Australia’s ‘outsized footprint’ on Myanmar mining sector enabled by weak sanctions regime, report says

Australian-linked companies are helping Myanmar’s mining industry “stay open for business” under the junta, activist group Justice for Myanmar (JFM) said in a major report published on Tuesday. The 154-page “Mines Against Humanity” outlines how 10 Australian company networks have, since the February 2021 coup, reportedly carried out exploration and extraction activities in Myanmar or acted as service providers in the mining sector. Their continued presence in the country provides revenue for the military junta, which exploits and profits off of the country’s deposits of minerals including coal, copper, gold, tin, and gems—many of which are located in areas where its troops are committing grave human rights violations—JFM said. The regime is responsible for displacing more than 2.3 million people nationwide, according to United Nations estimates. Local monitoring groups like the Assistance Association for Political Prisoners have reported nearly 26,000 arrests and at least 4,468 people killed by the military over the past three years. Businesses named in Tuesday’s report include Asia Pacific Mining Limited, Georesources Group and PSI Drilling, PanAust, Mission Legal, Knight Piésold, Golden Land & Australia Mining, Access Asia Mining, Australian Laboratory Services, Cornerstone Resources, and the Valentis Group. The latter four are listed on the Australian Stock Exchange. Also highlighted are inactive registered Australian companies that “require monitoring should they resume operations” under the regime: Mawsaki Mining, Tin Htay International, Indodrill, Minergy Myanmar, First Light Mandalay Mining and Metals, SCM Legal Limited, and Unity Energy & Resources. Data from the junta’s commerce ministry indicates that mineral exports, although on the decline, are still a “significant and lucrative” source of revenue, and have earned the regime well over US$1 billion since the coup. According to JFM, these exports brought in $895.6 million in the 2020-2021 fiscal year—during which the coup took place—then nearly $288.6m during a six-month period spanning 2021 and 2022, and finally, $337m during the last completed fiscal year. Australia’s interest in mineral-rich Myanmar was apparent in its participation in drafting amendments to the country’s 2015 Mines Law. According to a 2016 report by The Irrawaddy, the law was revised with the guidance of international experts that included the Australian Agency for International Development (AusAID), and was considered to be “more favourable to foreign firms than the [1990s] legislation previously in effect.” “The new rules pave the way for foreign firms to buy their way into already existing small- and medium-scale mining projects in joint ventures with local Burmese firms and then expand those projects,” the report said. The article cited a 2013 interview with Myanmar’s then mining minister Myint Aung on Australia’s ABC Radio in which he claimed to be “working very closely” with AusAID to make the law “an internationally recognised and accepted standard.” Northern Shan State’s Bawdwin Mine, pictured in 2017 and located in an active conflict area, was developed by Australian company Myanmar Metals, which later became Mallee Resources and sold its shares in the mine to a military-linked company after the coup (Myanmar Now) Speaking to Myanmar Now on the condition of anonymity, an expert familiar with international involvement mining industry said that “significant input” from the Australian authorities “made it far easier for foreign mining firms to buy up mining concessions and enter into partnerships with local Myanmar businesses,” facilitating the subsequent “flood” of Australian mining firms into the country. “In light of the current situation that they helped create, the Australian government should take an interest in regulating what Australian firms are doing while mining and prospecting in Myanmar, particularly now that conflict has spread to nearly every state and region of a country held hostage by a corrupt military junta,” the individual said. JFM noted that it was an Australian entity, the Brisbane-based PanAust, that became the first international company directly granted a permit under the new regulations in 2018, specifically to prospect for gold in Wuntho, Sagaing Region. In Myanmar, PanAust holds a 90 percent stake in Wuntho Resources Co., Ltd., which reportedly has seven exploration licences in Sagaing covering 1,500 sq km; some date back to 2016 and others were granted as recently as 2020, according to Tuesday’s report. PanAust claimed to have ceased all mining operations in 2021 after the coup but stated in its business review and sustainability report that year that it would “continue to honour” payments around administrative costs, tax obligations, and licensing. “The company made these payments to the illegal junta,” the activist group stated. In a statement to Guardian Australia regarding the JFM report, PanAust is quoted as saying that it had “decided to exit Myanmar and is in the process of withdrawing,” which, it noted, “may take several months.” According to September 2020 government data cited by JFM—a period prior to the coup—Australian companies obtained 11 of 28 foreign mining permits for coal, copper, gold, and zinc that year. This is more than any of the other countries involved in the sector, including China, Thailand, Japan, Vietnam, and the UK. Graphic showing how Australia, granted 11 out of 28 foreign mining permits in Myanmar in 2020, surpassed other countries involved in the sector (Justice for Myanmar) Curtin University professor of international business Dr Htwe Htwe Thein called the report’s description of Australia’s “outsized footprint” on Myanmar’s mining sector “astounding.” The 2020 figures “show how these activities went under the radar and have been allowed to develop to such a scale,” she told Myanmar Now, adding, “The Australian government has failed to pay enough attention and thought to the consequences of the lack of regulations for the sector.” Valentis Group, along with its several Myanmar subsidiaries, is characterised by JFM as a “complicated and sprawling network of companies focussed on mining exploration, extraction and related services that has remained active in Myanmar following the military’s coup attempt.” Michael Bui Phin, Valentis Group’s chief financial and operating officer, called JFM’s report “false, baseless, and scurrilous.” He said that the Australian-incorporated Valentis Asia had exited Myanmar “following the divestment in 2022 of our Myanmar operating subsidiaries.” He added that Valentis “had never derived any revenue from any mining or mineral extraction activities” so had not paid mining royalties or taxes to the junta. One Valentis subsidiary which the company claims it has divested from, Locrian Precious Metals, was identified in September 2022 for its involvement in what the Shan Human Rights Foundation termed a “gold mining expansion” in