Extractive Industry in Myanmar & Extractive Industry in Myanmar & ASEANASEAN

Wong Aung (SGM)Wong Aung (SGM)

11 Oct 2013, YMCA11 Oct 2013, YMCA

YANGONYANGON

Investment in Extractive & Energy Investment in Extractive & Energy SectorSector

Sectoral Sectoral Investment Investment 2011/122011/12

Billions of Billions of DollarsDollars

EnterpriseEnterprises s

Oil & GasOil & Gas 13.813.8 55

MiningMining 2.82.8 104104

Power Power 18.218.2 6464

TotalTotal 34.834.8

The extractive sector is Burma’s largest source of foreign currency and largest recipient of foreign investment

Regime-Controlled BusinessRegime-Controlled Business

Myanmar State EnterprisesMyanmar State Enterprises Multinational CorporationsMultinational Corporations Crony CompaniesCrony Companies

Export Earning per Export Earning per SectorsSectors

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

Overview of Oil & Gas SectorOverview of Oil & Gas Sector

Since 2004 the Burmese Since 2004 the Burmese regime intensified the regime intensified the opening of onshore and opening of onshore and offshore oil & gas blocks offshore oil & gas blocks to foreign companies, 28 to foreign companies, 28 in 2011-2012 alonein 2011-2012 alone

Of Burma’s 101 gas and Of Burma’s 101 gas and oil blocks, 37 blocks are oil blocks, 37 blocks are already operated by already operated by foreign companies and 30 foreign companies and 30 additional offshore are additional offshore are currently open for currently open for bidding.bidding.

Mineral Explorations MapsMineral Explorations Maps

Exporting Natural Gas by Exporting Natural Gas by PipelinePipeline

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

Yadana & Yetagun

Shwe Gas

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

Overview of Myanmar’s Mining Overview of Myanmar’s Mining SectorSector

CopperCopperLeadLeadZinc Zinc TinTin

CoalCoalGoldGoldSilverSilverIronIron

RubiesRubiesSapphirSapphiresesJadeJadeLimestoLimestonene

According to the Myanmar According to the Myanmar Ministry Ministry

of Mines Burma’s major of Mines Burma’s major mineral exports include:mineral exports include:

The majority of Burma’s mineral resources are present in Ethnic regions.

Mining ProjectsMining Projects

Letpadaung Mine (Sagaing Letpadaung Mine (Sagaing Divison)Divison)Union of Myanmar Economic Holding Ltd(UMEHL)

And Chinese State-Owned NORINCO, And Chinese State-Owned NORINCO,

Tigyit Coal Mine (Shan)Tigyit Coal Mine (Shan) 544 acre deposit with open-pit & 544 acre deposit with open-pit & underground tunnel mines producing underground tunnel mines producing 1,750 to 2,000 tons of coal per day.1,750 to 2,000 tons of coal per day.

Chinese and Burmese implementation.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 Impacts of Extractive ProjectsProjects

MilitarizationMilitarization Land confiscationLand confiscation Forced relocationForced relocation Loss of local Loss of local

livelihoodslivelihoods Environmental Environmental

destructiondestruction

MilitarizationMilitarization

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

On-going conflict in regions with active extractive industries

Land confiscationLand confiscation

Many hundreds of acres of Many hundreds of acres of farmland confiscated for farmland confiscated for Shwe Gas & Oil pipelines Shwe Gas & Oil pipelines and infrastructureand infrastructure

More than 7,000 acres of More than 7,000 acres of land from 26 villages were land from 26 villages were confiscated-Letpadaungconfiscated-Letpadaung

11,000 acres of farm land 11,000 acres of farm land confiscated for iron and confiscated for iron and cement factory complexes cement factory complexes connected to Pinpet Mine connected to Pinpet Mine

500 acres of farmland 500 acres of farmland confiscated for Tigyit Mine confiscated for Tigyit Mine

Forced relocationForced relocation

7,000 people under 7,000 people under threat of relocation of threat of relocation of Pinpet Mine ProjectPinpet Mine Project

Thousands of residents Thousands of residents forced to relocate for forced to relocate for Yadana-Yetagun pipelineYadana-Yetagun pipeline

