Mining: Partnerships for Development Toolkit - Oxford Policy ...

MINING: PARTNERSHIPS FOR DEVELOPMENTTOOLKIT

TOOLKIT GUIDEIntroduction 07Using the toolkit 13MODULE ONEMining and the host country 19Annex 1: Example of a country profile (Guinea) 21MODULE TWOThe participating mining operation and its economic andsocial initiatives and partners 27Annex 2: Six priority partnership themes for socio-economic programs 33MODULE THREEMeasuring the mining industry’s contribution to the host country 47MODULE FOURThe proximate aspects of governance that help or hinder mining’seconomic and social performance 57Annex 3: Calculating and reporting tax payments 69MODULE FIVEMeasuring the participating mine’s positive and negativecontributions to local communities 75Annex 4: Guidelines for field interviews 99Annex 5: Notes on calculating employment impacts 103MODULE SIXAnalyzing the life cycle impact of the participating mine on thehost country’s macroeconomic aggregates 111Annex 6: Template for collecting life cycle data 121MODULE SEVENImpact of mining on governance 125Annex 7: Detailed questions to help assess the impactof mining on governance 135MODULE EIGHTCommunicating your findings 143Annex 8: Workshop design tool to present the country case study ormining-issues paper 149TOOLKIT ADDENDUMGuiding principles regarding minerals taxation 157This toolkit has been developedby the International Council onMining and Metals (ICMM). It isthe third version of a toolkitoriginally published as theResource Endowment Toolkitin April 2006 in partnership withthe World Bank and UNCTAD.TOOLKIT REFERENCESAcronyms and glossary 167Referenced sources 173How was the toolkit developed? 177The steering group 178

Toolkit CDThere are a number of worksheet and databasetemplates to help you complete each of the modulesin the toolkit. Wherever you see this symbol there isa template available to help you complete the activitydescribed. All the templates are available on theICMM website at www.icmm.com/mpdtoolkit.MINING: PARTNERSHIPS FOR DEVELOPMENTTOOLKITCD versions of the toolkit are available on request– email us at info@icmm.com.

“THE TOOLKIT FOCUSES ON SIXTHEMATIC AREAS WHEREPREVIOUS WORK HAS INDICATEDTHE POTENTIAL FOR PARTNERSHIPSBETWEEN COMPANIES AND OTHERSTAKEHOLDERS TO ENHANCE THEPOSITIVE CONTRIBUTION ANDMINIMIZE NEGATIVE IMPACTS:1. MINING AND POVERTYREDUCTION2. MINING AND ECONOMICDEVELOPMENT: REVENUEMANAGEMENT3. MINING AND ECONOMICDEVELOPMENT: REGIONALDEVELOPMENT PLANNING4. MINING AND ECONOMICDEVELOPMENT: LOCAL CONTENT5. MINING AND SOCIAL INVESTMENT6. MINING AND DISPUTESRESOLUTION.”Image courtesy of Anglo American

IntroductionUsing the toolkitTOOLKITGUIDE

“I WOULD LIKE TO COMMENDTHE INITIATIVE THAT LEDTO THIS SEMINAL STUDYWHICH DEMONSTRATESTHAT NATURAL RESOURCEENDOWMENT, ECONOMICDEVELOPMENT AND SOCIALADVANCEMENT CAN ANDSHOULD BE COMPLEMENTARYCONCEPTS.” ** Glodomiro Sanchez Mejia, Ex-Minister of Energy and Mines, PeruImage courtesy of Xstrata

IntroductionTOOLKITGUIDEThe Mining: Partnerships for DevelopmentToolkit provides useful methodology forevaluating the positive and negativeeconomic and social effects of mining atthe local, regional and national levels inmining countries. These methods will beof relevance in particular to the increasingnumbers of lower and middle incomeeconomies that have high levels of mineraldependence.The toolkit provides a common analyticalframework that helps to ensure thatcomparisons can be made of mining’scontributions and impacts across differentcountries. It has been tested in five countriessince 2005 – Chile, Ghana, Lao PDR, Peruand Tanzania. ICMM is actively seeking morecountries to participate in future applicationsof the toolkit so that the evidence base canbe further extended.It can be used by mining companies, minemanagers and any other organizations andagencies that have an interest in therelationship between mining and socialand economic development outcomes.These will include host-country governments,development agencies and developmentorientednon-governmental organizations(NGOs). Experience has shown thatapplications of the toolkit are more effectiveif organized in partnership with both miningcompanies and other stakeholders.The application of the toolkit allows usersto develop an improved understanding ofwhat issues, policies and practices may behelping or preventing host communities,regions or the country from benefiting morefully from mining. However, its use doesrepresent a significant commitment of timeand resources, and users are advised totailor their expectations of the likely benefitsto the level of resources that they are ableto commit.Mining: Partnerships for Development TOOLKIT07

