public participation local content – mining agreements as tools to build trust between stakeholders

otsile matlou sadc law association annual conference august 2014

overview

FPIC local content as part of the modern mining model local content in different jurisdictions regional local content the distinction between local content and local participation building trust between stakeholders

free, prior, informed and consent

free • right of indigenous peoples and communities to exercise free choice prior • the requirement that the consent must be sought before project authorisations are secured informed • right to appraise indigenous peoples and communities of project details consent • consent not unreasonably withheld

local content and the modern mining model

• • the historical model skills import, minerals export, exploitation colonialism • • the new model: unprecedented demand for resources requires revision of the old model local content as part of the plan for mining companies, regulators and communities to benefit from local economic development of host communities and host countries.

local content: comparative study

south africa zambia zimbabwe

local content: lessons from other countries

local content is no longer unique there are different ways to measure local content local content policies should be transitory phased approaches work well enforcement is key

regional local content

cross-border economic linkages SADC Protocol 1997 AU African Mining Vision 2009

local content vs local participation

procurement vs ownership common aim: local economic development the interplay of the two with social license to operate

building trust between stakeholders

• • • local content is important for: investors communities regulators example: the BHP Billiton Cluster Programme for the Development of World-Class Suppliers where are the opportunities?

reading list

McKinsey Global Institute (McKinsey & Company) “Reverse the curse: Maximizing the potential of resource-driven economies” December 2013 accessed at http://www.mckinsey.com/insights/energy_resources_materials/reverse_the_curse_maximizing_the_po tential_of_resource_driven_economies on 16 August 2014 at page 13 See for instance ‘An overview of land use conflicts in mining communities’ Hilson, Gavin, Land & Policy, Vol 19, Issue 1, pages 65-73 and Darimani, A “Mineral Resource Capture & Conflicts in Africa”, MAC, 2005 ( www.minesandcommunities.org/article-php?a=7746 ) For more on the NSI, see S Manzini “The National System of Innovation Concept: An ontological review and critique” South African Journal of Science 2012; 108 (9/10) accessed at http://www.sajs.co.za/sites/default/files/publications/pdf/1038-9432-4-PB.pdf

on 16 August 2014 See D Kaplan “South African mining equipment and related services: Growth, constraints and policy” Making the Most of Commodities Programme Discussion Paper March 2011 accessed at http://www.prism.uct.ac.za/papers/mmcp%20paper%205_0.pdf

on 16 August 2014 See http://www.sadc.int/information-services/tax-database/zambia-investment-incentives/ See “Increasing local content in the procurement of infrastructure projects in low income countries” Institution of Civil Engineers – Engineers Against Poverty briefing note November 2008 accessed at http://www.engineersagainstpoverty.org/documentdownload.axd?documentresourceid=23 on 16 August 2014

reading list continued

Mintek 2007 map at page 45 of the Africa Mining Vision accessed at http://www.africaminingvision.org/amv_resources/AMV/Africa_Mining_Vision_English.pdf on 16 August 2014 See http://ewn.co.za/2014/08/14/Dlamini-Zuma-pushes-mining-industry-for-highspeed-railway accessed on 16 August 2014 For more on the Ghanaian legislation, see http://thenewcrusadingguideonline.com/index.php?option=com_content&view=article&id=2415:local content-law-engine-of-growth-for-ghanaian-enterprises-in-oi last accessed on 16 August 2014 M Hackenbruch and J Davis Pluess “Commercial Value From Sustainable Local Benefits in the Extractive Industries: Local Content” (March 2011), accessed at http://www.bsr.org/reports/BSR_LocalContent_March2011.pdf

on 16 August 2014.

For more on the programme see, A Barnett and M Bell “Is BHP Billiton’s Cluster-Programme in Chile relevant for Africa’s mining industry?” The Policy Practice, Policy Practice Brief 7 August 2011 last accessed at http://www.thepolicypractice.com/papers/18.pdf on 16 August 2014 . Report No. 66585-AFR Increasing Local Procurement By the Mining Industry in West Africa Road-test version January 2012 last accessed at http://siteresources.worldbank.org/INTENERGY2/Resources/8411 West_Africa.pdf on 16 August 2014

reading list continued

For instance, the ILO Convention 169 on Indigenous and Tribal Peoples The McKinsey view is that governments must consider six important dimensions to transform sub-soil wealth into long term prosperity: to produce resources efficiently, governments must promote institutions and governance and develop infrastructure; to capture value from resources, governments must make industries competitive through fiscal policy and they must promote local content development (of interest to us here; and to transform value into long-term development, governments must spend the windfall wisely and focus on economic diversification See McKinsey report supra at page 72-73 See McKinsey report supra at page 75 See the McKinsey report above at page 86

thank you