Reference

March 25, 2013

Recognizing that resource projects can have both negative and positive economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. The International Council on Mining and Metals toolkit provides a practical means by which costs and benefits can be measured, as well as a number of best practice guidelines for the industry.The toolkit consists of a methodology for the evaluation of positive and negative economic and social effects of mining in developing countries, addressing the local, national and regional levels. Users of the toolkit are able to develop and enhance the understanding of issues, policies and practices, which either help or hinder countries in which mining takes place. The toolkit is composed of eight stand-alone modules and an addendum on taxation: 

  • Module 1: “Mining and the host country” (p. 19). This involves preparing an overview of the country and its mining activities and an outline of factors which are influenced by mining.
  • Module 2: “The participating mining operation and its economic and social initiatives and partners” (p. 27). This involves developing a profile of mining operations along with the communities in which they are active.
  • Module 3: “Measuring the mining industry’s contribution to the host country” (p. 47). This involves understanding the change in broad based economic growth and social development of the country during mining.
  • Module 4: “The proximate aspects of governance that help or hinder mining’s economic and social performance” (p. 57). This involves identifying those elements of a country’s governance and macroeconomic management which could affect the benefits of mining.
  • Module 5: “Measuring the participating mine’s positive and negative contribution to local communities” (p. 75). This involves detailed consideration of the social and economic impacts.
  • Module 6: “Analyzing the life cycle impact of the participating mine on the host country’s macroeconomic aggregates” (p. 111). This involves measuring the contribution of the mine to, for instance, GDP, government revenue and balance of payments.
  • Module 7: “Impact of mining on governance” (p. 125). This involves examining direct and indirect effect of mining on governance structures, institutions and policy choices.
  • Module 8: “Communicating your findings” (p. 143). This involves preparing the case study and encouraging dissemination and debate.

Access the toolkit here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. The report provides insights on the decision to extract and some of the challenges and successes of mining companies in providing benefits to local communities.

The International Council on Mining and Metals report assesses the positive and negative socio-economic impacts of mining projects in Ghana. Evidence is drawn from a mine operated by AngloGold Ashanti. At a national level mining in Ghana has provided a strong positive influence upon the recovery of macroeconomic growth post 1986. Additionally, those living close to mining operations have benefited from poverty reduction and improvement of social welfare indicators. However, local communities feel not enough is being done. This is partly attributable to unmanaged expectations, such as that AngloGold Ashanti would take over local government functions in the absence of public service delivery.

 The report suggests that only a minimal critical level of governance is required in specific areas to enable economic recovery in sectors such as mining to occur. In the case of Ghana, mining companies developed their own ad hoc responses to the absence of governance institutions. In concluding, the authors retrospectively consider whether mining ought to have continued with an absence of governance, finding that the effectiveness of social action was reduced but benefits did ultimately reach local communities, thereby suggesting that the right decision was made in continuing with mining. 

 Access the report here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. The case study by the International Council on Mining and Metals provides an in depth analysis on how Chile was able to deal with the challenges of mineral export dependence.

The report examines how Chile achieved successful economic growth in Region II, where per capita is twice that of other regions. The report finds that this is largely attributable to the linkages between mining industry and other sectors of the economy. These linkages went beyond finding local suppliers. A mining cluster was established in the region by government and mining companies, which expanded its focus to supporting efforts of companies to get ISO 9000 and 14000 certification, thereby also raising competitiveness in international markets.

Two further sources of potential success in Chile are that, firstly, the country has established a routine in policy consultations whereby the public and private sector collaborate with each other, and secondly, the largest reduction in poverty has come from additional employment opportunities in non-traditional sectors. 

Access the report here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. The report provides examples on trade offs between local and national beneficiaries, capacity constraints and the decision on whether to extract or not.

