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1.1 Most if not all of the major
mining countries in Asia have today reformed or are in the process
of reforming their mining laws and policies. The reason why they
are doing this is simply good economic, business and commercial
sense. The reformation allows them to reposition themselves to
attract and generate increased foreign investments in their mining
industries. This will result in making available adequate supply
of mineral resources to the world. Ultimately, the whole exercise
will not only spur further growth in the economies of the mineral
producing countries but also those countries reliant on their
mineral resources many of whom have established co-operative mining
ventures with these producing countries.
1.2 Those countries with a head
start and having already in place conducive mineral laws and policies
will necessarily experience a high level of investor interest.
There is no doubt that investments and laws are interlinked. A
highly geologically prospective country without favourable mining
laws and policies will necessarily find difficulty in attracting
investments into their minerals sector. Countries having established
meaningful inter-relationship in exploration and exploitation
with their host nations will certainly benefit as a reciprocity
for their mining investment contribution and technological support.
1.3 Despite recent significant
negative developments such as the Busang gold mine fiasco in Indonesia,
the gold price collapse, over capacity in most mineral commodities,
it is generally believed that there will continue to be keen interests
for mineral sector investments particularly in mineral rich countries
in the Asian region with sound mineral sector legislative policy
frameworks. The underlying reason is simply that the whole world
continues to require adequate and ready supply of mineral raw
materials at all times to meet the needs of industries.
2.0 CURRENT STATUS
IN MAJOR ASIAN COUNTRIES
2.1 The following discussions
will deliberate on some of the major Asian countries with regard
to the status of their mining industries and their mineral resources
availability and requirements, and the efforts in reforming their
respective mining laws and policies.
(i) Indonesia
Indonesia is one of the earliest
Asian country to have implemented a reformed mining policy of
allowing foreign companies to develop its abundant mineral resources
in an equitable manner with the interests of both the government
and the investors being protected in a transparent form.
Its pro-active mining policy started
when the Contract of Work (COW) system was introduced in 1967.
It was later followed by the Coal Contract of Work (CCOW) which
was introduced in 1981. These COWs are mineral agreements entered
into between the government of Indonesia and foreign companies
to co-operate in developing the country's mineral resources in
accordance with Indonesia's Mining Laws and Regulations. The COW
does not grant the foreign company any proprietary rights or interests
over land or minerals. It merely appoints the investor as an exclusive
contractor for a designated area. The COW specifies a process
whereby such rights may be obtained by the company acting on behalf
of the government as its contractor.
The COW's principal provisions
are fairly standard and are non-negotiable. It contains among
others tax provisions and financial obligations, security deposits
and the mandatory minimum expenditure requirements.
The COW is now in its seventh
generation having gone through changes in contract terms resulting
from evolution of time and circumstances. The Coal COW, however,
is now in its third generation. Despite the changes, two basic
principles remain unchanged, namely;
(a) They guarantee the contractor
the right to develop and to mine when commercial deposits are
discovered.
(b) They protect the contractor
from future changes in the mining legislation and policies throughout
the contract life.
Altogether 197 COWs have been
approved thus far and some 276 of the 7th generation COW are being
processed and pending approval.
The COW system has no doubt provided
Indonesia with the opportunity to develop its vast rural economies
through the injection of foreign capital investments into the
mining industry. Despite the changes and requirements which may
be perceived as necessary due to changed circumstances such as
the recent Busang gold fraud, nonetheless, the COW system has
placed Indonesia as one of the top mining country in Asia, and
its mining regulatory framework and policies are envied and copied
by many of its neighbours.
(ii) Philippines
Philippines is rich in mineral
resources. It is one of the major world producer of base and precious
metals such as copper, gold, chromite and nickel. The mining industry
in the Philippines is a major contributor to the country's Gross
Domestic Product (GDP) and generates high employment particularly
in the rural areas.
