sharing in governance of extractive industries

Hi all,

i am wondering what other ground governments use to classify their mineral development agreements other than the financial magnitude of the specific project. what other consideration may influence a government to contract in a mineral development agreements?

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I believe other factors like mineral classification, concession size and state equity might be used. 

I would classify in accordance to the following: 1.0 Project Ownership: 1.1 Local; 1.2 Foreign; and 1.3 local &Foreign JV 

2.0 Size: 2.1 Medium; 2.2 Large; and 2.3 Super

3.0 Mineral type: 3.1 Industrial; 3.2 Precious Metal; 3.3 Non-precious metals; 3.4 Energy -Coal; 3.5 Energy- Uranium; 3.6 gemstones other than diamond; and 3.7 diamonds

4.0 Purpose of Project: 4.1 Exporting raw mineral; 4.2 exporting semi processed; 4.3 Exporting fully processed; 4.4 Supplying local industry-semi processed; and 4.5 Supplying fully processed to local industry and/or end consumers

5.0 Importance of mineral mined to the country: 5.1 Strategic; and 5.2 Non – strategic

6.0 Contribution to the local economy: 6.1 Small; 6.2 Big; and 6.3 Very big

7. 0 Contribution of development in local industry: 7.1 None; 7.2. Small; 7.3 Big; and 7.4 Very Big

8.0 Contribution of employment to local citizens: 8.1 Small; 8.2 Big; and 8.3 Very Big

9.0 Environmental Risk: 9.1 Very small; 9.2 Small; 9.3 Big; and 9.4 Very Big

10. Contribution of skills to the local population: 10.1 Small; 10.2 Big; and 10.3 Very Big

The Government will consider fulfillment of the conditions set in the mining law of the country in respect of applications for mining licences; if Bankable feasibility indicates the project would generate more benefits than adverse impacts or the vice versa to the country; and if markets are favourable enough for the mineral (s) involved to be mined.

I think that Dr. Massawe has correctly elucidated the general grounds that governments use to allow development of mineral wealth. That said, it must be noted that the overarching motivation is revenues for the government.

Forgotten the following 2 very important categories:

11.0 Procurement of supplies and services from local sources:

11. 1 negligible; 11.2 small; 11.3 average; and 11.4 mostly.

12.0 Involvement of local suppliers and service providers in procurement:

12.1 neglible; 12.2 small; 12.3 average; and 12.4 mostly.

Dr Massawe,

Thank you very much. I wonder however, if all those are not in one way or another linked to the financial aspects of the mineral project.

You are very right, all of them are variables of the financial aspect, and that is what they should be. Some of them have a positive effect and others a negative one. Some of them have a very strong effect, others a weak one. Experts could assign all variables Xi (i=1, 12) comparative weights of significance on the financial aspect of the project, and the alternatives of each variable Xij (j=1, n) comparative weights of significance on the financial aspect of the variable to enable statistical analysis to establish the comparative weights of the significance of all alternatives of all variables Xi (i=1, 12) on the financial aspect of the project.  Obtained matrix of weights constitutes foundation for decision makers.



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