IntroductioncontinuedTOOLKIT GUIDEAbout Mining: Partnerships for DevelopmentICMM’s Mining: Partnerships for Development initiative focuses on enhancing mining’seconomic and social contribution. It supports the formal commitment made by ICMMmember companies to actively support or help foster multi-stakeholder developmentfocusedpartnerships in countries where they are active.Mining is economically critical for millions of the world’s poorest people with some50 countries being significantly dependent on mining. Yet mineral wealth does notalways mean positive economic growth – the so-called “resource curse” theory.In 2004, ICMM began the Resource Endowment initiative in collaboration with UNCTADand the World Bank Group. It developed a substantial body of research on why somecountries have avoided the “resource curse” and developed practical recommendationsfor companies, governments and civil society. It was overseen by an independentinternational advisory group including the Head of the UN Global Compact and a formerPrime Minister of Senegal.The Resource Endowment initiative showed that the “resource curse” is not inevitable.Mining investments can drive economic growth and reduce poverty nationally and locally.However, companies alone cannot unlock the development benefits from mining –governance is key and multi-stakeholder partnerships can help fill capacity gaps.The findings were based on the application of ICMM’s Resource Endowment Toolkit(April 2006) in four countries – Chile, Ghana, Peru and Tanzania. The toolkit has beennow been revised, extended and re-published as the Mining: Partnerships forDevelopment Toolkit.The new version of the toolkit responds to a clear need in different parts of the world fora more systematic and objective way to quantify and agree ways to enhance mining’seconomic and social contribution. It is currently being applied in a number of countriesand can be used by mine managers and those interested in promoting economic andsocial development (host governments, development agencies and development-focusedNGOs).For more information on how to participate in this work, visit www.icmm.com/mpd oremail us at info@icmm.com.08 Mining: Partnerships for Development TOOLKIT

IntroductioncontinuedGuidelines for toolkit usersThe toolkit is designed to be used on acollaborative basis with a range of keystakeholders. Experience has shown that theinsights gained and the potential subsequentdevelopment of new partnership ideas areenhanced by a broad engagement with thework by other parties and especiallygovernments, local communities, developmentagencies and some specialized NGOs.The early applications of the toolkit havebeen led by mining companies. However, thelead can be taken by a party other than amining company. In such cases, activeengagement with some of the mine operationsin the country will be needed in order to gainaccess to the mine-specific data that is notin the public domain.The outcomes from implementing the toolkitwill typically be a country case study andone or more workshops to communicatethe findings of the country case study.Depending on your needs, you may not findit necessary to develop an entire countrycase study.The toolkit comprises a series of eightmodules and an addendum on taxation.It has been designed to be simple withoutplacing an excessive demand on time orcost, and, as far as possible, to beimplemented with in-country resources.Some of the more technically complexmethods of identifying “impact” (such aslocal-level cost-benefit analysis) aretherefore not included. 1You will need to decide which modules toimplement as part of the design process foryour project (see Figure 1 ). The modulescan be implemented individually or incombination but there are advantages inattempting as full an implementation asyour available resources allow.Each of the eight modules includes workedexamples or explanations of how to gatherthe necessary data and analyze and presentthe findings. Most modules also includeannexes that provide specific details orfurther elaboration on some part of theprocess (e.g. guidelines for field interviews,how to measure employment impacts orhow to organize a workshop).TOOLKIT GUIDE1 For further guidance, see a Guide to Cost-BenefitAnalysis of Major Projects, available athttp://ec.europa.eu, and the DAC Guidelines andReference Series on Applying Strategic EnvironmentalAssessment, available at www.oecd.org.Mining: Partnerships for Development TOOLKIT09

Figure 1: The eight modules of the toolkitTOOLKIT GUIDEMODULE ONE:Mining and the host countryPreparing an overview of the country’s geography, population, settlement, land use,economy and recent history with an emphasis on characteristics that influence or areinfluenced by the economic and social impact of mining: economic performance, politicalstability, quality of governance, dependence on mining, and poverty and human development.MODULE TWO:The participating mining operation and its economic and social initiatives and partnersDeveloping a profile of the participating mining operation(s) and the local communities inwhich they operate. This should include a profiling of any partnerships already set up by themining operation(s) for economic and social development across the six partnership themes.MODULE THREE:Measuring the mining industry’s contribution to the host countryUnderstanding how the host country’s broad-based economic growth (of incomes, GDP,exports etc) and social development have changed in the period during which mining hasassumed a significant relative importance.MODULE FOUR:The proximate aspects of governance that help or hinder mining’s economic andsocial performanceIdentifying elements of the host country’s quality of governance and macroeconomicmanagement that could affect the economic and social benefits of mining. The term“proximate” is used to distinguish this from the more detailed probing on political economyprocesses in module seven.MODULE FIVE:Measuring the participating mine’s positive and negative contributions to local communitiesMeasuring in detail the participating mine’s economic and social impacts (employment,procurement of locally supplied goods and services, training, social and infrastructureprovision, net impact) at the local level.MODULE SIX:Analyzing the life cycle impact of the participating mine on the host country’smacroeconomic aggregatesAnalyzing the participating mine’s contributions to GDP, government revenues, and balanceof payments over the life cycle of the mine, looking forward to include the likely impacts offuture expected operations and well as those of the present and recent past.MODULE SEVEN:Impact of mining on governanceExamining the direct and indirect influence of mining on governance structures, institutionsand policy choices at different levels of government (national, regional and local).MODULE EIGHT:Communicating your findingsPreparing the country case study (or mining sector issues paper) and encouragingdissemination of and debate about its findings via a workshop.TOOLKIT ADDENDUM:Guiding principles regarding minerals taxationUnderstanding the appropriate fiscal framework for mining including the importance of anequitable allocation of rents and transparent reporting according to EITI standards andengaging with governments to promote stable tax systems with minimal complexity.10 Mining: Partnerships for Development TOOLKIT