Although the need to have a successful
industry supported by a stable legislative and fiscal regime and
an efficient administrative system was realised years earlier,
however, it was not until 1994 when a major policy reform came
about in the country with the lowering of excise taxes for mineral
products. This was further spurred by the passing of a landmark
legislation called the Philippine Mining Act of 1995 and its Implementing
Rules and Regulations (IRR). The IRR was later revised and approved
in 1997 to take care of changed circumstances due to several mining
related environmental incidents in 1996. The 1995 Act and its
revised IRR introduced the concept of sustainable mining under
a new regime of mineral resource development which is pro-people
and pro-environment. The Act and the IRR contain such provisions
relating to mining rights, incentives, taxes, social, financial
and environmental responsibilities and administrative support.
A major new provision is the grant to foreign companies full ownership
in large scale exploration development and utilisation of the
country's mineral resources, a plus factor in the revival of the
Philippines mining industry.
Resulting from these changes to
the mining policies and regulatory framework in the country, many
international mining companies are now involved or are in the
process of exploring for opportunities in investing in the country's
mining industry. This no doubt indicates that the reformed mining
laws and legislations in the Philippines have created a conducive
investment climate and have provided much investor confidence
that helps return the Philippines back to the global mining investment
map. To the same extent, it has also helped the country to spur
economic growth to be in line with its other Southeast Asian neighbours.
(iii) Malaysia
Malaysia's mineral industry is
presently undergoing a period of transition. For a long time,
the thrust of development in the industry was predominated by
tin. During the heyday of tin mining, the industry had played
an important role in the Malaysian economy, contributing to about
14% of the country's GDP. Today, however, the industry is being
overshadowed by the other more glamorus economic sectors. It's
contribution to GDP is now less than 1.5%. The continued closure
of tin mines, the fall in mineral production, decrease in mineral
exports, decline in mineral sector employment and the drastic
drop in mineral sector contribution to GDP have been variously
quoted to support the notion that mining is a sunset industry.
The above perception may be true for tin mining but not for the
mining of a host of other minerals.
Although Malaysia has led the
world in the development of alluvial mining technologies for the
recovery of tin deposits, its search for primary hard rock minerals
has been largely neglected. This has, therefore, resulted in the
Malaysian mineral industry being left out in the mainstream of
development. Studies also revealed that Malaysia's mineral legislations
were outdated as they were specifically designed for the regulation
of alluvial deposits and thus, not well suited for the efficient
management of large scale exploration and mining of primary hard-rock
minerals.
In 1989, Malaysia embarked on a major review of its fiscal and regulatory framework for the mineral industry with expert assistance from the UNDP, government officials and the industry. As a consequence, a National Mineral Policy has been formulated and a comprehensive set of harmonised model mineral legislation introduced that contain the necessary ingredients for increased investment and expansion in the country's mineral industry.
The National Mineral Policy provides
the foundation for the effective, efficient and competitive development
and management of Malaysia's mineral resources. While the thrust
of the Policy is to expand and diversify the mineral industry
through optimum exploration, exploitation and utilisation of Malaysia's
resources, maximum use of research and development (R&D) and
modern technology, emphasis is also given to environmental protection
and sustainable development, as well as the management of social
impact. The salient features of the Policy include security of
tenure, favourable equity participation and fiscal regimes, high
priority land use for mining, uniform and efficient legal framework
and transparent guidelines and regulations.
In order to cater for the changing
trends and focus of the mineral industry, the institutional structure
of the various relevant mining organisations is also being looked
into by the government towards modernising them in ensuring their
capacity and capability of undertaking the successful implementation
of the National Mineral Policy. Efforts are currently in progress
to integrate, restructure and streamline all existing departments
and agencies related to mineral development in order to gear them
up for the new role.
With the legal, fiscal and institutional
frameworks almost in place, coupled with a fairly rich endowment
of mineral resources and Malaysia's positive stand on private
sector participation, the mineral industry provides ample opportunities
for investors, both domestic and foreign, in not only the upstream
but also the downstream value-adding activities. It is anticipated
that the minerals industry will play a pivotal role in helping
Malaysia move forward towards becoming a fully industrialised
nation by the next century as envisaged under its Vision 2020
agenda.
(iv) Thailand
The mining industry of Thailand
which has been dominated for centuries by the tin mining sector
has made considerable contribution to the country's economy. However,
with the collapse of the international tin market in the late
1985, Thailand's mining industry faced a serious crisis. The annual
contribution of the tin mining sector, as a result, declined by
more than 60 per cent.
