures with local companies looking for financing and technology.
24 Myanmar Exploration and Mining Uncharted Territory Future opportunities The emergence of opportunities for foreign service providers should correlate with the increase in issuance of exploration and production permits for There is a need for more modern equipment, foreign companies. For example, as more large- technology and international-standard services in the scale projects like the Bawdwin Mine come online, it Myanmar mining industry. This includes areas such as becomes more feasible for a mining software company information technology, machinery, mineral testing and to enter the market and set up shop. advanced geotechnical surveying.
However, the market currently lacks the volume of international activity to support more foreign machinery, technology and service providers. Any market entrance now would have to be a long-term play.
Mogok Ruby. Photo Austrade.
Myanmar Exploration and Mining Uncharted Territory 25 CONCLUSION
The Myanmar authorities’ commitment to developing Despite these challenges, Myanmar’s mining sector the industry in a responsible manner has resulted in is improving its legislative framework and permitting positive changes in recent years. Myanmar remains a processes in order to increase transparency, and frontier market – high risk and potentially high return. encourage more foreign participation.
Over the past three years, the new government To find out more, or for help contacting the relevant has struggled to capitalise on the previous wave government agency, please call or email of optimism. The country now faces challenges Jeff Turner, the Senior Trade Commissioner for across several fronts: armed conflict in Rakhine State Austrade in Myanmar. and Shan State create political and security risks; mines sites suffer from poor access; and industrial Phone: +95 1 2307410 (ext. 232) infrastructure is limited. Email: [email protected] In addition, the adverse environmental impact of past mining activities has attracted the attention of environmental and social groups.
26 Myanmar Exploration and Mining Uncharted Territory ABBREVIATIONS
Ag Silver
CSO Civil Society Organisation
Cu Copper
DGSE Department of Geological Survey and Exploration
DICA Directorate of Investment & Company Administration
DOM Department of Mines
EITI Extractive Industries Transparency Initiative
EIA Environmental Impact Assessment
FDI Foreign Direct Investment
FY Fiscal Year
IIMDA International Investors for Mineral Development Association
JORC Joint Ore Reserves Committee (Code)
JV Joint Venture
M&A Mergers and acquisitions
MEITI Myanmar Extractive Industries Transparency Initiative
MGE Myanmar Gems Enterprise
MIC Myanmar Investment Commission
MONREC Ministry of Natural Resources and Environmental Conservation
MoU Memorandum of Understanding
NGO Non-Governmental Organisation
NLD National League for Democracy
Pb Lead
SIA Social Impact Assessment
SOE State-Owned Enterprise
Zn Zinc
Myanmar Exploration and Mining Uncharted Territory 27 HOW AUSTRADE CAN HELP
TThe Australian Trade and Investment Commission We also provide financial assistance for exporters (Austrade) is the Australian Government’s international through programs such as the Export Market trade promotion and investment attraction agency. Development Grants scheme.
We deliver quality trade and investment services To discover how we can help you and your to businesses to grow Australia’s prosperity. We do business visit austrade.gov.au or contact us at this by generating and providing market information [email protected] or on 13 28 78 and insights, promoting Australian capability, and (within Australia). facilitating connections through our extensive global network.
REFERENCES
1. Oxford Business Group, The Report: Myanmar 2019.
2. Myanmar Centre for Responsible Business, Sector Wide Impact Assessment of Limestone, Gold and Tin Mining in Myanmar, May 2018.
3. Oxford Business Group, The Report: Myanmar 2019.
4. http://www.mining.gov.mm/DM/1.DM/Details.asp?submenuID=7&sid=181
5. Japan International Cooperation Agency, Final Report of the Asia Region Data Collection Survey on Geological Mapping and Mineral Information System in ASEAN, October 2014.
28 Myanmar Exploration and Mining Uncharted Territory austrade.gov.au