IntroductioncontinuedModules one to six can be implementedindividually, as a set of two or more modulesor in full and can be implemented in theorder you choose. Module seven – whosevalue relies on an understanding of whathas happened in the country over the periodsince mining started – will be much moreinformative if you have at least done modulefour and, ideally, modules two, three, fiveand six as well.Module eight – Communicating your findings– is the one module that should be appliedby all toolkit users. Implementing modulesone to seven will provide the evidenceneeded to prepare a comprehensive countrycase study. However, even if you only applya selection of modules, you should aim toproduce a shorter mining sector issuespaper.The addendum to the toolkit looksspecifically at the issue of mineral taxationbecause the fiscal stance towards mining isso vital both to the sustainability of miningin any country and to its broader economicand social development. That fiscal stanceis often contentious and not well understood.In some circumstances, you may decide tolaunch a specific study into the issue inparallel with your work on the toolkit.The toolkit is not a substitute for theenvironmental and social impact studiesthat most mining companies undertakebefore beginning a new miningdevelopment. 2 Neither does it seek toreplace the often intensive consultationprocesses with stakeholders that areinvolved in carrying out such studies.If, however, for your purposes theseadditional activities and methods arerequired, then the studies can becommissioned in parallel to implementingthe toolkit.TOOLKIT GUIDE2 ICMM’s Good Practice Guidance for Mining andBiodiversity (2006) provides tools and practicalconsiderations for assessing the environmental andsocial impacts of mining on biodiversity, availableat www.icmm.com.Mining: Partnerships for Development TOOLKIT11

Illustrative flow chart to set out key steps in using the toolkit – with exit criteria for each stepSTEP 1ASSESSMENTSTEP 2DESIGNSTEP 3PARTNERSSTEP 4PLANReviewpre-conditionsSelect modules Select partners Appoint projectmanagementteamStakeholderand industrydiscussionsPlanning Establishmanagementarrangementswith partnersSelect modulesand draft projectscopePre-conditionsmet?Decisionpoint for designstep met?Decisionpoint for stepmet?Decisionpoint for stepmet?YES YES YES YESNONO NO NOAddresspre-conditionsAddress issuesthrough reviewingproject designAddress issuesthrough reviewingpartnershiparrangementsAddress issuesthrough revisitingproject planSTEP 5COMMUNICATEYOUR FINDINGSWorkshopPublish findingsStarts processof elaboratingpartnerships12 Mining: Partnerships for Development TOOLKIT

Using the toolkitTOOLKITGUIDESTEP 1: AssessmentAsk yourself the following questions beforeyou decide to use the toolkit:1. Are there current issues in your countrythat the toolkit is suited to help youunderstand? For example:– Is there a preoccupation amongstakeholders about narrow definitions of“benefit sharing ”?– Does the discussion of tax revenuesdominate the agenda?– Is there a sense that not enough jobshave been created or that traditionallivelihoods have been damaged?– Are there any potential opportunities tobetter integrate the mine into thebroader economy that are being missed?– Are the needs of different stakeholdersreally understood and addressed?If yes, then focus your scope on thecorresponding modules of the toolkit.2. Will the toolkit results have broad, ratherthan narrow application? For example, thetoolkit is not equipped to quantify oranalyze problems of an environmentalnature; neither is it designed to add newlight on issues such as forced resettlementor displaced livelihoods. These arespecialized areas, and appropriatereference sources are provided. However,where these issues have already beensubject to an economic or social impactassessment, then the application of thetoolkit can certainly embrace the keyresults from these.3. Is there sufficient commitment ingovernment, among companies and otherorganizations in your country?The effective implementation of the toolkitrequires commitment – to data access andcollection, to the subsequent disseminationof the country case study or other findings,and to frank discussions on conclusionsand priorities for action across the sixpartnership themes. If this commitment ismissing then you should probably focusefforts first on building the necessarycommitment.4. Are there adequate financial andpersonnel resources to manage theprocess and undertake the analysisin-country? A competent team of localeconomic and financial analysts andsurvey specialists will be needed,supplemented in all cases by assistancefrom designated points of contact in themining companies and other stakeholderorganizations. Additional externalassistance may be requested in somecases from ICMM and similar internationalsources to help guide the early stagedesign of the work and the presentationof results. The services of a competentpolitical economist would also be of valuein most country cases.Mining: Partnerships for Development TOOLKIT13

Using the toolkitcontinuedTOOLKIT GUIDESTEP 2: DesignFollow these steps to determine the scopeof work you want to accomplish via your useof the toolkit:1. Determine what you want to accomplishwith the findings of the toolkit work andhow they will be used and select modulesaccordingly. If you are only looking for anarrow set of specific insights – e.g. aboutthe use of mineral revenues or about localemployment - then you need work onlywith a selection of the eight modules.2. Try to involve more than one mine in theprocess, as that will provide moreinformation sources for the requiredmine-specific data and allow differencesbetween mines to be identified andassessed. While the toolkit can be appliedto just one mine, the value ofimplementing the toolkit increases withthe number of mines involved.The involvement of multiple mines clearlymeans that the evidence base created willbe much more representative of theindustry as a whole and less likely tosuffer from any biases associated withusing just a single mine. The buy-in ofsenior management from participatingmining companies, and where possibleany chamber of mines (national and/orregional mining association), is thereforeessential to ensure co-operation both withother mines and with any independentresearch organization that is commissionedto implement the toolkit. Thus, in mostcases where the toolkit uses the term “amine”, “a mining company”, or “a miningproject”, the term is intended to encompassthe plural as well as the singular.3. Prepare an initial action plan fordisseminating the findings. This shouldinclude some form of face-to-facemeetings with those other parties whowould ideally be involved in helping you toassemble the necessary information orwho would be likely to be interested inthe findings.14 Mining: Partnerships for Development TOOLKIT

