Mining rights and title in Myanmar

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

According to the SEE Law, the government has the sole right to carry out the exploration and extraction of pearls, jade, precious stones and metals. The government also has the sole right to export these minerals. However, the government may by notification, under section 3 of the SEE Law, permit a private company to carry out mining activities. Pursuant to MIC Notification No. 15/2017, feasibility study and production of radioactive metals such as uranium and thorium is allowed to be carried out only by the country.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

MoNREC is responsible for maintaining information and data, which are presented at workshops from time to time. MoNREC’s website is: www.mining.gov.mm. The DGSE provides CD-ROMs for reporting mineral resources and reserves.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

The Mining Rules 2018, and the law amending the Myanmar Mining Law 2015, provide for the issue of prospecting permits, exploration permits, small, medium and large-scale mineral production permits, subsistence mineral production permits and integrated permits for prospecting, exploration and production. The law amending the Myanmar Mining Law added a provision to issue a permit to conduct a feasibility study, value-added process and sale and purchase permit. In practice, mining is usually conducted under production sharing contracts (PSCs), according to the Mining Rules 1996. The current Rules state that joint venture agreements can be entered into in accordance with the Mining Rules 2018. Under the current model of PSC, MoNREC provides two years for prospecting. An exploration permit is granted for no more than three years with a one-year extension available upon submitting an application for extension. A production permit is generally granted for with extension. These PSC provisions differs from the Mining Rules 2018. There are substantial delays in the issue of permits, complicated by land acquisition problems.

MoNREC currently favours PSCs over joint venture agreements. A PSC is a straight split on total production. Alternatively, there can be a cost-recovery type of production sharing, where a certain percentage of total revenue is reserved for the recovery of production costs. A straight split of the total production is preferred in large-volume, low-price and low cost-production minerals, such as dimension stones, coal and other industrial minerals. For more valuable metallic minerals such as gold and copper, production sharing with cost recovery is preferred.

MoNREC is flexible about negotiating the terms of each arrangement. The sharing of production costs may be fixed for the term of the agreement or on a sliding scale, depending on the level of production. The government’s share of production can be inclusive of royalty, valued upon a mutually agreed price, and sold back to the investor.

A profit-sharing arrangement is primarily used for current projects with active mines and plants. Parties may enter into a joint venture with a state-owned enterprise through competitive bidding or by entering into an agreement based on terms negotiated by both parties.

What is the regime for the renewal and transfer of mineral licences?

Permit renewal

MoNREC may renew a permit for prospecting, exploration or production. Applications for renewing a permit must be submitted to MoNREC three months before the expiry of the permit for the prospecting and exploration licences and one year before the expiry of production licences.

Permit transfer

Permits may be transferred with the consent of MoNREC and the approval of MIC. To transfer a permit, a permit holder must submit a transfer application with a copy of the draft transfer agreement.

What is the typical duration of mining rights?

A large-scale production permit lasts for a period of 15-50 years, a medium-scale production permit lasts from 10-15 years and a small-scale production permit lasts from five years to 10 years. Extension and renewal of mining rights is subject to the Mining Rules 2018.

The Ministry may reject an application for extension of tenure if any of the following circumstances is found:

• failure to comply with any condition of the permit by the applicant;
• the applicant has not carried out the mineral production operations in the large/medium/small-scale mineral production permit area at a reasonable rate of progress;
• no remaining ore deposits with reasonable quantities of mineral reserves to be produced;
• the programme of mineral production operation proposed to be carried out is not satisfactory; and
• if it is considered that it should not be extended in the interests of the people and the state.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

MIC, in exercise of the powers conferred to it under sections 42 and 100(b) of the MIL, with the approval of the government, announced Notification No. 15/2017, provides that a feasibility study and production of radioactive metals such as uranium and thorium is allowed to be carried out only by national entities. Prospecting, surveying, performing feasibility studies and developing minerals for small and medium-scale business in accordance with the Mining Law and prospecting, exploration and production of jade or gemstones are not allowed to be carried out by foreign investors. Prospecting, exploration, feasibility study and production with foreign investment for large-scale production of mineral, prospecting, exploration, feasibility study and small, medium and large-scale production with citizens’ investment for production of mineral, manufacturing and marketing of gems, jewellery and finished products with foreign investment and exploration, finishing and marketing of gems, jewellery and its products with citizen investment activities may be carried out with the MoNREC approval.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Myanmar was party to the Geneva Protocol on Arbitration Clauses of 1923, but was not party to the International Centre for Settlement of Investment Disputes Convention or other international conventions relating to arbitration. On 17 July 2013, Myanmar became party to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards 1958.

