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Feb 18, 2014

Mining and Exploration in Cambodia


By Billie Slott

Sciaroni & Associates continues its leadership position as Cambodia takes its rightful place in the region’s mining industry.
 
The Cambodian Association for Mining and Exploration Companies (CAMEC) held its monthly meeting on February 11, 2014. H.E. Suy Sem, the minister of the newly formed Ministry of Mines and Energy, (MME,) attended the meeting with several high ranking officials and announced a strategic framework for the newly formed ministry for 2014-2015. The Minister stated the following:
 
"The Ministry of Mines and Energy will start learning from previous lessons and experience in the minerals sector and promote the implementation of the former agenda in conjunction with a new plan in order to make major progress in fostering fairness and effectiveness for mineral resource development and its utilization including oil and gas. This will form an important impetus for social and human resources development, capacity building, competitiveness as well as the promotion of the mining and oil and gas industrial sectors.
 
For this mandate of 2014-2015, all activities of the Ministry of Mines and Energy will focus on the achievement of three (3) main strategic goals: Taxation, Economic, and Social Goals.
 
The Minister went on to say that these goals will be accomplished by the promulgation of a new law on tax and royalties, and the amendment of current laws, sub-decrees and regulations related to mining and exploration. The ministry is currently in the process of drafting a sub-decree on improving the competency of the officials employed by the MME."
 
Mining in Cambodia Historical Context
 
There was very little exploration for minerals in Cambodia before 2005. The French undertook some surveys prior to 1970 however  little was discovered about the full extent of Cambodia’s mineral deposits.
 
In 2005, foreign companies, mostly from Australia, decided to explore actively in Cambodia for mineral resources. The first explorations were accomplished pursuant to Memorandums of Understanding with the government, then the Ministry of Industry, Mines and Energy (MIME).  These companies were mainly exploring for gold, copper, and bauxite.
 
By early 2007, there were international standard exploration agreements signed with several mining and junior exploration companies. Exploration is still ongoing, however currently there are some companies in the bankable feasibility study stage and there could be a decision to mine within this year. The Royal Government continues to be supportive of exploration and mining companies, as Cambodia could derive much needed income from the mining industry, which would provide budgetary support to the government.
 
Current Legal Landscape
 
Mining, exploration and the processing of minerals in Cambodia is governed mainly by the Law on Mineral Resources Management and Exploitation dated July 13, 2001 and Sub-Decree No. 8 ANKr.BK on the Determination of Principles for all Types of Investment in Mineral Resources dated January 31, 2005, as amended by Sub-Decree No. 113 ANKr.BK on Amendment of Article 1 of the Minerals Sub-Decree dated September 29, 2005 and Prakas MIME No. 340 on the Registration and Conditions to Issue, Extend, and Transfer Rights of a Mineral License dated May 25, 2004.
 
Currently, there is a ban on all mineral exports by sub-decree but this was signed before the Royal Government fully understood the extent of the types of mineral resources Cambodia may have. This is to be revised this year.
 
The newly formed ministry is now the Ministry of Mines and Energy as of 2014. The ministry realizes that certain minerals cannot be processed in Cambodia such as bauxite and copper so they are in the process of defining terms such as processing and deciding which minerals could be processed here providing a value added component to the economy.
 
It should be noted that the ministry is also reviewing and may update the regulation Prakas MIME No 340 on the Registration and Conditions to Issue, Extend, and Transfer Rights of a Mineral License dated May 25, 2004. The minister announced at the meeting that term limits for exploration will change and will be investor friendly; the exploration period is currently set at six (6) years.
 
Our Services
 
Sciaroni & Associates has been heavily involved in the development of Cambodia’s  mining and exploration sectors since 2005 and was instrumental in the drafting, review and negotiations specific to the first two international exploration and exploitation agreements. Members of our Energy & Mining Practice Group provide a comprehensive range of legal services to mining and explorations companies for all commercial activities from company inception and registration, due diligence on tenements, drafting joint venture agreements and negotiations with the ministry.  The firm continues to provide expert knowledge in this growing segment of Cambodia’s economy.

 
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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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