Federation Urges ASEAN Members To Allocate Meaningful Budget For Minerals Industry

KUALA LUMPUR, Nov 10 (Bernama) -- The Association of South-East Asian Nations (Asean) members should allocate meaningful budget for their minerals industries annually and in their long-term development plans to ensure their sustainability in the future. Asean Federation of Mining Association's President, Dr Mohd Ajib Anuar, said the region's mineral resources industry currently faced a prolonged commodity down-cycle, with revenue of both private sector and goverments falling. "This has affected employment, gross domestic production (GDP) growth and national income, he said. "The short- and long-term measures for sustainable recovery require fundamental and structural changes, change of mind-sets and strong commitment to implement new dynamic business models," he said. Mohd Ajib said this in his keynote speech at the fourth Private Sector Forum on Cooperation in Minerals in Asean here Thursday. He said the budget would encourage potential investors to apply for exploration leases and raise risk capital for further exploration, leading to discovery and mine development. To-date, Asean produced over US$60 billion (US$1=RM4.25) worth of diverse types of strategic minerals and metals annually contributing more than 2.5 per cent of total Asean GDP, with total intra- and extra-Asean trade in major minerals and metal exceeded US$50 billion. Mohd Ajib said the industry faced a few challenges. The first, he said, was the sustainability of the production of strategic minerals and metals as current weak metal prices and extreme volatility in the market had caused considerable dislocations and disruptions. "The concern is that the pendulum towards cutting back in capital expenditure may swing too far, causing a period of under-investment in exploration and new supply," he said. In order to have comprehensive inventories and potential resources, Mohd Ajib said, the government needed to assist the industry undertake geological mapping, surveying and zoning of potential mineralised areas and make it available to investors on minerals resource mapping, land availability and its resource potential. The second challenge, he said, involved capital raising and funding for exploration and development of new mining projects as investors to-date were looking to low-risk, near-term and high-yield opportunities, which the early junior mining companies could not offer. "To address these critical issues, the governments can help by providing fiscal stimulus and incentives to encourages investment into such activities," he said. He said the third key challenge was on policies and regulatory changes in areas of what the industry called resource nationalism. "Mining companies, therefore, need to develop strategies to deal with these rapid mineral resources policy changes by developing more flexible business models, building strong relationship with governments and communicating effectively," he said. -- BERNAMA