A new arbitration law was enacted in January 2016 that allows Myanmar courts to enforce foreign arbitration awards under certain conditions.

There is no public record of any international commercial arbitration case having been conducted under the English law-based repealed Myanmar Arbitration Act 1944, nor under the present Arbitration Law 2016. There have been few international commercial arbitration cases conducted in Myanmar. This probably reflects Myanmar’s pre-1988 policy of minimising economic relations with other countries. Since 1988, there have been a number of contracts between public and private sector Myanmar parties and foreign companies, in which a foreign governing law and foreign arbitration rules are prescribed.

Myanmar is party to the Association of Southeast Asian Nations (ASEAN) Comprehensive Investment Agreement of 2009.

Myanmar became a member of ASEAN in 1997, and is obliged to ratify 14 key agreements prescribed by the Association. The Protocol on Enhanced Dispute Settlement Mechanism 2004 is one such agreement.

The arbitration provision in section 286 of the Myanmar Companies Law (MCL) states that: ‘Without limiting any other means by which a company may seek to resolve a dispute, a company may by written agreement refer to arbitration, in accordance with the Arbitration Law or any other applicable law, an existing or future difference between itself and any other company or person. In respect of power for companies to refer matters to arbitration, section 354(f) of the MCL states that: “The provisions of the Arbitration Law, other than those restricting the application of the Arbitration Law in respect of the subject-matter of the arbitration, shall apply to all arbitrations in pursuance of this section”.’

The arbitration procedure must always be in accordance with the Arbitration Law 2016.

As a matter of government policy, most contracts between state-owned enterprises and foreign companies specify Myanmar law as the governing law, and prescribe that disputes be settled by arbitration under the Arbitration Law. In general, the attorney general’s office and MIC do not allow foreign arbitration provisions when the Myanmar government is party to the contract.

In practice, most disputes between contracting parties in Myanmar are settled by the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) located in Yangon (when both disputing parties are members of it).

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

According to the 1987 Transfer of Immovable Property Restriction Act, private land ownership by a foreign national or a foreign company is not legal in Myanmar. Foreign nationals could only acquire land by way of a lease, which could not exceed a one-year term.

Since the Myanmar Investment Law was enacted in 2016, and under section 50 of that Law, foreign-owned companies investing under a MIC permit are entitled to lease land for an initial term of up to 50 years, which may be extended twice for another 10 years each, depending on the type of industry and the amount invested.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

Yes. The state has the sole right to carry out mining projects under the SEE Law. However, MoNREC may, by notification, allow private companies to carry out mining projects. Mining projects are usually allowed via either a permit-sharing or a production-sharing contract. Foreign investors should expect to carry out projects with local Myanmar companies.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

Rule 211 of the Mining Rules 2018 states that MoNREC may suspend or cancel a permit. The rules do not have compensation provisions. A permit may be suspended or cancelled for the following reasons:

• failure by the holder of a permit to make a required payment under the Mining Law or the Mining Rules on the date due;
• submission of false statements to the department or the organisation;
• discovery upon investigation that the permit has been applied for and obtained in contravention of the Mining Rules;
• after the death of the permit holder where the heirs are not qualified to obtain the permit under the Mining Law or the Mining Rules;
• where the permit holder is not able to pay in full the taxes and duties payable to the government, becomes insolvent or the company is liquidated;
• when the permit holder does not apply for the extension until the expiry of the permit without reasonable grounds; and
• when the permit holder does not hand over the permit despite notice of handover having been given.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

A company is only allowed to mine in blocks for which the company has received a permit. Mining is banned on the beds of the Irrawaddy, Thanlwin, Chindwin and Sittang rivers.