the Ta Ler (Tarlay) area in the Loi Kham hills in eastern Shan State’s Tachileik Township. The monitoring and research organisation reported that gold mining had taken a heavy environmental toll there, with toxic waste destroying farmland, poisoning water sources, and land degradation increasing the severity of floods. In 2020, Locrian was granted a five-year exploratory permit by the then-government, covering more than 450 sq km of land in Tachileik. JFM reported on Tuesday that Locrian was still active in Myanmar. The group cited Locrian’s reported inclusion in three 2023 documents: a list of approved companies compiled by a junta-controlled department for environmental management plans, as well as two letters from the military’s Ministry of Natural Resources and Environmental Conservation (MONREC) which allegedly mention Locrian’s engagement in gold mining. Valentis’ statement to Myanmar Now on Tuesday called claims by JFM that Locrian undertook mining activities in Myanmar and caused environmental damage “categorically false.” “Environmental issues reported were due to illegal or local small scale mining activities in the vicinity,” the statement said. It added that Locrian, which it described as “a mineral exploration company which undertakes exploration and geological studies in Myanmar,” had not provided funding to the regime. “Locrian has never undertaken any mining or mineral extraction activities, and therefore never paid any mining royalties or mining taxes to the Myanmar Government,” it added. In documents from the Australian Securities and Investments Commission database seen by Myanmar Now, Valentis Asia changed its name last week to SEA Group Support Pty Ltd. On January 24, Michael Bui Phin became the sole director of this new entity, ending the term of his counterpart, La Min Win—a Myanmar national who has headed various Valentis subsidiaries in Myanmar including Locrian, and who JFM identified as having close family ties to the military. At the time of reporting, Valentis Asia also appeared to have taken down its Facebook page. Gold mining operations are on the rise in Shan State’s Loi Kham hills, locals told Myanmar Now this week. However, they were not able to identify which companies were involved, noting only that many appeared to be unregistered and protected by pro-junta militias. “People in the community feel that they can’t say anything, because of security issues. The militias will look at anyone who is sharing information,” one individual explained on the condition of anonymity. Streams in the area continue to be poisoned by the mining activities, the source said, causing livestock to die, and forcing locals to purchase drinking water from outside the area, which is now also plagued by severe annual floods. Around half of the residents of one of the affected villages, Nai Hai Long, have already abandoned their land due to the dire conditions, leaving some 30 households empty. “They feel that there is no solution, and they almost want to give up,” the local source said. ‘A moral imperative’ JFM described continued Australian engagement in Myanmar’s mining as having “been enabled by Australia’s failure to impose sanctions on major portions of the military junta and the mining enterprises it has illegally seized.” Unlike allies such as the US, UK, the EU, and Canada, Australia has only introduced one round of sanctions in the last three years on 16 individual members of the junta and two military conglomerates: Myanma Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC). Junta data indicates that MEHL holds at least 24 exploration and mining licences for a range of minerals—two of which were granted since the coup, according to JFM. MEC is said to be involved in 16 mining projects, half of which went into operation after the coup. While they are significant players in the mining sector, the sanctions only targeting these two entities are insufficient, advocates say. “It's a moral imperative now for Australian companies and the government to review and realign their activities in Myanmar,” said Tasneem Roc, campaign manager for the Myanmar Campaign Network, an Australian advocacy group, describing JFM’s report as “damning,” and noting that further and immediate sanctions were “necessary to halt this complicity.” Like JFM, the Myanmar Campaign Network is calling for sanctions targeting junta-controlled institutions in the mining sector and these entities’ leadership, including MONREC, the ministry which “oversees the exploitation of Myanmar’s natural resources” and grants extractive licences and collects revenue on behalf of the military. Also identified were the regime’s No. 1 and No. 2 Mining Enterprises, and several departments under MONREC that prop up the sector. Other entities condemned by the networks are the Myanma Oil and Gas Enterprise, and the foreign private companies that provide the junta with funds, arms, equipment, or jet fuel used to carry out airstrikes. The Myanmar Campaign Network also urged Australian companies named in JFM’s report to “immediately cease payments under existing contracts to junta-controlled accounts and to make any payments of state revenue into escrow accounts managed by the legitimate government of Myanmar,” a reference to the publicly mandated National Unity Government. Melissa Chen, a senior lawyer at the Australian Centre for International Justice, which has advocated against military impunity in Myanmar, described a “clear link between the operation of the illegal military junta in Myanmar […] and financing by the minerals and resources sector.” “Targeted sanctions are most effective when imposed multilaterally or collectively,” she explained, and should be imposed by Australia “on individuals and entities involved in the minerals and resources sector and otherwise responsible for financing the junta,” alongside targeted bans on Myanmar exports of minerals and natural resources. If the country fails to act, it risks “potential complicity in serious human rights violations and international crimes,” Chen added. Business professor Dr Htwe Htwe Thein also warned Australian companies against operating in Myanmar when they are unable to conduct proper due diligence, face difficulties with financial transparency, and must undertake reputational risks. She pointed out that in 2022 the country was blacklisted by the Paris-based intergovernmental monitoring organisation Financial Action Task Force. The penalty was due to Myanmar’s lack of progress concerning measures intended to counter money laundering and the financing of terrorism. This, she said, “pose[s] big risks to companies doing business with Myanmar, let alone in a sector as opaque as the mining sector.” Community-based organisations in mineral-rich ethnic states have long called for a moratorium on mining and other extractive industry projects in Myanmar until there is a federal devolution of power that would allow locals to determine how to protect their own land and resources.

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