By Ros Sothea, VOA Khmer
Original report from Phnom Penh
07 April 2010Editor’s note: Richard Thompson is an international mining expert from the United Kingdom who has been working in the mining sector for more than 40 years. Within the last 10 years, Thompson has been conducting research on mining resources in Cambodia for the Japanese International Cooperation Agency. He spoke to VOA Khmer recently in Phnom Penh, weighing in on the country’s mining industry, the mining market and the benefits that can come from mineral extraction.
Q. Cambodia’s government expects to see a third of 20 licensed companies begin mining extraction in 2015. Is this a realistic timeline?
A. The possibility of getting mineral resources during the next five years will depend entirely upon the market of those mineral resources. Although the 20 companies, or the third of those companies, expect to begin mineral extraction, if the market value of their product decreases, they won’t have a market and therefore they are not likely to begin extraction. Besides that, there are still many requirements of the company in terms of legislation that needs to be fulfilled for a good mining industry to emerge. So it is impossible to tell at this stage whether the third of the companies be able to achieve this.
Q. Based on your 10 years of research, can you weigh the potential of the country’s mining resources?
A. As there hasn’t been extensive exploration, nobody is quite sure what is here. It’s going to take several more years to probably evaluate the potential of deposits, because with a proper mine you really need a very intensive drilling program, maybe several thousand or a few tens of thousand of meters of drilling to establish the shape, the size, the depth and the stretch before the amount of deposited metal can be calculated. And then the economic study can be made to see if there are enough mining deposits. This is not a profitable exercise. They take the risk, they choose to spend their money, and the profit comes when they eventually find something worthwhile, or economically useful.
Q. What mineral resources have been discovered and what can be done with them?
A. Some of the deposits so far discovered include bauxite, gold, gemstones, dimension stones, which is stone for carving, granite, iron ore, and likely other metals. But whether this mineral deposit [yields] enough to be economically extracted is still not certain. The basic products would go into many areas of the modern economy. For example, a lot of steel is used for making motor cars, copper is used in the electronics industry, the iron ore can be used extensively in the construction industry, to make steel, nickel is also used in steel alloy, and the granite is used in making nice flooring material. These are important for the growth of the global economy.
Q. Where are the markets for mining resources in Cambodia?
A. I should point out that, at the moment, the requirement of the mineral law in Cambodia [is that] minerals are used in Cambodia. However, the place you would sell minerals, particularly metal minerals, is not in Cambodia, because Cambodia doesn’t have a downstream industry to process or manufacture from them, and therefore Cambodia, like many developing countries, will be reliant on external markets. There may be opportunity to negotiate special prices with neighboring countries. But really I am not in position to know whether there are such negotiations in progress.
Q. How can mining resources play a role in Cambodia’s economic development?
A. If there are economic deposit discoveries, and investment comes to exploit those deposits, it is possible that Cambodia could have reasonable income from royalties derived from mining, but at this stage it is impossible to predict that. There are many countries that have mineral deposits, but are not rich enough to exploit them. Adjacent to Cambodia, you have four countries Thailand, Myanmar, Laos and Vietnam, and each of those countries has more or larger mineral deposits, which are exploited. So it is likely that Cambodia will have some deposits which are economically exploitable, but not certainly. Mining will not bring many jobs. The mining industry will gradually increase in terms of the size of deposits that are found. What will be interesting is to see if an industry downstream using minerals is to develop.
Q. Which countries receive large benefits from mining, and what do they do to manage the revenue?
A. Mining is a major contributor to Australia’s economy, the same as Brazil, where there are many and large mines. In Africa, countries like Zambia and South Africa. What they have developed is a framework for management of a mining industry, and most of them have adopted full transparency. And they also have a lot of governance within the industry to make sure the companies have to carry out specific reporting, and there is a lot of legislation to make sure mining is done ethically [and] to ensure environmental and social protections.
Q. What should Cambodia do to effectively spend the revenue and protect the environment?
A: Cambodia has moved toward developing the framework of its law, policy, strategy and regulation. There will be three or four more years before Cambodia has all these regulations in place. Good mining companies do not set up to damage the environment. But there are some mining companies that are not so good, and they try to keep their costs as low as possible, and in doing that they ignore the environmental regulations. So it is not a good idea to encourage those companies, mostly small companies, to come, but to attract good and big companies. And in order to do that, it is important to have good laws, good legislations and a good business environment.
