China Polymetallic Mining, the biggest lead and zinc resource holder in Yunnan province, is exploring opportunities to acquire resources in neighbouring Myanmar. Earlier this year, the miner sent a geologist and other staff to scout out investment prospects recommended by Myanmar government officials eager to see foreign investment in the country's largely untapped mineral wealth. "Relative to the mainland, the chances of success in acquiring Southeast Asian mining assets are much higher and the operating costs are lower," chief financial officer Li Tao told the South China Morning Post late last month. But competition for mining assets on the mainland was keen, he added, which meant prices were often bid up despite the fact that many of them were higher-risk early exploration projects. Foreign firms were expected to be allowed to wholly own projects in Myanmar, and they would enjoy five-year corporate tax holidays, Li said. The terms are part of Myanmar's new mining law that is expected to be passed this year to boost investment in the rapidly liberalising country, which ended decades of military rule in 2011 and saw the lifting of most international sanctions subsequently. Li said careful due diligence was important as there were legal, political and security risks to consider. China Polymetallic might avoid the less stable northern region and focus on the east, he added. A violent crackdown on protestors at the Monywa copper mine in central Myanmar late last year is an example of such risks. The protestors complained about insufficient compensation for alleged land grabs and raised concerns about possible environmental damage. Auditing of resources potential by third-party professionals was also needed, Li said. He estimated the acquisition process to take at least a year before a deal could be sealed. Under an internal guideline, any asset acquired by China Polymetallic should have an estimated internal rate of return of at least 25 per cent. The firm bought three mines in Yunnan last year and has been designated by the provincial government as a consolidator of its mining sector. It posted a net profit of 177 million yuan (HK$219.1 million) for last year, compared with a loss of 244.3 million yuan in 2011, as it ramped up output at its mainstay Shizishan mine that began production in mid-2011. The mine's lead output is targeted to rise to 38,500 tonnes next year from 20,300 tonnes last year, while zinc output will increase to 28,700 tonnes from 16,500 tonnes. About 75 per cent of lead consumed on the mainland is used in battery manufacturing, while zinc is mostly used to coat steel to prevent corrosion. The company budgeted 229 million yuan this year to expand or develop its six mines, four of which are expected to come on stream by June 2015.