Transcript Slide 1

EAST ASIA SCIENCE AND SECURITY
EXPERTS WORKING GROUP MEETING
September 22, 2010
Beijing, PRC
Minerals, Development and Local Communities:
Approaches and Case Studies from Asia
By
Allen L. Clark
East-West Center
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Asia mineral development
– Focused on the “New Frontier Nations”
• High impact on remote areas/communities
– Evolving/incomplete mineral policy and
legislation
• Twelve nations with new legislation in last 8 years
• Most use some form of a negotiated mineral agreement
• No linkages across sectors
– Lack of environment and social/cultural policy,
legislation and administrative guidelines.
• Community based mineral development is largely ad hoc,
guided by industry and impacted by multiple external
stakeholders (NGO’s/IDB’s/UN/NGO’s/AID)
– Increasingly important role of the private sector
• Role and “modus operandi” of mineral industry is poorly
understood
• High levels of mistrust, confusion, uncertainity.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Asia Mineral Development (Cont)
– Inadequate institutional capacity to effectively
administrate and/or manage mineral
development
• Virtually no social scientists on staff
– Competition between national to local
levels of
government and associated government
agencies
• Lack of inter-ministerial cooperation
• “Alternative” permissions
• Abdication or responsibility
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Legal Components and Community Agreements
• International Treaties and Accords
• Universal Declaration of Human Rights; International Dispute
Resolution Conventions; Other relevant Treaties/Conventions
• National law:
• Constitution; National mining regime (Laws; Implementing
Rules and Regulations; Decrees; Orders; Guidelines)
• Other National Laws/Regulations
•Revenue sharing; Foreign Investment; Dispute
Resolution; Cultural Protection; Environment: (land, water,
forest)
Contingent liability.
• Corporate Headquarters Country Legal Requirements
• Vicarious Liability/Respondeat Superior (Employer/employee
responsibility); Alien Tort Claims Act; Unfair Practices Acts;
Anti-corruption/ Foreign Corrupt Practices laws.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Legal Components and Community Agreements (Cont)
• Governing legal instruments
• Community Impact and Benefit Agreements; Industrial
and Employment Agreements; Joint venture, financing, contract and
leasing agreements; Investment guarantee policies; Internal corporate
policies of all other companies and contractors.
• Non-binding Advisory Panel Bylaws
• Community development association or other advisory association or
board; Environmental advisory committees; any other relevant advisory
committee rules especially those created by contract.
• Extra-jurisdictional requirement
• Equator Principles (now subscribed to by over 60 major companies);
Voluntary Principles on Security and Human Rights; United Nations Global
Compact; and corporations individual internal standards and guidelines.
A comprehensive legal structure and an agreed upon set of practices
and standards for socially responsible mineral development, meeting
national, investor and community needs, is the primary challenge
facing mineral development in Asia today.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Mining and Communities – Asia’s Challenge
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Case Histories
 Bougainville, Papua New Guinea – An old mine
in a newly independent developing nation.
 Kumtor, Kyrgyrz Republic – A large deposit
being mined in a newly emerging CAR nation.
 Sepong, Lao PDR – A new mine in a small
transitional nation of ASEAN
 Voisey Bay, Canada – From exploration to
mining in a developed mining country
 Tampakan, Philippines A prospective mine in a
developed ASEAN nation.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Bougainville – Papua New Guinea
(Before)
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Bougainville – Papua New Guinea
Time frame
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1963 CRA granted prospecting Authority
1969 Bougainville Copper granted Special Mining Lease
1972 Mine starts production
1974 Renegotiation of Bougainville Copper Agreement
1979 -1981 Landowners riot/villager unrest
1988 - New compensation demands – Autonomy
1989 Mine closes
1990-1996 Civil War between PNG and BgnVl Res Army
1997 Executive Outcomes
2000 Peace Accord – formation of BAR
2005 First elections held for Gov. of BAR
2010 – New elected Government – reopen Bougainville
Mine (?)
