A perspective from Myanmar

By Jan Dharmabandu

MINING is the first interface of civilisation with nature and represents the most intense with both sides impacted intensely. Each year about 5 billion tonnes of minerals are mined from the earth.

The impact of a 100-hectare mine on its footprint is much more intense than if the site hosted a farm or factory. It also generates much greater positive economic impact and is often unique - it is easier to find substitute locations for a farm or factory, but the mine has to be where the mineralisation is.

The most potent socio-economic contrast is the way impacts play out post-event. The impact on the environment, especially if mining is conducted professionally throughout its full lifecycle, is reversible. Reversal and recovery is especially rapid in regions where biotic and abiotic factors are intense, such as in the tropics, and occurs more slowly in the subtropics.

The impacts to education, empowerment and service infrastructure that a well-run mine brings to rural communities are irreversible social investments. An illegal logger who becomes a mine mechanic and whose children receive a good education due to him being in stable employment and the community school being well resourced, triggers a social chain reaction that is impossible to accurately model.

A 2013 IFC mining impact study found that about 28 jobs in the economy are associated with one direct mine job. While this seems high, there is much documentation supporting a multiplier of around 10 for mining.

Like other professions, mining professionals are governed by codes and ethics, and, by training are ‘responsible’. For example, a modern mine supervised by mining professionals would have, among many dangerous equipment items and activities, a myriad of moving vehicles with gross weights often exceeding 400 tonnes and regular blasts set off by explosives. Yet statistics from Australia, where the mining industry generates about US$130 billion in annual sales revenue, show an average worker is 20% more likely to get accidentally injured working in a retail shoe shop than on a mine. In countries where rules are respected and accountability counts, ‘responsible mining’ should sound almost as superfluous as ‘responsible dentistry’.

‘Resource curse’ is a phrase often used in high-level resource policy discussion, including in Myanmar and proposes that resource-rich economies generally grow more slowly than resource-poor economies. At first glance, it represents a difficult puzzle since nature’s free gift should be a blessing, not a curse.

Although concern over efficacy of resource-dependent development is centuries old, the phrase was first used in 1988 by Alan Gelb, who argued that resource-poor countries engage earlier in labor-intensive competitive manufacturing with the result being faster diversification, higher saving rates, and faster build-up of human and social capital.

Since then a few have challenged the concept. More recently, The World Bank’s Daniel Lederman and William Maloney concluded that the evidence for resource curse remains elusive. They say nations with quality administrative institutions can manage their resource revenue and effectively turn it into positive economic growth. In addition to efficient revenue management, they note that quality institutions and monitoring mechanisms lead to transparency and accountability. Furthermore, they reduce space and incentives for corruption.

Mineral occurrences are subject to rules of utility like other attributes of nature - population, water, terrain, flora and fauna, sunlight, wind, etc. Any of them can have a positive utility (a resource that can be converted to a reserve), or a negative utility (a burden that needs a solution) depending on the time and geographical location of their occurrence. Driven by technology or supply/demand movements, a mineral occurrence may or may not be a mineral resource. The authors of Resource Curse Hypothesis failed to recognise this transient nature of mineral resources. Wright and Czelusta effectively utilised this intrinsic flaw in the resource curse hypothesis to undermine it.

Let’s glance into the future - the mining of mineral-rich ‘polymetallic nodules’ from deep seas in PNG is scheduled to start in 2019 while mining in space is no longer a pipedream. Transformational supply chain changes can significantly alter the ability of nations to convert land-based mineral deposits to mineable reserves. In history, mineral resources had a critical role to play in the development stories of host nations, but today the same deposits may not be considered mineral resources due to changes in societal values and aspirations towards environment, safety, security and employment. The optimum utility of a mineral occurrence to a nation is in the early stages of the nation’s growth.

Mining in Myanmar has a terrible history littered with catastrophic accidents, environmental damage and associations with armed conflict while contributing only marginally to national coffers. This has resulted in today’s policy makers being suspicious, if not hostile, towards what they imagine to be ‘what mining is’, although recent dialogue has become encouragingly mature.

In 2014 Myanmar’s mining industry produced US$1.2 billion worth of minerals, excluding oil & gas and gems, compared to the US$8.1 billion of the Philippines. Comparing a few factors such as known geology, total land area and population density, an extrapolation can be drawn that Myanmar has the capacity to achieve several times higher mining-related revenue than the Philippines.

A number of factors are critical for that transition and some are outside Ministry of Natural Resources and Environmental Conservation of Myanmar (MoNREC) controls. On the part of MoNREC, the most important is clear regulations and efficient enforcement. Strict standards must go hand-in-hand with speedy and streamlined permitting processes.

Mining in Myanmar should be encouraged and supported as it can play a tremendous role, especially in the early stages of the journey to prosperity.

Jan Dharmabandu is a Chartered Mining Engineer and Chartered Environmentalist from Perth, Australia, having held mine development responsibilities in Australia, UK, France, Canada, Kazakhstan and Philippines.

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