UK Firm Withdraws Application to Explore Jade Area

By Seamus Martov 7 September 2015

CHIANG MAI, Thailand — Less than a year after submitting three applications for mineral exploration licenses to Burmese mining authorities, London-based firm Aurasian Minerals Plc has announced it will not pursue activities in the country for the foreseeable future.

The company said the decision to withdraw the applications, which covered a total area of 1,900 square kilometers (734 square miles), was taken “in view of the slow approvals process in Myanmar currently and the need for management to focus on opportunities with a nearer-term prospect of creating value,” according to a Tuesday announcement on the London Stock Exchange.

In a January progress update, Aurasian disclosed that it had made applications to explore for gold, silver and copper in an area subject to jade and gem mining concessions. Although the firm did not disclose the exact location, land for at least one of the applications is likely to be located in Kachin State’s Hpakant Township, the only jade mining area in Burma of any significant output.

Aurasian’s January statement added that mineral exploration applications were pending due to “the current security situation in the relevant areas”, and the company was awaiting a security clearance from authorities.

There have been repeated clashes around Hpakant’s existing jade mines since the collapse of a 17-year ceasefire between the Kachin Independence Organization (KIO) and the Burma Armed Forces in June 2011.

Peter Mullens, who was appointed Aurasian CEO in mid-July, said he was unable to identify the locations for the exploration licenses or elaborate on the security clearance process.

“I was not involved in application so not sure which state,” he told The Irrawaddy via email.

Attempts to clarify the exploration license applications from other members of Aurasian’s senior management were unsuccessful.

In March, outgoing chairman Tony Shearer directed enquiries to his successor, Bruce Kay, who did not respond before his resignation in August. Mullens directed questions on Aurasian’s Burma operations to Jon Loraine, the company’s vice president of development, who also did not reply to a request for comment.

Mark Farmaner, director of the Burma Campaign UK, said that the firm appeared to have sought exploration licenses in Burma without appreciating the implications of the country’s ongoing ethnic conflicts.

“Aurasian should never have put in these‎ applications with the Burmese government. They appear to be in conflict zones and without any consultation with local people,” he told The Irrawaddy.

“While some British companies will do their research on Burma and adapt their investment accordingly, or decide not to invest at all, a few small British companies specialize in trying to work with dodgy regimes or ‎in difficult places. It means they don’t have to compete with the bigger companies, and can negotiate higher returns from regimes desperate for cash. Aurasian appears to be one of these.”

A number of Western companies are waiting for changes to the regulatory framework of Burma’s mining sector to be bedded down before investing in the country.

Current rules restrict foreign firms from certain parts of the mining industry, which is expected to change with highly anticipated new legislation to replace the 1994 Mining Law.

Revisions to the junta-era legislation, first introduced to parliament in the second half of 2013 and set to amend nearly 70 percent of the 1994 law, have been stalled in Naypyidaw amid heated debate between parliamentary committees in the Upper and Lower House. The Ministry of Environment, Conservation and Forestry, meanwhile, has yet to finalize regulations for conducting environmental impact assessments.

Burma’s extractive industries remain the subject of serious human rights and environmental concerns, as outlined in a January World Bank study.

“When it comes to mining, Myanmar currently lacks the necessary laws and enforcement mechanisms to protect its environment and vulnerable populations against the impacts of mining,” the report said. “Over the past two decades, this has led to conflict and severe environmental degradation in the wake of a rapid increase in large-scale mining.”

Around 20 percent of Aurasian’s shares are currently held by a subsidiary of the US-based Newmont Mining Corporation, one of the largest gold mining conglomerates in the world. Newmont was active in Burma during the 1990s, developing the Kyaukpahto gold deposit in Sagaing’s Kawlin Township before withdrawing in 1997.

When asked if Aurasian would consider returning to Burma after the expected passage of a new mining law next year, Mullens indicated the withdrawal was open to review.

“We will wait and see what happens with law and review, then consider our position,” he said.