Around 3000 People ‘s Around 3000 People ‘s been displaced due to been displaced due to fighting nearing the fighting nearing the pipelines pipelines

Mostly from 26 villagers Mostly from 26 villagers are force to displaced -are force to displaced -LetpadaungLetpadaung

Loss of local livelihoodsLoss of local livelihoods

Forced to move from Forced to move from farmlandfarmland

Restricted access to Restricted access to fishing groundsfishing grounds

Prohibited from Prohibited from collecting Non-collecting Non-timber forest timber forest productsproducts

Environmental destructionEnvironmental destruction

Deforestation of mountains and Deforestation of mountains and mangrovesmangroves

Destruction of water-shed areasDestruction of water-shed areas Aggregate dredging damaging Aggregate dredging damaging

river ecosystemsriver ecosystems Pollution of streams and rivers Pollution of streams and rivers

with mining run-off and industrial with mining run-off and industrial wastewaste

Excessive demand on and Excessive demand on and disruption of rivers, streams and disruption of rivers, streams and lakeslakes

Air pollutionAir pollution Habitat destruction putting Habitat destruction putting

endangered species under threatendangered species under threat Dynamiting coral reefs and Dynamiting coral reefs and

destruction of wet-landsdestruction of wet-lands

Revenue from Extractive Revenue from Extractive SectorSector

Revenue does not benefit local people

Contracts and other payments made to government not transparent

Existing Gas Existing Gas RevenuesRevenues

Upcoming Gas Upcoming Gas RevenuesRevenues

Yadana / Yetagun: Yadana / Yetagun: approximately $2 billion approximately $2 billion per year since 2006-2007 per year since 2006-2007 to 2.94 billon in to 2.94 billon in 2011/20122011/2012

Shwe Gas Project: $1.8 Shwe Gas Project: $1.8 billion per year for 30 billion per year for 30 years starting 2013years starting 2013 M-9 offshore block: 0.4 M-9 offshore block: 0.4 billion per year starting billion per year starting 20132013 A-2 and A-6 offshore A-2 and A-6 offshore blocks to begin production blocks to begin production in the near future, in the near future, projected revenue projected revenue currently unknowncurrently unknown

Expenditure of EI RevenueExpenditure of EI Revenue

MinistryMinistry 2010/112010/11Kyat Kyat

billionsbillions

% of % of TotalTotal

DefenceDefence 1,3231,323 5151

ConstructionConstruction 296296 1111

EducationEducation 267267 1010

AgricultureAgriculture 199199 88

ElectricityElectricity 7878 33

HealthHealth 7373 33

OtherOther 358358 1414

TOTALTOTAL 2,5942,594 100100

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. dual-exchange rate and Singapore banks

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 budgetInadequate spending on important social services such as health and educationOver 75 % of Burma’s population does not access to grid electricity

Fiscal year 2010-2011 saw 51% of Burma’s national budget going to defence

Missing BillionsMissing Billions Corruption at Ministry of Mines Corruption at Ministry of Mines

(along with 3 other Ministries) (along with 3 other Ministries) publically exposed in early 2012publically exposed in early 2012

Military Generals involved in Military Generals involved in corruption related to land confiscation corruption related to land confiscation process for EI projectsprocess for EI projects

Yadana-Yetagun revenue deposited in Yadana-Yetagun revenue deposited in personal accounts in overseas banks personal accounts in overseas banks

Union of Myanmar Economic Holding Union of Myanmar Economic Holding Limited purchases arms with EI Limited purchases arms with EI revenuesrevenues

Economic favour given to Crony Economic favour given to Crony companiescompanies

$4.3 billion Worth of Jade Export in 2011/12. $4.3 billion Worth of Jade Export in 2011/12. But official exports of jade that year stood at But official exports of jade that year stood at only $34 million.only $34 million.

Burma Environment Working Group Burma Environment Working Group (BEWG) Benchmarks for Investment in (BEWG) Benchmarks for Investment in Energy, Extractive and Land Sector in Energy, Extractive and Land Sector in

BurmaBurma1) 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 Brief Introduction : EI in ASEANASEAN

Economies and Development Economies and Development IndexesIndexes

Mineral Deposit in SEAMineral Deposit in SEA

www.shwe.org

global@shwe.orgglobal@shwe.org

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