Transcript Chining Mining Presentation

Enhancing Benefits to Communities
from Extractive Industry
March 5, 2009
Dafna Tapiero
Extractive Industry Week
Manager, CommDev
Extractive Industry Projects Are Often Seen As “Controversial”…
•Increased pressure by governments and
communities for a larger share of
profits
•Social benefits often underestimated
•Environmental degradation often more
feared than real
•Unrelenting civil society attention
•Amplified brand and reputational risk
…and yet no sector is more important to development than ours…
2
Industry context
Sustainable Approach to Extractive Industry Projects:
A Business Imperative
EI companies are guests in remote,
impoverished areas, often for 20-40 years
Increased NGO activism and reputational
risk
A “Social License to Operate” does affect
the bottom-line
A condition of finance/investment – Equator
Principles, World Bank Standards
To ensure long-term success, mining
operations must be strategic,
transparent & equipped with qualified
human resources
Government
(local, provincial,
national)
Investors
EI
Company
Nongovernmental
organizations
Uninterrupted
operations
Community
Local business
Effective local stakeholder management happens by design
Extractive Industry Yields Benefits to Communities
Community
Investment
Amounted
invested
depends on the
project
Labor, employment
Suppliers, local infrastructure,
spin off businesses
Royalties, Revenues and Taxes to Government
Evolution of how to acquire a social license to operate
Old Approach
• Environmental Mitigation “Do No Harm”
• Unilateral decisions
Thinking About
Development
New International
Best Practice
• Cash Contributions “Handouts”
• Ad hoc philanthropy programs
• No results measurement
• Examples: Building Schools, Clinics
• Strategic community investment
• Conduct social baseline study
• Participative methodology (consultation)
• Identify metrics for monitoring results
• Communicate development results
to stakeholders
What Companies say about Community Investment (CI) Challenges
• We spend lots of money on CI but relations with communities don’t
improve (and sometimes even deteriorate)…
• Our CI program itself becomes a source of conflict
• Local stakeholders become dependent on us
• Infrastructure projects we build lie abandoned and unused
• In the end, we have little to show for all the resources spent
• Endless requests from communities – difficult to say “no”
• We get pulled in a hundred different directions
• We end up having to take over the government’s role
• Our CI program has little to do with our core business
What Causes these Problems?
 Limited understanding of often complex local context
 Ad hoc approach – reactive to community requests
 Notion of “giving” rather than “investing” (grants & donations)
 No exit strategy
 Focus on bricks & mortar /short-term projects
 CI isolated from operational side of business
 Lack of participation & ownership of local stakeholders
 Failure to measure impact (no baseline /focus on outputs )
 Lack of transparency and clear criteria
 Lack of alignment with business objectives/core competencies
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What is IFC CommDev?
•$12 million fund focused on helping communities receive
sustainable benefits from Extractive Industry (EI) projects;
•Offers capacity building, technical assistance, tool development
and information sharing through on-line Clearinghouse
•Supports IFC/World Bank clients who want to collaborate to go
above and beyond IFC Performance Strandards;
• Global, but emphasizes Africa (60 – 70%)
CommDev: Enhancing the local benefits of extractive industry projects
Project
Funding
• $12 million
fund - Norway
PGI and IFC
• 17 community
development
projects valued at
over $3.8 m.
• External funds
leveraged:
$9.86 m.
Knowledge
Support
•Toolkits – risk
mitigation,
participatory
processes…
•CommDev.org
Monitoring
&
Evaluation
•Support to
companies to
improve their
M&E.
• Financial
valuation of
sustainability
•Indicators
Capacity
Building
• Clients
• Multistakeholder
• Local civil
society
Partnerships
Tri-partite
approach:
Forge network of
companies, civil
society, local
government
practitioners and
donors.
IFC CommDev – Helping Companies Move Towards a
Best Practice Model for Community Investment...
•Strategic in nature
•Participatory in Approach
•Sustainable in Design
•Systematic in its tracking
•Yields measurable returns to both Company and
communities
10
Spotlight: Lonmin
• Increased number of local suppliers and the value of Lonmin’s local
procurement contracts - 30 local suppliers received 165 contracts worth
US$43.3m.
• Generated a 42% jump in Lonmin’s female workforce through the
Women in Mining program.
• Developed project planning process for Lonmin’s key stakeholders,
resulting in +20 projects worth over US$12.1m addressing issues such
as education, potable water, and agriculture.
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Among the Results
DRC – Artisanal Mining
• Developed roadmap detailing specific recommendations for key
stakeholders to take an integrated approach for cooperation and
development.
Peru and Colombia – Revenue Management and Social Accountability
• 68 institutions were trained to track extractive industry royalty
flows to local governments and ensure responsiveness and
accountability.
•Through direct technical assistance and through its on-line
platform, IFC has built capacity in over 840 municipalities to
improve the investment of royalties
Guatemala – Participatory Monitoring
•Helped establish a community-based mechanism for monitoring the
environmental impact of the Marlin mine
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CommDev.org
• Over 2,000 resources
available
• A “go to” resource for
information and
knowledge on community
development around
extractive industries,
• Tripled user base to over
900 visitors every day in
January 2009.
• Over 50% of users come
from developing
countries.
CommDev Tool: Financial Valuation of Sustainability
• Methodology, enhanced by Monte Carlo simulations
• Shows how results change as key assumptions change
• Process brings together multiple functional lines in companies
• Help companies make strategic decisions about WHICH sustainability
investments to make WHEN
Value Creation (productivity increases)
Value Protection (mitigating delays)
•Project specific issue mapping to
identify high and low risk issues.
•Aggregate estimates of the
extent to which sustainability
investments mitigate projectspecific risks.
•Cost-benefit analysis
•Estimation of value generated by
specific sustainability investments
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Capacity Building: Ghana Workshop
Multistakeholder training to maximize the benefits that extractive
industry projects can bring to local people.
• Setting clear objectives and a clear exit strategy
• Making the business case – cost-benefit rationale
• Stakeholder analysis
• Engagement with communities and local government
• Participatory processes
• Capacity building plan
• Quantitative and qualitative indicators/strong M&E framework
• Communications strategy
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Thank you!
IFC ComDev Contact Information
Dafna Tapiero
Manager, CommDev
Oil, Gas, Mining and Chemicals Department
Phone: 1 (202)458-5499
Email:
[email protected]
Fax:
1 (202) 473-3839