Mining companies in Cambodia have formed an association that will work in close collaboration with the government to reform and, according to board members, improve the standards and credibility of the mining industry.
While those in the mining industry are prioritizing the need to improve the investment climate through reform for mining firms, civil society groups say that more must be done to increase transparency in the management of mineral assets and improve environmental standards.
“The basic objectives are to promote mining exploration in Cambodia and it’s also a voice for the industry going forward,” said Richard Stanger, president of the Cambodian Association of Mining and Exploration Companies.
CAMEC was registered with the Ministry of Commerce in the beginning of January and has so far convened on two separate occasions. The association has also acquired a seat on the government’s working group on law, tax and good governance co-chaired by Finance Minister Keat Chhon.
To date, Liberty Mining International, Southern Gold, Indochine Resources, Cambodian Resources Limited, Oz Minerals and Kingdom Resources have all joined the association with several others currently going through the application process.
Mr Stanger said that one of the initial goals of CAMEC includes pushing for more tax incentives, such as a reduction on tariffs on imported mining equipment.
“We really need a proper fiscal structure and incentives for people to do things,” he said. “There are a lot of things that need clarifying.”
“Fiscal policy must be looked at holistically,” said Mick Sharry, vice president of CAMEC. “There is no point in looking at royalties without realizing the impacts on other aspects of the fiscal regime.”
Though still in its infancy, Cambodia’s mining industry has seen a recent increase in operations, with mostly Australian firms conducting exploratory activities for minerals in the northeastern corners of the country.
Heightened confidence in Cambodia’s natural resource potential saw investment approvals for mining ventures rise by 153 percent to $11.8 million in 2009, according to the Council for the Development of Cambodia.
Ensuring that the relative ministries – of agriculture, mining and land management – are synchronized when dealing with mining companies is another issue in need of attention, said Mr Stanger.
The realization of such advances will hopefully make it more financially viable for companies to operate, a blessing in an industry with high overhead costs.
“This business is all money going out, it’s very high risk and it’s all long-term,” said Mr Stanger.
Billie Slott, secretary of CAMEC, said the sheer youthfulness of the Cambodian mining industry meant that the private sector and government alike are going through a steep learning curve in how to enforce more stringent regulations.
“You have to figure out what kind of contracts you want. They have to decide on difficult issues like royalties,” she said.
The creation of CAMEC is a sector-wide attempt to ensure that those in the industry are able to adhere to international standards on aspects such as the environment, she added.
“It’s not just to organize the government. The by-laws say we are looking at ourselves as well,” she said.
Mam Sambath, chairman of Cambodians For Resource Revenue Transparency, said he hoped CAMEC would be able to have a constructive dialogue on matters such as corporate and social responsibility, transparency and best practices on social and environmental impact mitigation.
Such discussion “could help to attract the responsible mining companies to come to invest and promote the sustainable development in Cambodia,” he said.
Chhith Sam Ath, executive director of NGO Forum, highlighted the persistent need for the government to introduce a tighter legal framework on areas such as land rights, the environment and financial transparency, all of which are relevant in the mining sector.
“Consultations to ensure that the concerns of the public are taken into consideration as well as transparent assessments of the impact on the environment and social impact [local communities] should be encouraged,” he said.
Presently, companies have different approaches to operating here, said Mr Sam Ath. Thus, CAMEC should play a role in streamlining the exigencies on how mining companies operate, he said.
According to a report released by the environmental watchdog Global Witness in 2009, “there is a lack of clear and transparent procedures for company payments to secure access to…mineral resources.”
“Given the lack of details surrounding [payments] it is difficult to accurately estimate the totals.”
According to Mr Sharry: “Any issues that pertain to a constructive international dialogue on international standards in the mining industry being developed, [CAMEC] will be happy to participate.”
He added, however, that a fixed stance on reform to any laws on environmental safeguards and the displacement of people were still to be discussed by members of the association.
Likewise, Mr Stanger said that although no plans were yet in place to discuss issues regarding transparency “at this stage,” most companies were obliged to declare their costs as they are publicly listed.
Secretary of State for the Ministry of Mines and Energy, Khlaut Randy, referred questions to Secretary of State Tann Kim Vin, who could not be reached for comment.
During a June meeting, government officials from the Working Group on Law, Tax & Good Governance, underlined the importance of growth in the mining sector, according to an official summary from the meeting.
Anthony Houston, head of exploration for OZ Minerals who spoke on behalf of CAMEC at the June meeting, proposed two issues of primary concern to the industry: an assurance that companies will be able to continue on from exploration to mine development without threat of their licenses not being renewed and the creation of a transparent fiscal regime to address the issues of royalties and taxation.
Without such reform, profits in the industry will be curbed, he said, citing OZ Mineral’s outlay at the time of $9 million with no return.
“The private sector is not suggesting that the Mining Law be re-written; but requests consultation on the elaboration of the provisions affecting these core issues,” the summary states. “In addition, the industry requests the Government to consider investment incentives to defray the heavy front-end risk being taken by private companies and consideration on import duties to be applied to the specialist equipment it requires.”
CAMEC has also been granted permission to form a task force to consult with government on concerning issues.
Mr Stanger said that whereas mining companies have previously tended to work independently, CAMEC would encourage firms to join forces in their operations and provide assistance to one another.
“[The industry] is pretty embryonic,” he said. “So what we’ve done is pretty much get together and start moving ahead.”
Despite the moves to unify the industry, Mr Stanger says that extraction is still a way off.
It would not be unusual, he said, for companies to invest large sums of money in exploration and still end up leaving for fear of a lack of profits.
“That could happen to anyone of us. And that’s why in exploration you’ve got to keep generating new projects,” he said.