Mining governance climate – nov 2014

Report
Policy climate and the implementation
of the AMV and EMDP
Presentation by Yao Graham, TWN-Africa
at Workshop for Officials in ECOWAS on
AMV and EMDP
Fiesta Royale Hotel Accra
4th November 2014
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Evolution of Governance Focus since
1980s: From FDI Attraction and Managing
Resource Curse to Africa Mining Vision
a. Creating enabling environment for FDI
b. Managing the Resource Curse
c. Winner’s Curse, Popular Resistance and
Resource Nationalism
d. The Africa Mining Vision –minerals for
transformation v. managing resource
nationalism
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Notion of a resource curse
• Natural resource wealth leads to bad
development outcomes and have focused on
trying to explain why this is the case, either in
general or in respect of particular regions or
countries.
• Concept amalgam of various perspectives
• Evidence inconclusive
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Andrew Rosser 2006
• economistic perspectives that emphasise economic
mechanisms;
• behaviouralist perspectives that emphasise emotional or
irrational behavior on the part of political actors;
• rational actor perspectives that emphasise self-interested
behaviour on the part of political actors;
• state-centred perspectives that emphasise the nature of
the state;
• social capital perspectives that emphasise the degree of
social cohesion in countries;
• structuralist perspectives that emphasise the role of social
groups or socio-economic structure; and
• radical perspectives that emphasise the role of foreign
actors and structures of power at the global level.
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Resource Curse focus
• Influence from outside
• Voluntary, international, corporate, unilateral
• Revenue transparency and anti-corruption
– (EITI, PWYP, OECD guidelines)
• Impacts –Conflicts, less HR and social and
environmental
– Kimberley process, Dodd-Frank Act
– Guidelines on lending (IFC, Equator, AfDB)
– CSR (slew of voluntary frameworks and principles)
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What is the EITI?
• Product of Resource Curse paradigm product of confluence
of views of INGOs and Blair govt. in 2003
(See
https://eiti.org/eiti/history)
• The Extractive Industries Transparency Initiative (EITI) is a
global coalition of governments, companies and civil
society working together to improve openness and
accountable management of revenues from natural
resources.
• The EITI maintains the EITI Standard. Countries implement
the EITI Standard to ensure full disclosure of taxes and
other payments made by oil, gas and mining companies to
governments. These payments are disclosed in an annual
EITI Report (to see all EITI Reports, go to data.eiti.org). This
report allows citizens to see for themselves how much their
government is receiving from their country’s natural
resources.
• African countries half of EITI, 11 ECOWAS countries part of
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EITI
The Natural Resources Charter
Jim Cust, Acting Director, Natural Resource Charter - The Natural
Resource Charter in Africa: a tool for national strategy and evaluation
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NRC in Africa
• Has been endorsed by the ADB and adopted by
New Partnership for Africa’s Development
(NEPAD) as a flagship programme
• Is working to incorporate the African Mining
Vision principles in the methodology
• •Can also use the country exercises to help
countries identify support provided by AMDC
• •Can also be a complement to African Peer
Review Mechanism
• Implementation: Exercises by the end of 2013:
Sierra Leone, Tanzania
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RESOURCE NATIONALIST TRENDS
• The forms in which resource nationalism
manifests vary widely, including, among other
measures:
o outright nationalisation of mining companies,
whether compensated or uncompensated;
o increased state participation through, among
other measures, a state owned mining company;
o fiscal measures;
o mandated beneficiation (often through the
imposition of export levies);
o mandatory local inputs; and
o local equity and participation requirements.
THE GROWTH OF RESOURCE NATIONALISM IN AFRICA, PETER LEON- Head: Africa Mining and Energy Projects,
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Webber Wentzel, Johannesburg, South Africa, Toronto, Ontario, Canada, Tuesday, 5 March 2013
Peter Leon- cont’d
• Recently, the following resource nationalist trends
have emerged in African mining jurisdictions:
• 1. The imposition or increase of royalties or mining
taxes.
• 2. A mandatory requirement for state equity carry
in mining projects.
• 3. Indigenisation and local equity requirements.
• 4. The review of mining contracts, with a view to
possible renegotiation or cancellation.
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Responding to the Challenge of
Resource Nationalism
• Trade, investment and aid policies of OECD
powers
• The World Economic Forum’s Responsible
Mineral Development Initiative (2009)
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Raw Material Nationalism and int. trade
Many developed economies, notably the USA, EU and Japan, which depend on raw
material imports for the production of manufactures for export and their home
markets are increasingly arguing that export taxes and other export restrictions distort
trade and pose a threat to the competitiveness of their firms which depend on
imported raw materials by driving up the price of their inputs while lowering them to
their competitors. Moreover, the EU, which imports 70-80% of its primary resources,
has declared “an open global market completely free of all distortions on trade in
energy and raw materials” (Mandelson, 2008) as a key goal of the EU's trade policy.
