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sharing in governance of extractive industries

Regional stakeholder dialogue By Masuma Farooki (SNL Financial/S&P Global)

The global mining sector has a well-defined, universally agreed, set of primary challenges for its improvement. However, the degree, and priority, of these issues differs amongst regional stakeholders.[1] Commonly agreed challenges, on a global basis, include improving governance and transparency; instilling widespread sustainable mining practices; capacity building and education within agencies administrating the mineral sector; development of geological knowledge and skill, sharing mineral benefits with the larger population; and developing linkages with the local economy and the mining sector.

The global mining sector has an extremely diverse mix of stakeholders. At one end of the spectrum are national governments that set out national mineral regulations as well as providing overseas development assistance (ODA) to other countries for their natural resource sector. Collectively representing national governments are regional economic communities (such as the European Union, MERCOSUR[2], COMESA[3], ASEAN[4]) and super-national organisations (such as the World Trade Organisation and the United Nations).

At the other end of the spectrum are (usually) firms such as exploration and mining companies that can be state-owned, privately held or publicly listed, each with their own investors and staff. These stakeholders can be collectively represented by industry associations (eg Chambers of Mines and ICMM), formalising best practice principles and standards (such as the IFC standards and Equator Principles of investment).

Between the two ends are other stakeholders which includes civil society organisations, multilateral institutions, and a host independent consultants.

The legal (and sometimes ethical) jurisdiction of each stakeholder differs, as does their ability to influence the measures impacting the global mining sector. For the sake of simplicity, we consider the measures to address challenges in the mining sector under four categories;

  • Those addressed by means that are legally binding (such as national laws and regulations, trade and investment directives etc).
  • Those addressed by industry best practice standards and principles. These are not legally binding but there is a strong industry imperative (including peer pressure) to observe them. Examples would include the OECD guidelines on conflict minerals.
  • Those falling under monitoring and compliance reporting. While the findings from such reports may have no legal jurisdiction, they have a significant impact on the stakeholders' reputation with legal and financial repercussions. The Natural Resource Governance Institute's Resource Governance Index is an example of such monitoring measures.
  • Those addressed by diplomatic relations, such as receiving ODA or World Bank financed project assistance. While these measures are not legally binding, exclusion from assistance can be a ramification of non-compliance.

We can also distinguish between stakeholders who have the remit to address the measures described above.

National governments: Refers to governments both in developing and industrial countries that can enact legally binding regulations, where non-compliance can result in legal action.

Super-national organisations: Refers to organisations that have been granted/ceded certain legal rights, by member national governments, to act on their behalf. For particular policy matters (such as trade and investment treaties, diplomatic engagement etc) they have the same powers as national governments. This would include the EU, MERCOSUR, COMESA and the African Union.

Multilateral institutions: Refers to international institutions that act on an agreed mandate (supported by national governments) but operate under an independent board. While these institutions have limited ability to enact legally binding regulations, they can use 'exclusion from future programmes/assistance', as a means for achieving compliance. Such institutions would include the World Bank and other regional development banks, WTO and the IMF. Also included are institutions that issue standards, such as the International Organisation for Standardisation (ISO), the International Labour Organisation (ILO) and the Extractive Industries Transparency Initiative (EITI).

Civil society: Refers to non-profit organisations, not serving under a government directive. While they may receive funding from governments, public bodies and multilateral institutions, they maintain an independent mandate for their operations. They do not hold legal power to compel compliance. In case of observing non-compliance they employ public outreach campaigns and lobbying as well as use the legal tools available through governments (such as courts and regulatory bodies). This category would include NRGI, Publish What You Pay, Oxfam Transparency International, and Open Societies Foundation.

Mining industry: Refers to exploration and mining companies, as well as equipment and service providers. Industry associations and national Chambers of Mine are also included here. Examples would include the ICMM.

Investor: Refers to the private sector that provides finance for the mining sector, either through debt or equity funding[5]. There are very few organisations that can be specified as 'mining specific' and most investors will be governed by rules applicable to their investments across a number of sectors. However, there are specific codes of investments, such as the Equator Principles, that govern investment in the natural resource sector.

Independent consultants: Refers to commercial organisations that are employed by national governments, super-national organisations, multilateral institutions and also civil society. These international and local consultants often act in an advisory and assistance capacity.