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Kumtor – Kyrgyz Republic
Kumtor
Mine
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Kumtor – Kyrgyz Republic
Time frame
– 1978 – Deposit discovered by Russian Geophysical expedition
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1988 - Soviet specialists view mine as non-commercial
1992 Negotiations begin with Cameco
1993-1994 Feasibility study
1994 Agreement signed (4% of profits to the local Government)
1998 Cyanide spill – local unrest
2002 Kyrgyz worker killed in mine wall collapse – local unrest
2004 IFC sells holdings in Kumtor
2007 Government considers nationalization of Kumtor –
protests by Kumtor mining community
– 2007 Villagers blockade road over environment/work issues
– 2008 Kyrgyz Financial police raid Kumtor offices
– 2009 New Terms Agreement signed for future mining
– 2009 Cameco transfers all rights to Kyrgyzaltyn JSC
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Sepong - Lao PDR
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Sepong - Lao PDR
Time frame
– September 2001 Gold Feasibility Study
– October 2001 Gold Environmental and Social
Impact Assessment (ESIA)
– October 2002 Copper Feasibility Study
– November 2002 Copper ESIA Addendum
– December 2002 First gold poured
– December 2003 Gold expansion Feasibility Study
and ESIA Addendum
– December 2004 Gold production expansion
- March 2005 Copper Project to be in production
– April 2010 – Mine sold to MinMetals of China
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Sepong - The role of the IFC
Original ESIA (2001) prepared by Oxiana, with IFC
guidelines and reviewed independently by State
Technology and Environment Agency (STEA) resulting in
following changes:
• Early preparation of a Resettlement Action Plan
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Formalization of the Public Consultation and
Disclosure Plan (PCDP)
• Establishment of a Trust Fund for Community
Development
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Development of a Community/Indigenous Peoples
Development Plan (C/IPDP).
– Establishment of a trust fund – A means to keep social services
within the purview of local government, rather than the mine, while
implementing the programs within the C/IPDP.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Case History Lessons Learned
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Existing national policy and legislation is inadequate to guide
social and community development.
In the absence of national policy and legislation commit to the
development of environmental and social codes consistent with
the best and most appropriate standards
Its never to early to start the process to acquire a “social license
to Mine”
Government agencies, at all levels, are inadequately staffed to
administrate social and community projects
There is no “one size fits all” for social and community
development programs.
Social and community programs must be directed to
sustainability and not dependency.
Community perception of a mine and its role in community
development changes over time and generations.
Environmental degradation is the most common “trigger” of
social and community dissatisfaction.
Successful social and community development programs are
dependent on:
1. maintaining an absolute commitment to public consultation and
2.
involvement of the local community in the development and
implementation of social and community programs.
an ability to listen, to be flexible, to have an absolute commitment at
the highest levels in the organization and hard work.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Generic History of Community Development
• Years 1-3: Pre-development phase: ESIA preformed to assess
the impact of the mine on the environment and local
communities and propose means of mitigation and/or
remediation. – little or no concept of the “reality of the mine”.
• Years 4-8: Development to production – Community programs
initiated creating “haves and have not’s” and new demands
arise. A partial concept of the “reality of the mine” emerges”
• Years -9-13: Operational Mine – Community programs
modified and expanded with greater participation of the
community and external stakeholders; environmental impacts
increase and resource rent distribution issues become critical.
The “reality of the mine” becomes clear.
• Years 13-15 Mine Expansion – Community expectations
change, increase and divisions within the community, with
government and with industry emerge. Adequacy of community
programs become and issue. The “reality of the mine” becomes
a negative.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Generic History of Community Development (Cont.)
• Years 15-25 : Pre-closing phase: The “inter-generational”
phase of community programs characterized discontent past and
present programs, increased demand for increased funding and
concerns re mine closure and sustainability. Invariably the
“reality of the mine” is negative.
• Years 26-30: Mine closure – With mine closure adverse social
impacts arise (unemployment, social unrest); environmental
issue become critical (and many unmet) and issues of
sustainability become paramount. Contingent liabilities are left
unmet. The “reality of the impact” becomes a legacy.
ENERGY AND MINERALS EXPERTS
WORKING GROUP MEETING
Sepon – Basic Principles
– Communicate, spend time listening not talking.
– Use appropriate communication media, including
the best translators available.
– Use local knowledge and resources if possible
– Break complex issues into simple steps.
– Be prepared to explain time after time.
– Be prepared to say no – with a reason.
– Understand community structures and cultural
expectations.
– Understand social contexts (Gender, ethnicity)
– Understand and respect all stakeholders.
– Address every issue.
– Deliver on promises.
– Be absolutely committed.