Using the toolkitcontinuedSTEP 3: PartnersBased on your goal(s), identify one or morepartners with whom you would like to work.If you represent a mining company, youmight choose to work closely with keydepartments of the government or with anNGO or an international donor that is likelyto have a shared interest in your chosengoals. If you represent an NGO or governmentdepartment, you will need at least onemining company to work with you, becausemuch of the required data to fully implementthe toolkit is available only from thecorporate data files. Partners need to havesome shared common objectives but theyneed not be in full agreement about the keyhypotheses that they expect the toolkit toverify. To the extent possible all partnersshould engage in the work with open mindsand allow the evidence as it accumulates totell its own story.Hold an early meeting (or meetings) orworkshop(s) with your chosen partner(s) toagree on the goals and the methods forconducting the work and to review the toolkitscope of work. This may require expandingor contracting the original goal, but keep itfocused on the modules of the toolkit.STEP 4: PlanFollow these steps to develop a project plan:1. Appoint a project management team withrepresentatives from each partnerorganization. Agree on a governance systemfor the partnership and how to allocateroles and responsibilities for the work.2. Decide which modules will or can beimplemented in-house and which will ormay require a contract with an externalresearch organization. Different modulescan be delegated to different individualsin your team. Much of the toolkit researchis desk-based, but consultations withcommunities and meetings with providersof data (particularly data from theparticipating mining operations) will alsobe required, particularly in carrying outmodules five and six. There is guidancewithin each module to help you decidethe best course of action.3. Write a brief that covers the scope of workfor each module including reference tothe modules you wish to implement via acontract with third party organizations.The brief should reference the completetoolkit.4. For the sake of credibility and value, youshould adopt an objective and broadperspective on the scope of the investigation,the questions to be asked of intervieweesand the representation of their views.5. Select a research organization(s) with theinterests, skills and capacity to implementthe required toolkit modules that cannotbe done in-house in a credible andunbiased manner. Seek advice from ICMMif you have questions on this matter.TOOLKIT GUIDEMining: Partnerships for Development TOOLKIT15

Using the toolkitcontinuedTOOLKIT GUIDE6. Identify supplementary data sources foryour research. The toolkit relies fairlyheavily on data from mining companies’operations, but it also explains how tocombine these with and interpret datafrom public sources, such as theInternational Monetary Fund (IMF), theUnited Nations Development Programme(UNDP), and the World Bank, as well asfrom the mining industry itself. Non-miningsources will cover a range of issues, suchas revenue payments to governments,governance, and household poverty.The toolkit seeks a balanced approachtp data collection by ensuring thatassessments can be undertaken evenwhen the available economic and socialdata cannot support more sophisticatedquantitative analysis.7. Decide on the type of written output youplan to produce and plan the inputs andinstructions to researchers accordingly.For example, if you have decided to writea full country case study, you will needa report that can bring together theevidence from modules one to seveninclusive. The information and analysiswherever possible should be organizedaround the six partnership themes.8. Whether in a workshop, in your writtencountry case study report, or in a shortermining-issues paper, try at an early stageto identify key issues. For example, yourevidence base should normally establish therationale for partnerships based on one ormore of the six partnership themes. But thedetails of how such partnerships might beformed – and what their scope would be –will need to be developed through theresearch activity.STEP 5: Communicate your findingsThe five country case studies to date haveshown that workshops are far better thanremote methods (such as printed reports orweb sites) for disseminating toolkit findings,encouraging debate, and engaging partners.However, the printed reports or web sitesdo provide a valuable complementaryresource in all cases. For both workshopsand written reports, it is important to avoidoverly technical language so that a wideaudience can understand the main aspectsof the debates.You are encouraged to use workshops andto seek attendance by as many relevantbusiness, government and civil societystakeholders as are able or willing to takepart. Workshops can add diversity of opinion(and balance of views), encourage theshared ownership of non-contentiousinformation (and give focus to debate) andpromote an understanding of mutualinterests (and motivate prospective partnersto action). However, they do add greatly tothe time and costs of preparation, especiallyin cases where some important stakeholdersmay show resistance to participation andneed to be encouraged to do so.16 Mining: Partnerships for Development TOOLKIT

Mining and thehost countryANNEX 1Example of a countryprofile (Guinea)MODULEONE

“POLITICS, ECONOMICS, ANDGOVERNANCE ARE ALLLIKELY TO HAVE A BEARINGON THE CONDUCT OF THEMINING PROJECT AND ITSECONOMIC AND SOCIALCONTRIBUTION.”Image from ICMM

Mining and thehost countryMODULEONEPurposeModule one sets the country context forthe benefit of subsequent modules of thetoolkit. It provides an overview of thecharacteristics of the host country thatmight illustrate how the political economyhas evolved to the present day and howthat, in turn, may influence or be influencedby mining.The overview will provide an insight intothe host country’s economy, governanceand current issues and may reveal newpartnership opportunities, all of which willbe useful in other modules in this toolkit.Whether you are planning to write acountry case study or shorter report thatdraws on only a few of the modules, youwill probably want to write some backgroundmaterial to set the context. Module oneprovides the framework for organizingthis information.Gathering the dataSet the context with a brief description of thehost country’s geography, physiography,broad climatic and vegetation zones, andnatural resources; population, settlementand land use; demographics (population,ethnicity, education, health); economy,politics, recent history, bordering countriesand geopolitical context. Address thesegeneral characteristics to the extentnecessary to set the mining industry incontext, with your focus on the maincharacteristics that influence or areinfluenced by the economic and socialimpacts of mining, including:• the economic base: land, water, living andmineral resources;• economic performance (past and present);• mining past and present in the countryand its environmental, economic andsocial impacts;• quality of governance; 3• political stability; and• poverty and human development, includinghuman rights.These characteristics will or could have abearing on how mines are planned, built,operated and judged.3 “Governance consists of the traditions andinstitutions by which authority in a country isexercised. This includes the process by whichgovernments are selected, monitored and replaced;the capacity of the government to effectivelyformulate and implement sound policies; and therespect of citizens and the state for the institutionsthat govern economic and social interactionsamong them.” (Source:http://info.worldbank.org/governance/wgi/index.asp.)Mining: Partnerships for Development TOOLKIT19

