* Mining law may not come until March 2014 or later
* Private equity waiting in the wings for mining law clarity
* Existing projects suffer from tough funding environment
* Falling commodity prices erode Myanmar advantage
By Melanie Burton
SINGAPORE, Oct 4 A year ago Myanmar was the hot
new destination for resources investors looking to make a fast
buck in a country opening up to the outside world, but a new
mining law is still not passed, the hot-money crowd has filed
out and reality has set in.
Yet while funding options may have slimmed, opportunity is
still knocking, industry participants at a conference in
Singapore said this week.
"A year ago everyone was going to Myanmar. You couldn't get
on a flight there because every flight was booked," said Edward
Rochette, chief executive of Canadian explorer East Asia
Minerals Corporation, which has applied for an
exploration permit in the country.
"Investors were thinking: 'It's wide open, it's the Wild
West, we'll just sign and be done'. Unfortunately, it's going to
take time," he added.
Explorers have banged up against processing times for
prospecting permits stretching out several years while commodity
prices have fizzled and debt and equity funding markets have
dried up. The country has to fight harder to attract capital.
"In up markets they (explorers) can sell the blue sky,
greenfield projects. In a down market these companies are on the
edge and just cannot attract capital. Most of the people here
are at the small end of town," said a source from a commodities
trading house who was attending the conference.
This is dampening government efforts to raise foreign
capital in the mining sector and has pushed out processing times
for local-foreign joint ventures to gain the right to explore,
"There's disappointments in local parties not coming
through, there's disappointments in foreign parties not being
able to raise money once they promised it," said Ma Cherry
Trivedi of Myanmar-based Two Palms Mining Company, whose company
has several permits in the application stage.
Myanmar is rich in minerals including gold, copper, lead,
zinc, nickel, tin, antimony and chromite. It passed foreign
investment legislation almost a year ago, but its mining law is
still at least six months away.
"The government worries about fluctuations of commodity
prices as well as the waiting time," said Aung Thuyein Win, a
director at Myanmar's mining ministry, on the sidelines of the
But if the government had rushed to pass legislation to
capture better prices, it would have risked selling itself
short, he said.
"The government is still waiting for foreign investors, but
they have to protect locals," he added.
DOING THE HOMEWORK
Opportunities still exist for investors with longer-term
horizons such as commodity trade houses and specialised private
equity. The new mining investment law could spark a flurry of
interest in companies that have obtained exploration permits.
"We are doing our homework on Myanmar right now," said one
private equity investor based in Singapore, noting there was
ample investment choice in existing projects elsewhere in Asia,
given lower commodity prices.
"Myanmar projects are all pretty much greenfield projects
... but if we found a management team with experience and
expertise we believed in, then we'd invest," he added.
Among the companies in the queue for prospecting rights is
Indonesian state-backed tin producer PT Timah, which
applied for an exploration permit in Myanmar last year,
primarily looking for tin and tungsten.
"Timah is expanding to become a regional player," said an
official from the producer, who declined to be named. "We are
optimistic but need some more time."
Myanmar has approved more foreign direct investment in the
past five months than all of last year, but the receding tide of
mining-focused capital has left greater scope for the patient.
"I have better opportunity now without the crowds than with
the crowds because I'll have actual time with the ministry,"
said Rochette of East Asia Minerals Corporation.
(Editing by Alan Raybould)