Elements of the strategy for attaining this goal include:
•Negotiations in WTO regarding an EU proposal for a discipline on use of export taxes
•Awareness raising in different for a including G8, OECD, UNEP
•Getting binding commitments in Free Trade Agreements (FTAs) on market opening,
the elimination of export duties and disciplines in other areas relevant to access to
raw materials such as rules on subsidies, competition and investment.
•Further precise justifiable exception grounds for restrictions.
•The use of WTO accessions negotiations to get binding commitments on export
duties and dual pricing
•Use of Bilateral (non preferential agreements disciplines on export duties,
investment, dialogue
•Use of the WTO dispute settlement mechanism to challenge measures which the EU
believe violate WTO rules.
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The World Economic Forum’s Responsible Mineral
Development Initiative (2009)
• Initiated in 2009, “the RMDI aims at providing possible paths
forward on how to govern mineral wealth in mineral-based
emerging economies”.
• The RMDI is a true multistakeholder cooperation between the
World Economic Forum and leading global experts in the field:
coming as an initial idea out of the Global Agenda Council on the
Future of Mining & Metals; working intensively with the World Bank
Institute and the Commonwealth Scientific and Industrial Research
Organisation in scoping and conducting research; and consulting
with representatives from the Forum’s Mining & Metals Industry
Partner Group, the International Council on Mining and Metals, the
International Finance Corporation, EITI, the International Bar
Association, and the Intergovernmental Forum on Mining, Minerals,
Metals and Sustainable Development, as well as representatives
from the public sector.
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•
•
•
•
•
•
The events of the last few years have heightened the need for stakeholders involved in
mineral development to find common ground to understand each other’s needs,
perceptions and priorities.
In 2012, significant resource-related disagreements flared up in almost every significant
mining region, from Mongolia to Chile and from South Africa to Indonesia. Some,
notably in South Africa, escalated sufficiently to migrate from the financial to the news
sections of the national and global media (see Exhibit 2).
This convergence of events is no accident. It is the outcome of tensions created by
diverging stakeholder expectations and poorly managed consultations intended to
resolve them.
– Many governments are under pressure from their citizens to ensure they benefit
appropriately from the mining industry. This includes looking beyond royalty and tax
revenues. As a South African government adviser says, “I’m not sure that we want
companies that are just going to dig holes. We want companies that are going to make
those linkages and build our economy for the future, post-mining.”2
– Local communities are increasingly aware that they typically bear a disproportionate
share of mining impacts and costs. They are becoming more vocal in demanding larger
shares of benefits as compensation and a more meaningful share in decision-making.
– Companies are operating in a “new normal”, with falling commodity prices putting
pressure on operating margins and higher capital costs leading to budget overruns in
many expansion and greenfield projects. They are consequently looking to generate
more value from existing investments and being more selective about new ones.
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Two Phases of RMDI
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Six Building Blocks of Responsible Mineral
Development
• (1) Progressive capacity building and knowledge sharing among all
• stakeholders
• (2) A shared understanding of the benefits, costs, risks and responsibilities
related to mineral development
• (3) Collaborative processes for stakeholder engagement throughout
• the life cycle of mining projects
• (4) Transparent processes and arrangements
• (5) Thorough Compliance, Monitoring and Enforcement of Commitments
• (6) Early and comprehensive dispute management
The six building blocks reflect the issues surrounding many developments.
They include economic and social aspects, such as issues around taxes and
royalties, local suppliers and hiring, environmental questions such as water,
waste and land use, as well as health and safety concerns.
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Six Building Blocks of Responsible Mineral
Development
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Mineral Value Management
• Mineral Value Management (MVM) is an RMDIdeveloped tool designed to enhance mutual
understanding of the holistic drivers of value from
mining, and to provide a means to measure and
communicate the needs and expectations of various
stakeholders.
• MVM is based on seven dimensions that drive value
creation for all stakeholders:
– Fiscal (tax, royalties, etc) and legal/regulatory environment
– Employment and skills
– Environment and biodiversity implications
– Social cohesion, cultural and socio-economic implications
– Procurement and local supply chain
– Beneficiation and downstream industry
– Infrastructure
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Africa and RMDI
• 13 project countries: including Africa: Ghana,
Liberia, South Africa and Tanzania; in East
Asia: Australia, Indonesia, Laos, Mongolia and
Papua New Guinea; and in Latin America:
Brazil, Chile, Colombia and Peru. Site of
founding initial research
• January 2014 Presidents of three ECOWAS
countries spoke at (Ghana, Guinea and
Liberia) spoke at WEF RMDI event
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\What Comes Next?
The Forum plans to pilot MVM at a country,
regional and local-community levels in 2013,
as part of multistakeholder dialogues aimed
at identifying, debating and taking action on
issues related to advancing responsible
mineral development. Dialogues are already
being established in Chile, Peru and Guinea.
Other countries of focus include Mongolia
and Mozambique.
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