Mining and thehost countrycontinuedMODULE ONEData sources might include:• BBC News country profiles(http://news.bbc.co.uk/2/hi/country_profiles/default.stm);• US Central Intelligence Agency WorldFactbook(www.cia.gov/library/publications/the-worldfactbook);• IMF Staff Reports under Article IV(www.imf.org);• World Bank’s Country Briefs availableunder “Highlights” on each country’s page(www.worldbank.org/countries);• World Bank’s aggregate and individualgovernance indicators for six dimensionsof governance(http://info.worldbank.org/governance/wgi/index.asp);• United Nations Development Programme’sHuman Development Report statistics,including the human development index(http://hdr.undp.org/en/statistics);• Bertelmann Foundation’s Country Reports(www.bertelsmann-transformationindex.de/en/bti/country-reports);• World Health Organization’s countryprofiles for countries that are members ofthe United Nations(www.who.int/countries/en);• United Nations Statistics Division of theDepartment of Economic and Social Affairscountry profiles(http://data.un.org/CountryProfile.aspx); and• Organisation for Economic Co-operationand Development information by countryor topic under “Browse” (www.oecd.org).You may also elect to pursue themesuncovered from these broad sources(e.g., gender politics and activism) throughother sources, such as the national pressof the host country.How to present your findingsModule one should present a discursivecountry description of two to three pages.Differences between countries precludethe definition of any standard pro-formastructure, so you should exercise yourcountry knowledge and judgment.Annex 1 provides an example. The fourcountry case studies prepared under theICMM’s Resource Endowment initiativeprovide further, more complete examplesof module one content and structure. 44 www.icmm.com/page/1409/resource-endowmentinitiative.20 Mining: Partnerships for Development TOOLKIT

Example of a countryprofile (Guinea)ANNEX1Example description of country context (Guinea)Environment, resources, land use and settlementAt 245,800 km 2 , Guinea is roughly the size of the United Kingdom and slightly smallerthan the U.S. state of Oregon. There are 300 km of coastline and a total land border of3,400 km. Its neighbours are Côte d’Ivoire (Ivory Coast), Guinea-Bissau, Liberia, Mali,Senegal and Sierra Leone. The country is divided into four main regions: the Basse-Cotélowlands, populated mainly by the Susu ethnic group; the cooler, mountainous FoutaDjallon that runs roughly north–south through the middle of the country, populated byPeuls; the Sahelian Haute-Guinea to the northeast, populated by Malinké; and theforested jungle regions in the southeast, with several ethnic groups.Upper Guinea and Middle Guinea remain the country’s poorest regions. This situation isthe direct result of the influx of refugees received since the outbreak of hostilities inLiberia and in Sierra Leone, as well as the rebel attacks in 2001. This has damaged theenvironment, destroyed considerable socio-economic infrastructure and caused enormouslosses in household assets (livestock and plantations). In addition, industrial and toxicsolid waste (biologically contaminated waste from hospitals, laboratories, slaughterhousesand mining enclaves) is generally thrown into the natural environment, watercourses orthe sea, receiving the same treatment as other waste. 5Guinea has abundant natural resources, including 25% or more of the world’s knownbauxite reserves. Guinea also has diamonds, gold, and other metals. Bauxite and aluminaare currently the only major exports. Other industries include processing plants for beer,juices, soft drinks and tobacco. Agriculture employs 80% of the nation’s labour force.continued5 International Monetary Fund, January 2008,IMF Country Report No. 08/7.Mining: Partnerships for Development TOOLKIT21

Example of a countryprofile (Guinea)continuedANNEX 1Economic performance (past and present)Guinea is a low-income country of huge mineral wealth. However, the per-capita GDPin 2010 of US$395 (current prices) compares poorly even with the sub-Saharan Africanaverage. In 2007 Guinea ranked 170 out of 182 countries on the UNDP 2007/08 humandevelopment index (HDI). 6 Growth rose slightly in 2006-08, primarily due to increases inglobal demand and commodity prices on world markets, but the standard of living fell.The Guinea franc depreciated sharply as the prices for basic necessities like food andfuel rose beyond the reach of many Guineans. 7Quality of governanceFrom 1996 to 2007, Guinea scored low on all six measurable dimensions of governancein both absolute terms and relative to the averages set by sub-Saharan Africa. 8 Poorgovernance provides one explanation for poor growth, and the 2008 Country Report ofthe Bertelsmann Foundation found a number of specific factors to support this view. 9Political stabilityThe Guinea economy has performed poorly after independence from France in 1954.The macroeconomic problems following the early Sekou-Toure years lingereduncorrected by only lacklustre structural adjustment in the mid-1980s and early 1990s;and civil unrest was quite common, even at that stage. By 2006, worsening economicperformance and stalled reforms led to more general strikes; and these, in turn, ledeventually to the new Government of Consensus in March 2007 headed by Prime MinisterLansana Kouyaté. This promised much; but in May 2008, the new Prime Minister wasdismissed by the President, Lansana Conté. Further military and civil unrest has sinceensued around various issues, including a large hike in petroleum prices. 10continued6 UNDP Human Development Report (2009).7 The CIA World Factbook, Guinea, retrieved28 October 2010.8 Worldwide Governance Indicators project(http://info.worldbank.org/governance/wgi/index.asp).9 Bertelsmann Stiftung, BTI 2010 — Guinea CountryReport. Gütersloh: Bertelsmann Stiftung, 2009.10 International Monetary Fund, January 2008,IMF Country Report No. 08/7.22 Mining: Partnerships for Development TOOLKIT

