Transparency in Mining and its Role in Economic Development

1
Transparency in Mining and its Role in Economic
Development

• Paul Mitchell
• President
• ICMM

2
Presentation Covers

• Economic performance of mining countries
• Key success factors and the role of transparency
• Prospects for reform
• Transparency and reform generally
• Conclusions

3
Economic performance of mining countries

• 33 mining dependent economies globally
• Performance assessed using 6 socio-economic
  factors
• Performance is very mixed
• - 45 relatively good
• - remainder relatively poor
• Table summarises performance
• Broadly, about equal chances of good and poor
  outcomes

4
Socio - economic performance
5
Key access factors

• Most important host countrys commitment to
  economic, legal and institutional reform
• Over time such reform should produce policies to
• - encourage resource investment
• - encourage social cohesion and investment
  security
• - foster effective use of resource revenues

6
Transparency and improved economic performance

• Improved performance follows a similar pattern
  macroeconomic and legal reform
• Governance generally improves with mining related
  economic growth (using world bank indicators)
• No bank indicator for transparency but control
  of corruption is a guide
• Performance against this indicator reasonably
  weak in 3 of 4 case study countries (Ghana,
  Tanzania and Peru)
• Suggests high transparency not a pre-requisite
  for initiation of socially beneficial mining
  investment

7
Governance improves with economic growth
8
Transparency and positive outcomes generally

• Beyond the investment initiation phase,
  transparency important
• For society
• - greater competition between mining companies
  for development rights
• - enhanced efficiency in negotiations between
  mining companies and governments
• - more positive public attitudes about their
  governments
• For business and society
• - enhanced credibility about governments
  contract decisions and greater security of deals
• - improved political stability, giving better
  government access to capital markets and greater
  incentives for responsible government expenditure
• - improved accountability in general.

9
Prospects for mining sector reform

• The mining world has changed dramatically
• Developing countries are much more important both
  as sources of minerals and producers of metals
  (both above 50 of global production)
• Sources of investment have diversified
  substantially major mining companies are now
  domiciled in China, India, Russia, Chilli,
  Kazakhstan and Peru
• Demand has grown rapidly in context of
  constrained supply, thus there is a scramble for
  resources
• - governments have much greater choice about
  their investment partners
• A challenging environment for reform
• Most effective under economic need, not buoyancy

10
The way ahead

• The key initial requirements economic and legal
  reform
• Transparency is an important part of broader
  reform but greater transparency alone is
  insufficient
• The key leverage point is host national
  governments
• - they decide who gets resources and the
  associated conditions
• Two other groups also important
• - international agencies to develop capacity
• - civil society to ensure accountability
• Companies role
• - make the case by demonstrating positive
  outcome
  
  
  on the ground

11
www.icmm.com
ICMM 6th Floor North 35 Portman Square London W1H
6LR United Kingdom Telephone [phone]
5070 Fax [phone] Email
info_at_icmm.com