The report provides an in depth case study on the impact of mining on economic growth and poverty reduction in Peru. The country has since the 1990s had a strong economic growth rate, partly attributable to mining. However, at a more localized level, poverty and inequality have remained stagnant. Furthermore, mining companies have also found themselves in social conflicts with local populations. The report considers what prevented macroeconomic policies from achieving greater social development and poverty reduction. The answers include:

    - External constraints faced by mining companies in employing local labor and enhancing local input. Partly a result of a lack of opportunities and government support for small local enterprises.

    - The institutional and governance structures which have failed to incorporate local communities in participating in the political process.

    - The government has often failed to meet people’s expectations with regards to the provision of public services. This has meant mining companies have had to negotiate directly with communities on additional contributions, leading to unsustainable short run agreements.

    - A lack of adequate property rights. Mining companies in negotiating with government assume property rights represent the interests of the people and ensure stability when this is not the case, again resulting in grievances.

Given the large degree of challenges and negative consequences identified, the report poses the question of whether mining investments ought to even go ahead. The authors find that due to the significant macroeconomic success, continued mining is justified. However, challenges at a local level must urgently be addressed if macroeconomic success is to be sustained.

Access the report here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. One particularly salient issue guiding any framework is the protection of vulnerable groups, particularly women.

The report explores the different impact of the extractive industries (EI) upon men and women. In doing so focus is placed upon the implications of such differentiation for the sustainable development of their communities and the profitability of extractive industry projects. Gender is considered in terms of four different dimensions:

     - Employment and income: There are significant gender imbalances in access to jobs and the type of job.

     - Environment: Impacts upon the environment from EI operations can also affect agriculture and tasks such as water, fire and food collection, which are often the domain of women.

     - Community consultations: Women tend to be excluded from the decision making process regarding EI operations and resources.

     - Artisanal and Small-scale Mining:  Women tend to have unique roles in artisanal and small scale mining which create specific health and safety risks.

 The report also provides a number of suggestions for all stakeholders involved on how to address and mitigate gender based negative impacts of EI. These include, but are not limited to:

     - Supporting women’s employment in EI operations and support industries.

     - EI companies and governments can offer capacity building for women to take advantage of EI related business and employment opportunities.

     - EI companies and governments can facilitate gender-sensitive social baseline assessments and social mapping. 

Access the report here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction. The report addresses the most critical sustainability issues in an encounter between indigenous peoples and mining companies, thereby providing useful insights for Precept 5.The report by Downing et al notes that much of the unexploited ores of commercial quantity lie under indigenous lands and as the pressure to access those resources builds up, so a major sustainability and land access problem unfolds. The report addresses the issue of sustainability in an encounter between indigenous people and other stakeholders. Four dimensions are found to assist in understanding these negotiations:

  1. The perceptions and objectives in the encounter.
  2. The stakeholder’s capacity to resist or sustain the negotiations.
  3. The tactics and strategies used in dealing with each other.
  4. The socio-economic and environmental risks and benefits.

 The report reviews the history of encounters and builds a typology of possible strategies and tactics. It is found that such encounters typically result in the loss of sovereignty for landowners and the creation of new forms of poverty. The most serious sustainability risks are indigenous people’s right to their culture and heritage. This source of ‘wealth’ and well being includes access to common resources, food security, spiritual certainty, mutual support in times of need and income generation from traditional sources. A sustainable approach therefore requires for indigenous people to improve their livelihoods but also enhance their collective wealth. The report provides an empowerment model with 15 sustainability elements that ought to form part of an encounter. This covers issues such as:

  • Rights and access to indigenous land and respect of sovereignty.
  • Benefit sharing arrangements.
  • Protection of basic human and civil rights. 

Access the report here.

March 25, 2013

Recognizing that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction.

The paper by Downing addresses one such negative effect – displacement and resettlement. The challenges of mining-induced displacement and resettlement (MIDR) are subject to the resettlement effect: the loss of physical and non-physical assets such as productive land, income earning assets and their sources, social structures and resources. Such risks, unaddressed, can generate ‘new poverty’, opposed to the poverty under which people suffered before displacement. One major problem has been that compensation, instead of rehabilitation or sustainable development, has become the goal. Rather, compensation ought to be perceived as a means for ensuring sustainable outcomes.

