Myanmar RulesBurma Rules
Burma Mining Legislation and Rules: Updated
After the adoption of the 1994 Myanmar Mine Act changes through the adoption of Law No. 72/2015 on 24 December 2015 (the "Mine Law Changes"), the Ministry of Natural Resources and the Environment1 (the "MNREC") adopted the highly awaited Myanmar Mine Rules under Notification No. 13/2018 of 13 February 2018 (the "Mine Rules") and repealed the earlier 1996 Mine Rules.
The most important changes that have been introduced by the changes to the Mine Act are mentioned in our Myanmar Mine Alert: Increase to 50 years the duration of the approval of large manufacturing only; grant a clear right to approvals of manufacturing; allow small and medium-scale manufacturing development into large manufacturing products through the establishment of jointventures between overseas and locally based companies; grant a guarantee of approval of manufacturing to those who have successfully conducted prospection and exploitation and completed viability studies.
Mine rules, which provide further orientation and address certain regulative issues, are important supplements to create the necessary legislative and regulative framework to promote investments in the extractive industries. In spite of the mine ordinance's being published, there are still reservations and uncertainties that must be taken into account.
A few of the (... not exhaustive) features of the mine rules are: There are certain rules of procedure for applying for various types of mine licences under the Mine Code: Prospection licenses; (2) explore licenses; (3) viability studies licenses; (4) large manufacturing licenses; (5) intermediate manufacturing licenses; (6) small manufacturing licenses; (7) sub-sistence manufacturing licenses; (8) minerals processing licenses; (9) trade licenses; and (10) integral operating licenses (i.e. if more than one of the above-mentioned regulatory approvals related activity is to be performed).
As a reasonable step to streamlining the mining operation, the mining rules require that licensees will be able to carry out minerals processing and trade without special licenses. However, it is generally unclear whether and how the operation of a licence owner will be granted on the basis of the existing regulations.
Given the significant capital expenditure involved in the mine, granting grant facilitation of grant fathering would offer not only owners but also potential shareholders adequate protection of their capital outlays. Developing and pragmatically implementing well thought-out policy and regulation to meet the diverse needs of Myanmar's various stakeholder groups could boost the trust of Myanmar's capital market and revive its mines.
Mine regulations contain various supplementary information that may be of interest to the investor in terms of the allowed area and ownership. They stipulate, for example, that the "admissible area" for a "large-area industrial property " (i.e. for prospection, exploitation, feasibility and/or (large-area) production) must be from 1 sq. km to 2100 sq. km and for a "medium-sized industrial property" (i.e. for prospection, exploitation, viability and/or (medium-scale) production) must be 1 sq. km.
Mine regulations also contain information on the duration of the various mine licences. While, for example, the amendments to the Mines Act stipulate that the duration of the permission to produce a major mine is between 15 and 50 years, the rules of the mine make it clear that the duration of such permission can only be extended for a further 5 years per extension, provided that the competent authority agrees.
There is still concern that in the first instance only 15 years can be granted to an investor if they are granted a licence to produce a large manufacturing product, which obliges them to then pursue a non-guaranteed gradual renewal. As a result, the otherwise anticipated benefits of a 50-year approval deadline for large manufacturing underpinned.
According to the nature of the application, an investment firm may be obliged to provide various tools to manage the impact on the environment, such as an initial assessment, an EIA and/or an EMP. Under the Mining Code, the licence holder is also liable for all costs related to the protection of the environment.
The Mine Code provides for the establishment of an Environment Protection Trust at a state banking institution in Myanmar, the amount of the fee being determined on the basis of the respective EMP for prospecting, producing and/or refining minerals. The Mining Regulations require, in supplement to the aforementioned resources, that the licencees pay the required charges independently into the environment management trust established under the Environment Protection Act.
Finally, licensees must establish and help to establish a mine closing funds at a state-owned Myanmar banking institution. Ensuring the environment and sustainable development should undoubtedly be an integrated part of any mine law, and the Myanmar government was right to consider such environment and sustainable development when preparing the mine regulations.
We' re ending our updated with our earlier statement that'an oak of preventative action is all that' and nowhere is this cliché more true than in evaluating Myanmar's investing opportunity. The Department of Natural Resources and Environmental Protection is a relatively new department that emerged in 2016 from the fusion of the Department of Mining and the Department of Environmental Protection and Forestry.