Today, the mining industry in
Thailand has overcome that crisis. Thanks to the efforts of the
authorities, namely the Department of Mineral Resources, the Mining
Industry Council of Thailand, and the Thai miners who themselves
have painfully brought the mining industry back on-track and to
move forward in the right direction. The industry made a major
structural change in emphasis from dependance on metallic to industrial
minerals. This shift resulted in a major success in turning around
the ailing mining industry.
Thailand produces some 45 mineral
commodities from various regions of the country. Tin which once
was the predominant mineral produced has now to be imported for
increasing domestic consumption, the same as in the case of Malaysia.
Industrial minerals today accounts for 92% of the country's overall
mineral production.
To boost mineral industry development,
a high level committee was formed in the last several years to
reformulate the country's mineral policies, and to coordinate
the activities of the various governmental agencies entrusted
with the task of overseeing the industry. At the same time, the
Mining Industry Council of Thailand, the national private sector
body representing the industry's interest, has proposed to the
Government to revise the taxation system, institute environmental
requirements, and introduce deregulation measures. Thailand's
Mining Law which was promulgated in 1962 and governs the mining
industry is currently being reviewed.
All these efforts are aimed to
strengthen the position of the minerals industry as an important
raw material contributor towards the country's industrial development.
As amplified in the country's economic blueprint, namely the Industrial
Master Plan of Thailand covering the period 1996 to 2012, emphasis
has been given to the minerals industry to play an important role
in enhancing the nation's economic and industrial development
process.
(v) Vietnam
Notable mining policy and regulatory
advances have been made in recent years in Vietnam. The Ordinance
on Mineral Resources was enacted in 1989 and was followed by a
series of regulations, decrees and circulars. These were important
first steps toward promoting mineral development and to some extent
in governing mineral resources development effectively in the
country.
Within the provisions of the Ordinance,
there exists many limitations with regard to the implementing
terms and requirements. Although a Foreign Investment Law was
in place with attractive provisions for foreign investment, it
does not, however, fully address the peculiar characteristics
and the needs of the mining industry.
The aforesaid obstacles and limitations
were removed when a new Mineral Law was enacted in 1996. The Law
provides the necessary legislative framework to properly manage
and develop the mining and processing of minerals to play an important
role in the country's socio-economic development. The Mineral
Law also ensures that all mineral activities must be directed
and carried out in accordance with its provisions to ensure economic
and rational utilisation of mineral resources, labour, safety,
sanitation and environmental protection and social order on the
basis of mutual benefit to the investors, the government and community
as a whole.
The new Mineral Law reflects the
salient features of the country's new economic policies for the
mining industry. It protects mining rights in a fair and reasonable
manner so as to encourage domestic and foreign investments in
the mining and mineral processing sectors. Preferential treatment
is being given by the government to mineral projects that are
carried out in the remote rural areas.
High priority is also given to
those mineral projects using advanced technology in mining and
mineral processing. Mineral processing is much encouraged but
exporting of mineral raw materials is restricted. Domestic investors
are given top priority for projects of a small and medium size.
Foreign investors are encouraged to invest in large scale projects
which require high capital investment, employ modern methods of
mining and environmental protection as well as to provide stable
markets and to undertake marketing.
Although some basic issues such
as rights to mine upon discovery are still unclear, however, some
20 foreign companies are now working in Vietnam exploring and
prospecting for mineral resources.
(vi) China
China has a long history in the
development and utilisation of its mineral resources. However,
the mining industry became prominent only in 1949. China has some
151 minerals with proven reserves located within some 20,000 mineral
occurrences and is believed to have one of the world's largest
mineral reserves.
The mining industry in China is
governed by the Mineral Resources Law of 1986 which is the basic
law overseeing the exploration and mining of mineral resources
in the country. In addition, various accompanying regulations
have been formulated covering matters such as mineral exploration
rights, mine inspection, mineral royalty collection and the implementing
rules for the Mineral Resources Law.
In 1996, the Mineral Resources
Law was amended. The amendments took effect from January 1997.
