Extractive industries

Myanmar is rich in natural resources, including gems, minerals, oil and gas. The economic activities involved in exploring and extracting these resources are known as extractive industries. Myanmar is one of the world’s largest producers and exporters of jade, one of the oldest exporters of oil, and also the tenth largest exporter of natural gas. In addition, it produces a variety of minerals including copper, tin, tungsten, and zinc1.

Importance of the sector

 

According to official statistics, the extractives sector makes up 6 percent of the country’s GDP, 23.6 percent of state revenue, and 38.5 percent of the country’s total exports. Data from other sources suggests that this could be an underreporting of the sector’s actual significance to the economy. For example, China’s reported imports of gems in 2014 from Myanmar alone exceeds the latter’s total official values of exports from all the extractive industries combined2.

The extractives sector also employs a small but significant proportion of the workforce. According to the 2014 census, the mining and quarrying sector employs 168,000 people, or 0.8% of the workforce3.

Since 2014, Myanmar has been a member of the Extractive Industries Transparency Initiative (EITI), which is a global standard to promote open and accountable management of natural resources, through a collaboration between government, civil society, and companies working in the extractives sector. The first EITI report for Myanmar, which covers the period from April 2013 to March 2014, was released in January 2016.

State owned enterprises in Myanmar play a large role in extractive industries, particularly in the mining sector. The oil and gas sector is dominated by joint ventures between foreign companies and Myanmar state owned enterprises. A detailed breakdown of the companies that have obtained licenses for exploration and extraction are available on our Oil and Gas profile page.

Oil and Gas

 

Oil wells in Yenangyaung during the early 20th century.  Photo taken from  "Twentieth century impressions of Burma : its history, people, commerce, industries, and resources" Arnold Wright, 1910. Public domain

Oil wells in Yenangyaung during the early 20th century. Photo taken from “Twentieth century impressions of Burma : its history, people, commerce, industries, and resources” Arnold Wright, 1910. Public domain.

Myanmar’s oil industry was first established in the 19th century, and began exporting oil as early as 1853. Today, the natural gas industry accounts for 30 percent of the country’s exports in 2014, and Myanmar is the second largest producer of natural gas in the lower Mekong region. 80 percent of the natural gas produced is exported, mainly to China and Thailand. Myanmar has proven natural gas reserves of 10 trillion cubic feet and proven oil reserves of 50 million barrels from onshore and offshore fields4.

Foreign companies’ involvement in the exploration and development of onshore and offshore oil and gas extraction sites began after the introduction of the first Foreign Investment law in 1988. As of 2014, more than 100 blocks have been allocated for exploration and production, with multiple rounds of bidding for production sharing agreements between state owned enterprises and foreign companies.

Offshore natural gas production commenced in 2000 with the Yadana project, followed by the Yetagun, Zawtika and Shwe projects. Onshore production is focused on oil, with the Chauk, Yenangyaung and Mann fields being major producers. There is also a significant presence of artisanal oil extractors, which are operations run by small, informal enterprises using methods that are sometimes as simple as a bucket and rope.

Myanmar’s oil and gas blocks

Explore Open Development Myanmar's profiles database of Myanmar's oil and gas blocks here.

Gems and Jade

Myanmar is the world’s largest source of high quality jade and rubies, producing about 90 percent of the world’s rubies and 70 percent of its jadeite5.

Unlike other extractive industries, the precious gems sector is completely controlled by state owned enterprises and local contractors. Foreign investment in the sector is prohibited.

There is considerably less transparency on the production, sales and exports of gems and jade when compared other extractive industries. In Myanmar’s first and only EITI report to date, the only data available on this sector are the sales that take place during the Myanmar Gems and Jade Emporiums. Two such emporiums took place between April 2013 to March 2014, in which US$ 1,531.61 million worth of gems and jade was sold. This is in contrast to the value reported by Chinese Customs, according to which China imported US$ 12.3 billion of jade and gems from Myanmar in 2014, but even larger values have been quoted for the value of this sector. Global Witness conducted an investigation into the jade industry in Myanmar, and in the report containing their findings, they estimated that jade production in Myanmar could be as high as US$ 31 billion in 20146.

Minerals and other Mining

Excluding gems and jade, there is also a significant presence of other mining activities in Myanmar, including base metals (gold, copper, silver, lead, zinc, tin, manganese, antimony), industrial minerals (cement, clays, gypsum, fertilizer bases, dolomite, limestone, salt and barite), and energy sources (coal and uranium).

The scale of mining operations range from vast industrial extraction sites to small, artisanal operations. All mineral exploration of mining is overseen by the ministry of mines, and private companies have to enter into a production services contract with the ministry before they can begin operations.

Examples of large scale mining operations include the coal mines in Tigyit in Shan state, which contributed to powering the 120 MW Tigyit coal-fired power plant, or the Man Maw tin mining district, which in 2014, became the largest source of tin in the world7. Small scale artisanal mining activities are also significant, with over 20,000 people employed in the artisanal gold mining industry alone.

Considerable environmental risks are associated with mining practices, ranging from deforestation, climate impacts from burning fossil fuels such as coal, gas and oil, to the use of mercury in the artisanal mining of gold.

 

References

  • 1. Moore Stephens LLP. “Myanmar Extractive Industries Tranparency Initiative (MEITI) Report for the Period Apr 2013- MARCH 2014.” December 1, 2015. View source
  • 2. Shortell, Paul. “Parsing Myanmar’s First EITI Report.” The Myanmar Times, June 10, 2016. Accessed November 20, 2016. http://www.mmtimes.com/index.php/opinion/20796-parsing-myanmar-s-first-eiti-report.html.
  • 3. Department of Population. The 2014 Myanmar Population and Housing Census Census Report Volume 2-B The Union Report: Occupation and Industry. Report. March 1, 2016. Accessed November 20, 2016. View source
  • 4. Moore Stephens LLP. “Myanmar Extractive Industries Tranparency Initiative (MEITI) Report for the Period Apr 2013- MARCH 2014.” December 1, 2015. View source
  • 5. Asian Development Bank. “Myanmar: Unlocking the Potential.” August 1, 2014. Accessed November 20, 2016. View source
  • 6. Moore Stephens LLP. “Myanmar Extractive Industries Tranparency Initiative (MEITI) Report for the Period Apr 2013- MARCH 2014.” December 1, 2015. p40. View source
  • 7. Gardiner, Nicholas J., John P. Sykes, Allan Trench, and Laurence J. Robb. “Tin Mining in Myanmar: Production and Potential.” Resources Policy 46 (2015): 219-33. doi:10.1016/j.resourpol.2015.10.002. View source
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