Cambodian Mineral Resources

While Cambodia’s mineral resources remain largely unexplored, several important minerals have been discovered, which include bauxite, copper, zinc, gold, iron ore, nickel, granite, gemstones and tungsten. Minerals currently extracted include gemstones and gold - mostly mined by small-scale operators - marble, granite, sand, limestone and salt.

International mining firms see Cambodia as a new frontier that has yet to be explored. Unlike many other parts of the world, there has been little geological exploration of Cambodia since France ended its almost century-long colonisation in 1953. For this reason, and the fact that Cambodia is the only country in South East Asia that allows 100 per cent foreign ownership, overseas mining companies have been keen to invest.

The Ministry of Industry, Mines and Energy implements the country’s mineral law and policy. Under the wing of the ministry, the Department of Geology and Mines, and Department of Energy, coordinate the development of the mineral sector. The Cambodian Development Council (CDC) is the government agency that grants exploration licences to investors. If exploration is successful, investors are required to present a master project plan to the CDC before they can be granted a licence.

Mineral production in Cambodia has increased over recent years, so too has the number of mineral exploration licences granted to both foreign and local companies. However, as commodity prices plummet amidst the global financial crisis the sector could suffer as small and medium-sized investors struggle for cash.

BHP Billiton - the world’s largest mining company ? is exploring for bauxite in Mondulkiri province on a 97,373-hectare concession. In 2006, BHP Billiton and Mitsubishi Corporation signed a mineral exploration agreement with the Royal Government. The agreement allows for bauxite exploration and evaluation of the potential for an alumina refinery. BHP says its exploration projects in Cambodia will continue in 2009 and that they are speculative with uncertain outcomes. The government meanwhile is optimistic these projects could lead to an eventual investment of billions of US dollars.

Australian company Southern Gold signed a Memorandum of Understanding (MOU) in 2006 for a prospective land position in the eastern provinces of Cambodia. During 2007/2008 Southern Gold increased its security of tenure with four MOU tenements being converted to Exploration Licences, bringing the total of granted licences to seven, covering an area of 1,600 sq km. The company has begun a three-year gold and base metals drilling programme in cooperation with the state-owned Japan Oil, Gas and Metals National Corp (JOGMEC), a Japanese body tasked with securing stable supplies of natural resources. The $4.5 million project is at two locations, Kratie and Snuol ? north-east of Phnom Penh.

OZ Minerals of Australia (formerly Oxiana), in a joint-venture with a local company, is undertaking gold exploration at the Okvau-Oput area in north-east Cambodia and claims to have identified a promising trend of gold mineralisation. The company is also exploring other gold areas, including Phnom Chi, 100km west of Okvau, along with an area prospective for copper.

Kenertec Resources ? a Korean company ? obtained the rights in 2007 to explore and develop eight mining zones covering an area of 1,520 sq km in northern Cambodia, consisting of two copper/zinc mines, three iron/manganese mines, and three jewel mines. The company says it has detected a significant amount of minerals through on-site surveys including high quality copper, zinc, iron and manganese. Kenertec estimates the zones hold about 100 million tons of copper and zinc and about 1 billion tons of iron and manganese. They plan to continue exploration for another 2 to 6 years.

Four Chinese steelmakers have established a joint venture to explore and develop iron ore mines in Cambodia. Wuhan Steel, China’s fifth biggest steel mill, is leading the project with a 50 per cent stake, with Shanghai-based Baosteel Group taking 20 per cent, Anshan Iron & Steel Group and Beijing’s Shougang Iron & Steel Group each hold 15 per cent in the venture. The project is to explore and develop mines in Cambodia’s Preah Vihear province following exploration of the area by Cambodian companies and China’s National Machinery and Equipment Group that found the region may have 2.5 billion tons of iron ore reserves.

Local companies LYP Group, Udomseima, Dany Trading and Regapo have been granted concessions to mine sand in Koh Kong province, southern Cambodia. The sand is being exported to Singapore. Dredging is carried out by the Hong Kong-based Winton Enterprises in the Koh Kong estuaries where the sand is loaded onto barges before being transferred to larger ships for transport to Singapore. The government has imposed a strict limit on the size of the extraction zone and the amount of sand that can be extracted. It is estimated that between 40,000 and 60,000 tons of sand per month is being removed.

Singapore imports around 3.8 million tons of sand each year for land reclamation and construction projects. Following an Indonesian government ban on sand exports in January 2007, as a result of serious environmental degradation, Singapore has sought new supply sources. While sand-mining operations in Koh Kong province’s extensive salt water estuaries remain small-scale they are expected to have little impact on the local environment.

Cambodia devotes a surprisingly large share of its territory to conservation. According to a 1992 review by the UN’s World Conservation Monitoring Centre, Cambodia’s set-aside level of 26.3 per cent was far higher than the land reserved for conservation in Thailand (16.3 per cent), the US (11 per cent), Indonesia (10 per cent) or Australia (5.3 per cent).

The country’s environmentally protected areas, such as Koh Kong’s Peam Krasop Wildlife Sanctuary (a 25,897-hectare protection zone established in 1993) cover more than a quarter of its landmass. These areas also contain minerals, creating the potential for environmental damage. But minerals that can help lift Cambodia out of poverty should not be beyond reach simply because they lie buried within a protected area. Cambodia’s 47,845 sq km of land devoted to protecting the environment is hardly sacred. In the rest of the world, many protected areas are routinely open to mining. For example, authorities permit mining in about 78 per cent of South Australia’s 332 protected areas, according to the state’s regional government.

In Cambodia, however, it all boils down to control. In considering exploitation, the Royal Government obtains binding guarantees that companies will respect the environment and not harm indigenous rights. Ensuring that companies respect these agreements is of paramount importance.

The Royal Government is committed to the protection and preservation of Cambodia’s environment and its natural resources, while meeting the needs of sustainable development. It is also committed to alleviating poverty, and ensuring that the benefits mineral resources eventually bring to the country are distributed throughout all levels of society.