The amendments strengthened the state-ownership of China's mineral
resources and allow the local governments the responsibility for
guaranteeing exploration and exploitation of mineral resources.
The amendments also allow private enterprises and Sino-foreign
joint venture companies to participate in the exploration and
exploitation of mineral resources in China under state supervision.
Also in 1996, the Coal Law was
approved and became effective on 1 December that year. The Coal
Law provides that all coal resources are owned by the state and
that it will not be affected by any changes in the surface land
ownership or the right of use of the land where the coal resources
are located. The state protects lawful exploration and mining
rights from any encroachment and ensures the operation against
any interference and disruption in mining areas and exploration
sites. Mining rights cannot be sold or leased. The Ministry of
Coal Industry is responsible for administrating and enforcing
the Coal Law.
China encourages foreign investment in new technological renovation projects that could improve the industrial infrastructure, increase productivity, and better utilise mineral resources. Potential investment projects usually go through a multi-tiered screening process. In 1996, the government abolished the preference tax and tariffs on imports of capital equipment for companies having foreign partners. The elimination of these taxes reflects its interest to reduce labour-intensive and small-scale projects that dominated the early years and to shift to fewer and bigger, technology-intensive projects. Also, these changes are made to unify the tariff rate structure in line with that of the World Trade Organisation (WTO) and to ensure competition in a social market economy.
(vii) India
India announced a new National
Mining Policy in 1993 which partially opens up its minerals sector.
Applications for foreign investment in the mining industry are
given automatic approval up to a limit of 50% in a particular
project or company. The industries in which 51% automatic clearance
will be given are: mining of iron ore, metallic ores including
manganese, chromite, bauxite, copper, lead and zinc ores (but
excluding uranium) and the mining of non-metallic minerals. As
for the issue of large prospecting licences, it has been laid
down that recommendations of state governments should not exceed
5,000 km2 for a single licence and the total area held by a single
company should not exceed 10,000 km2. Automatic approval of foreign
equity up to 74% will be allowed for services incidental to mining
such as drilling shaft sinking and surveys.
(viii) South
Korea
South Korea has poor natural resources
and hence its domestic mining industry is relatively small. In
1996, its mineral production increased by 11.3% to US$1.89 billion
with the non-metallic minerals sector contributing the single
largest output totalling US$1.02 billion. South Korea, however,
consumes large amounts of mineral resources which have to be imported.
The mining industry in South Korea
is governed by the Mining Act which was overhauled in 1994 to
make available idle mining areas, to simplify administrative procedures,
to promote foreign investment in the mining industry and to strengthen
environmental protection requirements. In promoting foreign mining
investment in South Korea, foreigners are allowed to own mining
leases without any restrictions.
In order to ensure that South
Korea continues to enjoy a stable supply of mineral resources
for her economic and industrial requirements, the country has
adopted a two-prong mining promotion and development strategy.
In one instance, it has a domestic mining promotion policy which
encourages the expansion of its local mineral resources production
base to ensure that it provides the strategic supply sources of
minerals in times of emergency. Under this policy, the government
supports geological prospecting, subsidises drilling and tunnellings,
assists in modernising mining facilities, provides scholarships
and supports R&D.
Under the second policy, which
is the overseas minerals development policy, South Korea aims
to raise the mineral resources supply availability through active
participation in overseas minerals development projects. Through
this policy, South Korea has been able to obtain a secure and
stable supply of mineral resources for the long-term, and which
at the same time consolidates its economic co-operation with the
host countries.
Like South Korea, Japan is also
relatively poor in mineral resources but consumes large amounts
for its industries. Although Japan is one of the world's largest
producers of non-ferrous metals, however, almost all of its mineral
raw material requirements are imported.
Although the domestic Japanese
mining industry played a strategic role in the country's economic
recovery in the 1940's and 1950's, however, the economic prosperity
that resulted brought about a lack of cost competitiveness in
the domestic mining industry. As a result, the local mining industry
has substantially declined and Japan has to direct its attention
towards greater participation in mining ventures overseas. The
Japanese mineral resources policy today aims to secure stable
supply of mineral raw materials not only for the country but also
for the world as a whole.