Example of a countryprofile (Guinea)continuedMining past and presentMineral production, particularly of bauxite and alumina, has been central to Guinea’seconomic development since independence. The UNCTAD 2007 World Investment Reportshows Guinea’s economy to be the most mining dependent in the world, with an averageratio of mineral to total exports of 89.8% over the period 2000 to 2004. 11 This dependenceis the more remarkable because the growth of the mining sector in the overall economyhas in fact been slower than the growth of overall GDP: the IMF Selected Issues Paper(January 2008) estimates that the GDP share of minerals fell from 85% of the total in theearly 1990s to less than 70% by the period 2002 to 2005. 12ANNEX 1The mining industry is playing an important role in the socio-economic development ofthe country. Mining is the most important export commodity and source of revenues forthe Government, and agreements signed recently are likely to involve billions of dollarsand consolidate the sector’s position as the main source of foreign direct investment. 13Relative to the country’s very low base, the regions least affected by poverty in Guineaare those where new mines and mineral transport and processing infrastructure areproposed or are being built. This may reflect the positive effects of earlier phases ofmineral production in these locations. These regions have at least relatively bettereconomic infrastructure and basic social service facilities and are relatively well endowedwith natural resources. They are also quite close to the capital with its comparativelybetter educated and trained population.continued11 World Investment Report 2007(www.unctad.org/en/docs/wir2007_en.pdf).12 Guinea: Selected Issues and Statistical Appendix,IMF Country Report No. 08/20(www.imf.org/external/pubs/ft/scr/2008/cr0820.pdf).13 Community Development Framework Study for theMining Sector in the Republic of Guinea, (2007).Mining: Partnerships for Development TOOLKIT23

Example of a countryprofile (Guinea)continuedANNEX 1Poverty and human developmentAccording to the UN Human Development Report (2006), 40% of the population livebelow the income poverty line. In 2008 the population was estimated at 10.28 millionand expected to increase to more than 11 million during 2011.After the implementation of the economic and structural reforms of 2003–06 veered offcourse, with a resultant drop in income of 0.6% per head, the economic slump wasaggravated by the global financial crisis in 2007. Inflation rose to more than 22%, alongwith a depreciation of the currency of 18%. This was followed by deterioration in livingstandards, reflected in a rise in the poverty rate from 49% in 2002/03 to 53% in 2007/08.In the face of these difficulties, Guinea launched reforms in 2007 under its secondPoverty Reduction Strategy Paper (PRSP 2), supported by the Poverty Reduction andGrowth Facility (PRGF) of the International Monetary Fund (IMF) and the intervention ofother technical and financial partners. The reforms bore fruit in 2008, despite a difficultinternational context; and public and private investment rose by 14%. As a result,economic growth accelerated from 1.8% in 2007 to 4.9% in 2008, driven by theimprovement in the terms of trade resulting from the surge in mineral raw materialprices and the fall in the price of oil. 14 However, a reduction in the proportion of peopleliving below the income poverty line has yet to be seen.14 African Economic Outlook: seewww.africaneconomicoutlook.org/en/countries/west-africa/guinea/.24 Mining: Partnerships for Development TOOLKIT

The participatingmining operationand its economicand social initiativesand partnersANNEX 2Six priority partnershipthemes for socio-economicprogramsMODULETWO

“THE SIX THEMES CONSTITUTEA BROADLY APPLICABLECATEGORIZATION OF MINING’SECONOMIC AND SOCIALCONTRIBUTION.”Image courtesy of Newmont

The participating miningoperation and itseconomic and socialinitiatives and partnersMODULETWOPurposeModule two provides a profile of theparticipating mining operation, 15 of themain partnerships set up by the miningoperation to bring economic and socialdevelopment, and of the main initiativesundertaken to date.Gathering the dataModule two requires two separate datagatheringsteps:• Step 1: profile of the participating miningoperation and local communities; and• Step 2: overview of the economic andsocial performance of the participatingmining operation and its partnershiparrangements and initiatives across thesix priority partnership themes.STEP 1: Profile of the participating miningoperation and local communitiesFirst, gather sufficient data to provide abrief, non-technical description of ownership,financing, investments, production levels,and environmental footprint of the miningoperation. This is essentially the informationon which the mining company has relied inits internal management decisions aboutproject strategy, scope, design and operations.Much of this information will also haveinformed the decisions of regulators andfinanciers; and their respective roles in, andinfluence on the scope of, the project wouldbe informative if available. The relevantdocuments will normally be available froma company’s finance and environmentaldepartments, annual report or website.Aim to describe each mining operation andset its scale and scope in the host-countrycontext. Issues to cover will typically include:15 As discussed in “Using the toolkit”, participationby more than one mining operation in theimplementation of the toolkit is strongly encouraged.However, for simplicity in presentation, the toolkitassumes just one mine, mining operation, or miningcompany is involved.• ownership structure, including minoritypartners;• physical location, including the areaoccupied by the mine and relatedinfrastructure (such as a railroad or port)and its previous use;Mining: Partnerships for Development TOOLKIT27