Figure 1, provides an overview of the various measures and the 'jurisdiction' of each set of stakeholder. For the sake of simplicity, we mention only the major stakeholders influencing each measure, accepting that all stakeholders will have some contribute to all measures.

The spheres represent each set of measures mentioned earlier. The main stakeholders influencing each measure, as they overlap is indicated within the figure. The agenda that is covered under each overlap is represented by a number, with a more detailed description of the agenda following after the figure.

Legal and regulatory directives are set by national governments as well as super-national organisations. National governments (as sovereign entities, or by ceding certain powers to super-national organisations) are the only actors that can agree to legally-binding measures. They also carry prime responsibility for addressing non-compliance of such measures.

Diplomatic engagement is within the realm of national governments and, to a lesser degree, regional economic communities. The assistance programmes and engagement is largely at the government-to-government level. Multilateral institutions and independent consultants are involved in the implementation of such programmes.

Monitoring and compliance, here, is attributed largely to civil society organisations. This does not preclude the national governments as major actors, who are responsible for monitoring all practices that are covered by legal and regulatory directives. This grouping also includes the independent consultants, who are involved in issuing certification for standard compliance.

Industry best practice/standards are often formalised[6] by the mining industry, and may frequently originate from civil society. The monitoring/compliance primarily falls to three sets of actors; the mining industry, civil society and independent consultants. National governments also support industry best practice through diplomatic engagement. This is often delivered through the funding of development-assistance programmes (primarily involving civil society) and also direct engagement with the mining industry.

The common ground between diplomatic engagement and monitoring/compliance is led by multilateral institutions. These organisations are the primary conduit for bringing together the diplomatic engagement objectives of national and super-national governments while supporting monitoring and compliance frameworks in a number of resource-rich countries. In addition, these multilateral organisations are also working with the mining industry, while keeping abreast of national and international legal and regulatory directives. In a sense they are situated at the centre of all four spheres mentioned here. Alongside these multilateral institutions are independent consultants and civil society.

Figure 1 The overlap between stakeholders and measures

  1. The compliance and regulation agenda: The overlap between monitoring and compliance measures with legal and regulatory agenda focuses on the impact of regulations developed in one country on the mineral production/trade from other partner countries. This agenda explores specific issues (such as conflict mineral sourcing) where regulations did not originate from partner countries, but they are expected to be compliant.
  2. The compliance and best practice agenda: The overlap between monitoring and compliance and promoting industry best practices measures, focuses on challenges in operationalising industry best practice standards. Unlike the previous category, these measures look at voluntary compliance and therefore address issues that are not regulatory in nature.
  3. The global mineral strategy agenda: The overlap between diplomatic engagement and legal and regulatory measures, address the concern for mineral import dependent countries to promote stable supply of minerals in global markets. This aspect focuses on the use of diplomatic engagement to promote investment and expanding mineral production in third countries.
  4. The agenda to support best practices in third countries: The overlap between diplomatic engagement and industry best practices covers a wide range of topics and focuses on assisting third countries in adapting and operationalising agreed industry best practice principles. As opposed to category two, this explores government to government support mechanisms, while the former was focused on civil society and other private actors. The diplomatic engagement, whether through funding support, or technical assistance is meant to address sustainable and responsible mining practice uptake.
  5. The multilateral agenda: The final set of overlap is where all measures overlap; legal and regulatory as well as industry best practice, with an element of monitoring and compliance and assisted by diplomatic engagement.

The STRADE team will be exploring these agenda with different regional workshops in late 2017 and early 2018, with our findings published soon.



[1] See STRADE Policy Brief “Aligning EU cooperation with resource-rich developing and emerging countries‘ needs – key elements for creating win-win partnerships and a strategy for sustainable mineral supply”, No. 08/2017.

[2] Economic and political bloc comprising Argentina, Brazil, Paraguay, and Uruguay, and Venezuela.

[3] Common market for Eastern and Southern Africa.

[4] Association of Southeast Asian Nations.

[5] See STRADE Policy Brief “Attracting mineral investors: the fundamentals of investment decisions" for more details, No. 05/2017

[6] Refers to the process of codifying best practices and setting them out as charters or principles to be adhered to.

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