Extractive Industry in Myanmar & ASEAN

Wong Aung (SGM) 11 Oct 2013, YMCA YANGON

Investment in Extractive & Energy Sector

The extractive sector is Burmas largest source of foreign currency and largest recipient of foreign investment

Sectoral Investment 2011/12 Oil & Gas

Billions of Dollars 13.8

Enterprises

5 104 64

Mining Power
Total

2.8 18.2
34.8

Regime-Controlled Business

Myanmar State Enterprises Multinational Corporations Crony Companies

Export Earning per Sectors

32 countries were focused in four major sectors: energy, oil and gas, mining, and manufacturing

Overview of Oil & Gas Sector

Since 2004 the Burmese regime intensified the opening of onshore and offshore oil & gas blocks to foreign companies, 28 in 2011-2012 alone
Of Burmas 101 gas and oil blocks, 37 blocks are already operated by foreign companies and 30 additional offshore are currently open for bidding.

Mineral Explorations Maps

Exporting Natural Gas by Pipeline

Yadana & Yetagun
275 km (within Burma) 20 villages (40,000 population) Major source of revenue for junta

Shwe Gas
793 km (within Burma) 22 Townships Biggest Trans-Nation Pipeline project in the Region

Overview of Myanmars Mining Sector

The majority of Burmas mineral resources are present in Ethnic regions. According to the Myanmar Ministry of Mines Burmas major mineral exports include:
Copper Lead Coal Gold Rubies Sapphires

Zinc
Tin

Silver
Iron

Jade
Limestone

Mining Projects
Letpadaung Mine (Sagaing Divison)
Union of Myanmar Economic Holding Ltd(UMEHL) And Chinese State-Owned NORINCO,

Tigyit Coal Mine (Shan)

544 acre deposit with open-pit & underground tunnel mines producing 1,750 to 2,000 tons of coal per day. Chinese and Burmese implementation. Mining concessions in Shan state have also increased since 2011, with 46 mining companies being granted 276 concessions (mostly to UMEHL) that cover a total of 28,325 acres in 11 townships

Impacts of Extractive Projects

Militarization Land confiscation Forced relocation Loss of local livelihoods Environmental destruction

Militarization
On-going conflict in regions with active extractive industries
Open armed conflict and bomb-blasts in project areas

Increased presence of army barracks and checkpoints in areas with extractive projects
Thousands of Burma Army soldiers deployed along Shwe Gas pipeline corridor, as well as non-state armed groups

Land confiscation

Many hundreds of acres of farmland confiscated for Shwe Gas & Oil pipelines and infrastructure More than 7,000 acres of land from 26 villages were confiscated-Letpadaung 11,000 acres of farm land confiscated for iron and cement factory complexes connected to Pinpet Mine 500 acres of farmland confiscated for Tigyit Mine

Forced relocation

7,000 people under threat of relocation of Pinpet Mine Project Thousands of residents forced to relocate for Yadana-Yetagun pipeline Around 3000 People s been displaced due to fighting nearing the pipelines Mostly from 26 villagers are force to displaced Letpadaung

Loss of local livelihoods

Forced to move from farmland Restricted access to fishing grounds Prohibited from collecting Non-timber forest products

Environmental destruction

Deforestation of mountains and mangroves Destruction of water-shed areas Aggregate dredging damaging river ecosystems Pollution of streams and rivers with mining run-off and industrial waste Excessive demand on and disruption of rivers, streams and lakes Air pollution Habitat destruction putting endangered species under threat Dynamiting coral reefs and destruction of wet-lands

Revenue from Extractive Sector

Revenue does not benefit local people Contracts and other payments made to government not transparent

Existing Gas Revenues

Yadana / Yetagun: approximately $2 billion per year since 2006-2007 to 2.94 billon in 2011/2012

Upcoming Gas Revenues

Shwe Gas Project: $1.8 billion per year for 30 years starting 2013 M-9 offshore block: 0.4 billion per year starting 2013 A-2 and A-6 offshore blocks to begin production in the near future, projected revenue currently unknown

Expenditure of EI Revenue
Fiscal year 2010-2011 saw 51% of Burmas national budget going to defence
Ministry 2010/11 Kyat billions % of Total

EI revenues used for weapons purchases (Yadana and Yetagun revenue) Military to receive $2.3 billion in 2012 budget (36% increase from 2011) EI revenues not clearly accounted for e.g. dualexchange rate and Singapore banks

Defence Construction Education Agriculture Electricity

1,323 296 267 199 78

51 11 10 8 3

EI revenues locked-away in Special Fund

Central Government controls all EI revenues and not clear whether oil & gas revenues are accounted for in current national budget Inadequate spending on important social services such as health and education Over 75 % of Burmas population does not access to grid electricity

Health
Other TOTAL

73
358 2,594

3
14 100

Missing Billions

Corruption at Ministry of Mines (along with 3 other Ministries) publically exposed in early 2012 Military Generals involved in corruption related to land confiscation process for EI projects Yadana-Yetagun revenue deposited in personal accounts in overseas banks Union of Myanmar Economic Holding Limited purchases arms with EI revenues Economic favour given to Crony companies
$4.3 billion Worth of Jade Export in 2011/12. But official exports of jade that year stood at only $34 million.

Burma Environment Working Group (BEWG) Benchmarks for Investment in Energy, Extractive and Land Sector in Burma
1) Do No Harm
Investment should not exacerbate natural resource and land-based conflict in Burma.

2) Best Practices or No Practices

Investors should respect the widely accepted global standards for environmental and human rights law while following international best practices in human rights, social and environmental impact assessments.

3) Act Transparently and with Principles

Investors should have a zero-tolerance policy on corruption and should uphold full revenue and contract transparency.

4) Support Civil Society not Impunity

Civil society should be free to fulfill its role without threat of repression or abuse.

5) Empower Communities
Community grievances must be fully addressed in existing and proposed investments.

Brief Introduction : EI in ASEAN

Economies and Development Indexes

Mineral Deposit in SEA

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