While a handful of foreign-owned mining firms continue to spend millions scouring the provinces for valuable mineral deposits, not one has commenced mining. Geopacific Resources, an Australian firm with copper and gold exploration projects in Cambodia and Fiji, under a joint venture agreement with Royal Group, has for the past 18 months been exploring land within Preah Vihear province. This week, managing director of Geopacific, Ron Heeks, spoke with the Post’s Eddie Morton about Cambodia’s evolving mining sector and the gamble that is mineral resource exploration.
What lured Geopacific to Cambodia in the first place?
Cambodia was targeted because it has prospective geology, the rocks are the right type and right age, and there are good signs of gold and copper identified in the region.
Cambodia is a growing economy and has an evolving mineral industry that has had little systematic exploration.
How is exploration going so far?
We are still in the early stages of exploration, having commenced exploration 18 months ago. Our initial results have been promising, but there is a long way to go. Exploration is time-consuming and requires a large amount of information in order to understand the region properly. We’re focused on the Preah Vihear region, and our field camp is at Chaeb district. Our licence covers 158 square kilometres.
If everything went as fast as possible, we could see extraction two years down the track. You couldn’t do it any quicker than that. So far, we have invested about $3.5 million into exploring Cambodia.
Was it a challenge entering the mining sector here?
Most developing countries suffer from a lack of industry-specific knowledge of mining, including the risks, costs and time involved to discover and bring an operation into production. Having no success stories coming out of Cambodia is a challenge because people simply don’t know of the place. If we were talking about a place like Ghana, people are aware of lots of success stories.
Because of this, security of tenure is one of the most critical aspects of working in any region. It is really a gamble. You can go to an area and spend millions of dollars searching and then walk away with nothing.
Consequently, exploration projects are hard to get funding for. And to be frank, the past couple of years have been the hardest I have experienced in terms of raising funds.
Cambodia, however, is an excellent place to work, and it has no specific challenges except that they do not have a mining history from which to base some decisions upon.
What advice do you hope the Ministry of Mines and Energy took from its recent trip to Western Australia?
Cambodia can learn a considerable amount from developed mining countries such as Australia. Managed well, the industry can bring numerous benefits, especially in remote areas. Security of tenure is the most critical aspect. It is impossible to attract investment if there is even a hint that the asset may be lost. This is why you are seeing a move away from some even very mineral-rich countries.
Clear concise laws that do not change are critical and Cambodia is well advanced along this path. Keeping everything transparent from both the mining company and government sides is very important also, so investors know exactly what they are dealing with.
The government said it is considering introducing more lenient tax laws for mining firms, off the back of Australia’s now-scrapped mining-tax scheme. Do you think this is a good move?
The increasing of mining tax dramatically curbed mineral investment in Australia and was removed by the next government. Countries new to exploration need to encourage companies to come, and tax benefits early on can achieve this, combined with clarity of regulation. That Cambodia is looking at these issues is an excellent sign and should help attract more companies into the country.
With reform, do you think Cambodia’s mining sector will prosper in the coming years?
Yes, definitely, if they are internally competitive and transparent. The country is underexplored, and most exploration operations are at very early stages. Few companies are working in this space at present, as the industry is suffering from long-term effect of the global financial crisis of a few years ago. I would not expect a rush, but a slow, steady increase in companies looking. A success story will assist greatly to help new players to look at Cambodia for investment.
And while most neighbouring countries are ahead in terms of regulation and in regards to the amount of on-ground work, any success arising out of all Asean countries would assist in bringing more companies into the region.
This interview has been edited for length and clarity
