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How does mining benefit Myanmar?

Author: Jan Dharmabandu is a mining engineer and a Chartered Environmentalist attached to Perth based Ensys Consultants.

This article originally appeared in the Global New Light of Myanmar on 30th May 2017 as “What is & Why Mining: a Perspective from Myanmar”.

 

Each year about 5 billion tonnes of minerals are mined from the earth. Mining is the first interface of the civilization with the nature. It has also so happened that mining has been the most “intense” interface between the nature and the civilization. Both sides of the interface are impacted intensely by the transaction.

If a mine with a 100ha footprint, its impact on its footprint is much more intense than had the 100habeen used for example, to run a farm or a factory. The same way that mine would generate far higher positive socio-economic impact and it is often unique – that is that it is much easier to find substitute locations for the farm or the factory, but the mine has to happen where the ore is.

A mining jobs generation study by IFC done in 2013 states that “about 28 jobs in the economy were associated with one direct job in the mine”. 28 indirect and induced jobs (see Table) are encouragingly high. But there is much literature in public domain supporting job multiplier factors around 10 for mining projects in remote areas.

Like in any other profession, professionals in mining are governed by codes and ethics and, by training are responsible. For example, a modern mine supervised by mining professionals would have, among many other dangerous equipment and activities; a myriad of moving vehicles with gross weights often exceeding 500 tonnes and rock blasts in some mines regularly setting off few thousand tonnes of explosives in one single go. Yet statistics from Australia, a country with a mining industry that generates about USD130 billion in annual sales revenue, show that an average worker is 20% more likely to get accidentally injured working in a shoe shop in the city 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 hypothesis that came into macro- economic parlance in the early 90’s where it proposes that resource-rich economies generally grow more slowly than resource-poor economies. At first glance it represents a difficult puzzle since a free gift of nature should be a blessing, not a curse.

Although concern over the efficacy of resource-dependent development is centuries old, the exact phrase “Resource Curse” was first used by Alan Gelb in 1988 as part of an economic research. He argued resource poor countries engage earlier in labor-intensive competitive manufacturing and result being faster diversification, higher saving rates, and faster build-up of human and social capital.

Since then there has been few assays challenging the concept. More recently Daniel Lederman and William Maloney of The World Bank concluded that the evidence for Resource Curse “remains elusive”.

They said that nation with quality administrative institutions are able to manage their resource revenue and turn it into positive economic growth. Quality institutions and monitoring mechanisms also lead to transparency and accountability- reducing space and incentives for corruption.

Mineral occurrences are subjected to common rules of utility like other attributes of nature; population, water, terrain, flora and fauna. 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 the geographical location. Driven by technology or supply/demand movements, a mineral occurrence may or may not present itself as a mineral resource. Wright and Czelusta effectively highlighted the failure to recognize this transient nature of resources to undermine the resource curse hypothesis.

For example, mining mineral rich ‘polymetallic nodules’ from deep seas of PNG and elsewhere are scheduled to start production in 2019. More further into the future, Goldman Sachs project team argues that “mining in space is getting cheaper and easier, and the rewards are becoming more promising as time goes by”.

These transformational changes in the supply chain of commodities can significantly change the ability of individual nations to convert land based mineral deposits to mineral resources and mineable reserves. Also, as happened in Europe, mineral resources had a critical role to play in the development story of their host nations. But the same deposits are not considered “mineral resources” today, due to changes in the societal values and aspirations towards environment, safety, security and employment etc. The best utility of a mineral occurrence to a nation is in the early stages of its growth story.

Mining in Myanmar has had a terrible history marked by catastrophic accidents, unbridled environmental damage and associations with armed conflict while contributing only marginally to the national coffer. This resulted in policy makers today being suspicious – if not outright hostile -towards what they imagine to be what mining is”, although the dialogue of late has become encouragingly mature.

In 2014mining industry of Myanmar produced USD1.2billion worth of minerals (excluding oil & gas and gemstones) compared to the USD 8.1 billion, the number from Philippines. Comparing few factors such as known geology, total land area and the population density between Philippines and Myanmar, an extrapolation can be drawn that Myanmar has the capacity to achieve several times higher mining related a revenue than Philippines.

There are factors critical for that transition. Some are outside the control of MoNREC. On the part of MoNREC, the most important is clear regulations and efficient enforcement. Strict standards must be combined with a speedy and streamlined permitting processes.

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

 

Source: The Global New Light Of Myanmar

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