Through the Metal Mining Agency
of Japan (MMAJ), efforts have been vigorously undertaken by the
Japanese Government to promote overseas exploration directly and
also to support Japanese private mining companies operating globally.
The thrust of the Japanese mineral
policy is based on the following premises, namely:
(i) Strengthening international
competitives of its domestic non-ferrous metal smelters.
(ii) Encouraging the development
of overseas mines.
(iii) Developing overseas smelting
businesses.
The Japanese government has also established a national stockpile of rare metals which are essential for the high technology industries and which are, in turn, a major contributor to the Japanese economy. The stockpile includes nickel, chrome, tungsten, cobalt, molybdenum, manganese and vanadium. None of these metals are produced in Japan and, in the judgment of the government, are particularly vulnerable to instability of supply, hence the need for the stockpile.
Through the work of the MMAJ,
several important mineral deposits have been discovered and mines
successfully opened-up, both in Japan and overseas. The minerals
produced include,gold, zinc, lead and copper. In the agency's
collaborative effort with the private sector, other mineral resources
have also been discovered, a recent example being the opening
of a uranium mine in Canada, which is expected to be in production
from the year 2000.
3.0 CONCLUSION
3.1 From the foregoing, it is
apparent that most of the major mining countries in Asia have
reformed and adopted new mining policies and regulations that
aim to generate economic growth and industrial development in
their respective countries through ensuring stable and secure
supply of minerals resources. Others like Mongolia, Myanmar, Cambodia
and Laos have also follow suit. The majority of the reformation
in most of these countries have focused on creating a more liberal
investment climate and proactive strategies characterised by providing
political and legal stability, security of tenure, repatriation
of profits, management and equity control and progressive, stable
and internationally competitive fiscal regime, better access to
financial and technological support.
3.2 As a result of these structural
reformation in their mineral policies and legislations, the mining
industry in Asia will be seeing substantial changes and transformation
in the years ahead. This in turn poses many challenges and opportunities.
3.3 With the liberalisation of
the mining industries in the Asian countries through the reformation
of their mining laws and policies, it can be expected that mineral
investments in these countries will be enhanced which ultimately
will result in not only increased economic wealth for themselves
but also for those other developed countries which require these
mineral resources to sustain their economies and industries.
3.4 In conclusion, it can be said
that these efforts by the developing and developed countries of
Asia in reforming their mining policies and regulatory frameworks
and in working together in co-operative mining ventures are a
form of synergistic partnership to better utilise the God-given
mineral wealth for the benefit of mankind in line with the new
international economic realm of trade liberalisation and globalisation.
1. Mining Legislative Framework
in Indonesia by Nursaleh Adiwinata and Khairin, Directorate General
of Mines, Indonesia.
2. The Philippines Mining Act
of 1995 by H.C. Ramos and G.M.C. Noble, Mines and Geosciences
Bureau, Philippines.
3. Opportunities and Challenges
in Malaysia's Mineral Sector by Mohamed Nor Abd. Aziz, Ministry
of Primary Industries, Malaysia
4. Current Status of the Malaysian
Minerals Industry by Malaysian Chamber of Mines.
5. An Overview of Mining Industry
in Thailand by Akanit Suwanasing, Mining Industry Council of Thailand.
6. Mineral Law - State Policies
For Mining Industry Development, Mineral Processing in Vietnam
by Nguyen Tien Phuong and Nguyen Thi Dzung, State Department for
Management of Mineral Resources, Vietnam.
7. Brief Introduction on China's
Legal System Regarding Mineral Resources by Li Hongguang, Department
of Policy and Legislation, Ministry of Geology and Mineral Resources,
China.
8. Legal Infrastructure for
Mining Industry in Korea by Dr. Chun Kahp-chin, Korea Institute
of Geology, Mining and Materials.
9. Japan's Non-Ferrous Metal
Policy and the Role of the Metal Mining Agency of Japan, by Shigeki
Sakurai, Metal Mining Agency of Japan (MMAJ), Canberra.
10. Mining Annual Review 1997,
Mining Journal Ltd., United Kingdom.
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