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinuedMODULE TWO• development milestones, ore reserves,identified resources and projected minelife, regional mineralization, explorationpotential and programs, and furtherdevelopment potential and factors;• production, markets and customers;• mining and waste management: open pitor underground, environmental propertiesof mine materials, water balance and wastemanagement strategy, specific mine wasteand tailing management arrangements,and zone of direct environmental impact;• actual capital investments to date orplanned and the likely level of the“staying-in-business” investments,including local and regional exploration toextend existing deposits or find new ones;• similar information for other local mines(i.e., in the broad region of the mine understudy); and• recent or planned mine closures in thatsame area or nationally.Second, gather information on thecommunities directly (and indirectly) affectedby the operations of the mine. These will beeither villages or towns near the mine orthose along the main supply routes as theseare most likely to be positively or negativelyaffected by the mine’s activities. The aim isto get an idea of the number, size andproximity of villages in the area, as well asthe key characteristics of those living inthese communities. 16 If possible, information16 You may want to draw comparisons with thesituation in the rest of the country; i.e., is there anevidence base for saying whether the communitiesin the mining area are ethnographically different,relatively better off, or more economically orsocially deprived than the rest of the country?on changes in the communities since miningstarted in the area would be helpful, althoughthis information may be difficult to find.National census statistics may be able toprovide some basic information, such aspopulation size in the communities or themain economic activities in the region.Any previous fieldwork and qualitative orquantitative research work conducted inthe area will also be helpful. If no otherinformation is available, the communitysection will need to rely on information fromreports produced by the mining company.For example, social impact assessments,participation agreements, communitydevelopment plans or communityengagement plans.Information on the affected communitiesshould typically include:• the number of villages or towns in thearea, their proximity to the mine and thesize of their populations;• the languages spoken by communities,the main ethnic groups present (includingwhether there are any tensions betweengroups), major cultural characteristicsthat may impact upon the way thecommunities interact with the minesactivities (e.g., nomadic lifestyles maymean that there are more disputes overthe use of land in the area);• the level and quality of infrastructureand services in the area (is the arearelatively more or less well-serviced thanother areas in the country?);• poverty, unemployment levels and literacylevels of communities (if significantlydifferent from the rest of the country); and28 Mining: Partnerships for Development TOOLKIT

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinued• the main economic activities of those livingin the communities (including an outline ofany artisanal mining activities in the area),information on how many people in thelocal community are dependent on miningactivities for their livelihoods (and, if thedata already exists, an outline of anychanges in economic activity since thecommencement of mining in the area).STEP 2: Overview of economic and socialperformance of the participating miningoperation across the six prioritypartnership themesStep 2 describes the current activities andassesses the performance of theparticipating mining operation across thesix priority partnership themes that thepilot applications of the toolkit have shownto cover the principal parameters ofeconomic and social development: 171. mining and poverty reduction;2. mining and economic development:revenue management;3. mining and economic development:regional development planning;4. mining and economic development: localcontent;5. mining and social investment; and6. mining and disputes resolution.These six themes are described in Annex 2.A mining operation’s net positivecontribution to the six themes will, for themost part, require multiple partnershipsbetween different mining companies andbetween mining companies and otherorganizations. Thus, Step 2 also developsinformation about the economic and socialpartnerships the mining operation hasestablished with government (local, regionalor national), other mining operations orcompanies, donor organizations, nongovernmentorganizations, communityorganizations, and local communities.Gather information to describe the policies,programs, and management and monitoringarrangements established by the miningoperation to enhance the positive andmitigate the negative economic and socialimpacts of its project. 18 Source documentswill include project social impactassessment reports, communitydevelopment agreements, and social andenvironmental monitoring reports. Thesewill be available from the mining operation’sexternal relations or community relationsteam. Wherever possible, you shouldreference relevant pre-project baselinedata and any targets that have been setunilaterally or in agreement with theauthorities. Other data sources includelocal-level social reports and other publicreports on the initiatives of the miningoperation and its partners. A starting point17 The ICMM’s Resource Endowment initiative identifiedsix priority partnership themes (based on experiencein Chile, Ghana, Peru and Tanzania), wherepartnerships between companies and others mayhelp to enhance positive socio-economic outcomesand minimize adverse outcomes from mining.Experience has demonstrated that the six themesconstitute a broadly applicable categorization ofmining’s economic and social contribution; and,where possible, you are encouraged to organizefindings using these themes.18 For further information on how resolving local-levelconcerns and grievances can mitigate negativesocio-economic impacts, see ICMM’s publicationHuman Rights in the Mining & Metals Industry:Handling and Resolving Local Level Concerns andGrievances, October 2009, available atwww.icmm.com.MODULE TWOMining: Partnerships for Development TOOLKIT29