 A number of recommendations are made regarding how to counter the resettlement effect:

  1. A resettlement plan ought to be created, providing a time bound strategy, objectives, responsibility, and monitoring and evaluation.
  2. As part of such a plan the affected people ought to be included in prior consultation, building their capacity to deal with resettlement.
  3. An impoverishment risk assessment ought to be carried out, examining risks in the known risk categories with special consideration for vulnerable groups.
  4. The risk assessment allows for entitlements to be defined.

In addressing some of these problems the author recommends an interim ‘on the ground’ solution through establishing a MIDR Contingency Clause in which an agreement is made that MIDR “risks are assessed, goals set, costs estimated, organizational arrangements proposed, and financing secured before a mining project goes forward” (p. 20).

Access the article here

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. Transparency in such a process is a crucial first step. The Extractive Industry Transparency Initiative (EITI) is a mechanism through which such transparency can be fostered in natural resource revenues. Thus, it supports the principles of Precept two and is a key instrument for implementation.

The report by the World Bank provides a review of the early successes and challenges of EITI-implementation. The EITI is a global standard with the objective of promoting transparency in natural resource revenue flows, particularly between government and extractive companies. Once such company audits are made publicly available, stakeholders can hold the government to account. Such third party oversight is an important element for Precept two. In the report’s review of EITI implementing countries a number of overarching lessons and themes emerge. These include:

      - The countries that had the greatest success in EITI implementation were also those countries that had consistent and dedicated high level political leadership.

       - Civil society ought to participate and engage, not merely act as observers.

       - Sharing knowledge among other EITI implementing countries, especially regionally, can prove very fruitful.

       - Whilst EITI is a voluntary initiative, legislative backing can help to create greater certainty for all stakeholders.

 Access the report here.

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. In turn, an informed public requires greater transparency in the governance of natural resources. In the implementation of the Precept principles, third party oversight is found to be a useful instrument to achieving transparency. The Publish What You Pay (PWYP) coalition seeks to provide precisely that: third party oversight of resource revenue streams. The report by van Oranje and Parham provides an insight to some of the successes and challenges faced by PWYP in its initiatives since launching.

The report reflects upon the growth of the PWYP coalition since its beginning. In doing so it addresses the origins and structure, analyzes how PWYP operated internationally and examines the effectiveness of its advocacy and policy endeavors. Thus, the report acts as a practical tool for elucidating some of the lessons on how PWYP was able to achieve its success and overcome challenges. Factors contributing to its success include:

      - The simplicity of the underlying message: “citizens of countries that are rich in natural resources should not be poor” (p. 16). Clarity of objectives has allowed PWYP to get the issue on political and business agendas.

      - The organizational structure enables PWYP to deliver concrete results yet generation broad ownership.

      - Formal procedures managing strategic planning and advocacy have only been introduced when required thus it has been able to operate with minimal bureaucracy.

Two main challenges that remain however are overcoming entrenched interests in the continued lack of transparency from governments and companies and the need to continue transferring ownership to local groups whilst collaborating at an international level. 

Access the report here.

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. In turn, an informed public requires greater transparency in the natural resource sector. The paper by Truman reviews the international initiatives aimed at ensuring transparency in savings, stabilization and investment funds.

Truman considers the policy challenges that are faced by Sovereign Wealth Funds (SWF) and the critique to which they were and still are subject. In dealing with these challenges, improving transparency and accountability is perceived to be of paramount importance. Hence the Santiago Principles were developed, allowing an assessment of SWF according to a set of standards. Truman compares the rating of 44 SWF according to the Santiago Principles to his own SWF Scoreboard. The paper finds that the Santiago Principles are a good first step for improved transparency and accountability, although not as comprehensive as the SWF Scorecard. Asian SWFs are also considered separately due to their number and size. It is found that these create more anxiety in host countries and as a result are to be held to a higher standard of accountability and transparency; in turn this suggests Asian SWFs ought to promote increased compliance with SWF standards.

 

Access this article here.

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