Mining Law to get an overhaul, officials say

The 1994 Mining Law is set for a sweeping overhaul that could see nearly 70 percent of the existing law amended, an official said last week.

U Nay Win Tun, an Amyotha Hluttaw representative and chairman of the Mining and Resources Affairs Committee, said the changes would see the new bill reworked to meet international standards while giving more Myanmar companies the opportunity to work in the sector.

“The new mining bill has two significant changes. First, it was drafted under international criteria and second, it will level the playing field among Myanmar investors in the mining sector,” he said. A draft of the new law has not yet been made public. The Gemstone Law, which pertains to precious stones, is also being amended.

The committee submitted its proposed amendments to the Amyotha Hluttaw on October 1. The Mining Law amendments will be debated by MPs within two weeks, U Nay Win Tun, who also serves as the chairman of Ruby Dragon Mining, said. However, it could take months for a final version to emerge from parliament, because the amendments will also have to be approved by the Pyithu Hluttaw, or lower house.

The existing law, and the delay in amending it, have significantly dampened early excitement that Myanmar’s economic opening would mean a quick score for international mining companies looking to capitalise on the country’s abundant mineral resources that remain relatively unexplored.

Last year mining conferences in Yangon drew hundreds of international company representatives eying Myanmar’s rich deposits of gold, zinc, copper, nickel and tin, but most walked away disappointed by the restrictive legal framework and the lack of preparation and capacity by the Ministry of Mines.

Instead of staking their claim in Myanmar, most have decided to take a wait-and-see approach, pursuing projects elsewhere while they keep an eye on Nay Pyi Taw to see what the new law will look like when it is signed before moving forward.

According to Alisher Ali, chairman of the Yangon-based investment banking advisory firm Mandalay Capital, the inadequate law is the biggest reason that there has been “lacklustre foreign direct investment in the mining sector”.

Mr Ali added that proper changes to the law would make “the environment more conducive to foreign companies”, and that Myanmar was a country of “significant potential”, with the right framework in place.

“The oil and gas sector is testimony to how the country has been a magnet for FDI, and mining can do the same. There is the same level of interest if the legislation is correct,” he said.

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.

“In the current system these are separate contracts, so the mining companies have a concern that they might spend a lot of money in exploration without being legally certain they can take the next step,” said Edwin Van der Bruggen, a partner at the law firm VDB Loi in Yangon.

Perhaps the most contentious issue for both local and domestic mining operations is land ownership and resettlement.

“In the current system, the mining company has to agree on compensation with the occupiers of land, but there is no guidance on how much that compensation should be,” Mr Vanderbruggen said.

These problems have been highlighted by the ongoing dispute at the Letpadaung copper mine in central Myanmar.

The mine, the country’s largest, is a joint venture between the Chinese backed Wanbao Mining and the military-controlled Union of Myanmar Economic Holdings Limited. It has been the site of tensions as local residents continue to protest government land confiscations.

“This is a really difficult issue to address so I would not be surprised if the new law remains silent on this point,” he said.

source: The Myanmar Times
http://www.mmtimes.com/index.php/business/8442-mining-law-to-get-an-overhaul-officials-say.html