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Singapore: Australian company Mallee Resources has been lambasted over the sale of its multibillion-dollar mine in military-ruled, conflict-torn Myanmar to a group with alleged connections to the junta.

Formerly known as Myanmar Metals, the Perth-based entity had a 51 per cent stake in the Bawdwin mine in north-east Shan state, one of the world’s top silver, lead and zinc deposits.

The extraction of silver at the Bawdwin mine in Myanmar first took place in the 15th century.

In the wake of the brutal takeover in 2021 by the Tatmadaw, as the military is known, the company decided to exit the troubled country and change its name, offloading its majority share in the mine for $US30 million ($45 million).

The sale, however, drew complaints from civil society organisations over fears that proceeds from the mine – which is forecast to produce $US2.9 billion in 13 years once operational – could end up with the armed forces, which have waged a savage crackdown against resistance, and result in a spike in violence around the site.

The Australian National Contact Point for Responsible Business Conduct (AusNCP) has now found that Mallee failed to consider the human rights impact of its ownership of the mine and the divestment of its stake to Win Myint Mo Industries, which has links to crony businessmen previously sanctioned by the US for alleged drug trafficking and for funnelling cash to the military.

The Australian government agency, which determines companies’ compliance with OECD guidelines, said the ASX-listed miner also neglected to make proper disclosures about the activities and corporate structure of the Myanmar operation and its ties.

The mine is in north-east Shan state near Myanmar’s border with China.

The report, filed by Victorian barrister and independent examiner Shanta Martin, also took aim at Australian government departments including Austrade, saying their material promoting investment in the country before the 2021 coup had “made insufficient reference to the importance of undertaking human rights due diligence prior to and during business activities in Myanmar”.

Due to a history of abuses and fighting in Shan state over natural resources, Mallee should have conducted enhanced due diligence to assess “the gravity of human rights abuses that could be caused, contributed to or directly linked to the [Bawdwin] mine”, the report found.

The company’s actions were not compliant with OECD guidelines, it said.

Mallee managing director John Lamb did not reply to a request for comment on Tuesday but according to the AusNCP the company argued it had not withdrawn from the mine irresponsibly. Mallee said it was “confident that no one in the Bawdwin or local community was made ‘worse-off’ from [its] activities in Myanmar during 2017 to 2021, or has been made ‘worse-off’ from its withdrawal from Myanmar”.

The business conduct referee said there was insufficient evidence to determine whether the Mallee sale had broad adverse human rights consequences, or whether it could result in an increase in conflict near the mine or boost financing to the junta.

Transparency International Australia chief executive Clancy Moore called on the Australian government to widen sanctions against the military regime and its conglomerates.

“The final statement [about Mallee] shows the company failed in its human rights obligations in divesting from Myanmar and puts the remaining Australian-linked mining companies, investors and shareholders in Myanmar on notice,” he said.

Moore lodged the complaint against the miner as the then-Australian head of NGO coalition Publish What You Pay and on behalf of 245 Myanmar-based groups and the Bawdwin Labour Union, which represents workers around the mine.

“Any Australian doing business in Myanmar risks enabling the corrupt and murderous junta,” he said.

The Bawdwin mine has a rich history. Extraction of silver first took place there in the 15th century and it was famously once presided over by Herbert Hoover before he became US president.

Mallee, whose shareholders include Rich Lister Mark Creasy, has turned its attention to a nickel mine in Tasmania since withdrawing from Myanmar.

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