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinuedMODULE TWOshould be the project’s communitydevelopment agreement (if one exists). 19An initial list of partnerships can be derivedfrom the participating mine and its partners’websites and social reports. These sourcesmay list but not explain partnerships thathave since failed; however, it is important todetermine why the failure has occurred andto include the reason in the description ofthe failed partnership. Published sourcesmay not have the answers, and the questionmay need to be pursued in interviews withstakeholders in module five, Step 1 (or nowduring module two if you feel that the issuewarrants immediate attention).As well, the views, and especially the criticalviews, of both partners and communitiesshould be sought and included. Anyindependent evaluations of any programswould provide particularly relevant evidence.If documentary evidence is not available,then, as above, you will need to decidewhether to leave interviews to module fiveor to undertake sufficient interviews nowto flesh out your module two data.The information should be broadly pursuedand organized under the six partnershipthemes. Mining companies and partnershiporganizations will typically define, manageand communicate their economic and socialimpacts in their own terms. Therefore, youwill need to translate their programs andpolicies into a common understanding ofthese six themes. For further guidance, see19 To understand the issues, challenges andapproaches to community development in themining sector, see Community DevelopmentFramework Study for the Mining Sector in theRepublic of Guinea, available at http://commdev.org.ICMM’s Mapping in-country partnerships,which describes a range of past and currentpartnership initiatives and organizes themunder the six themes. 20When identifying and describing partnerships,it will be the specific social or communitydevelopment initiatives that first come tomind, such as malaria eradication, HIV/AIDSprograms or support for local schools.Important as they are, however, theyconstitute just one element of a muchbroader contribution, which many people,including those within the mining company,often do not appreciate fully. 21In other words, it will always be the casethat the main economic and socialcontributions of mining companies willemerge from their core business processes.These processes should not be difficult todescribe: paying taxes; employing people;procuring goods and services; skillsdevelopment; contributing to infrastructuredevelopment; 22 and implementingenvironment, health and safety programs. 2320 Mapping in-country partnerships, ICMM, February2010, available at www.icmm.com.21 See Strategic Community Investments: A Quick Guide(2010) produced by the International FinanceCorporation and available on the CommDev website(http://commdev.org).22 Infrastructure (such as roads, water supplies orpower supplies) that has been developed by largemines can be important economic and socialcontributions, depending on the degree to which theinfrastructure also meets the needs of and is madeavailable to communities.23 ICMM’s Good Practice Guidance on Health ImpactAssessment (2010), which sets out an overview ofhow mining and metals operations can affect thehealth and wellbeing of local communities anddescribes typical health impact assessmentprocesses, is available at www.icmm.com.30 Mining: Partnerships for Development TOOLKIT

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinuedFor module two, therefore, be mindful of theparticipating mine’s incidental, but often verysubstantial, positive influence via the implicitpartnerships that are to be found in day-todaycommercial arrangements between themine and local organizations.This module of the toolkit does not requireyou to make value judgments about acompany’s future priorities: focus instead onan analysis of the success of current effortsin terms of the six themes.Box 2.1, The Role (and Challenges) ofPartnerships in the Economic and SocialContribution of Mining, is based on recentICMM research 24 and discusses the potentialvalue of partnerships in the mining sector.How to present your findingsFor Step 1 (the description of the miningoperation and local communities), the aim isto describe the mine and local communitiesfor a broad, non-technical audience. Numericalinformation – for example, ore reserves,production and mine life or statistics aboutthe communities – can be inserted selectivelyinto an otherwise generally discursive narrativeabout the mine and the affected communities.For Step 2 (overview of economic and socialperformance), provide the mining operation’sown view of its overall contribution toeconomic and social development and howthis fits with the work of other organizationswithin and beyond government.MODULE TWOThe economic and social contributions ofmining operations arising from core businessprocesses (such as paying tax and employingpeople) should be described in broad terms;they will be quantified in module five.24 Mapping in-country partnerships, ICMM, February2010, available at www.icmm.com.Provide narrative descriptions of any existingpartnerships across the six priority partnershipthemes. Your resources may limit you to asimple listing and brief profiles of initiativesand partnerships. However, the applicationof the toolkit in Ghana has shown it to beworthwhile, if time and resources permit, togo a step further and develop a partnershipdatabase, which can be maintained andgradually updated over time. The databasecould be structured as indicated by the examplepartnership database in Annex 2, aninteractive form of which is provided on theCD included with the toolkit. These samedata – whether organized into a formaldatabase or not – can be referred to in latermodules, especially in module five.Mining: Partnerships for Development TOOLKIT31

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinuedMODULE TWOBox 2.1 The role (and challenges) of partnerships in the economic and socialcontribution of miningMining companies are typically involved in a range of in-country partnerships. Modernmines are often located in remote, poorly governed areas; and partnerships are one wayto stop a company’s social programs from drifting into roles and responsibilities moretypically found with government. Indeed, partnerships can go further and strengthenthe capacity of existing social and government institutions to carry out these functions.In similar vein, mining companies’ participation in partnerships allows them to maximizetheir indirect economic and social contributions in situations in which it would be difficult,or even inappropriate, for a company to undertake the work alone. For example,partnerships reviewed for the ICMM report Mapping in-country partnerships includedcollaborating with the World Bank and the government of Madagascar on the developmentof port facilities, creating collaborative local and regional development planning structuresin Latin America, resolving long-standing disputes in Colombia, building communityhealth centers in South Africa, and even improving fishing livelihoods in Indonesia.Notwithstanding these examples, ICMM’s partnership research has also thrown up twoconstraints on their broader uptake in the mining sector.The first is a lack of awareness of the potential benefits, and this issue is well illustratedby the difficulty of assessing the impacts of partnership. In other words, withoutunderstanding exactly how the quality of life has improved in a target community, howcan a partnership claim to be effective? Making this assessment is not easy when dataand analysis do not exist. It is precisely for this reason that we anticipate greater useof the toolkit and wider adoption of new metrics that look beyond the traditionalcategories of wealth or employment creation. A recent “business and development”seminar – organized by Business Action for Africa, the UK Department for InternationalDevelopment, and the Overseas Development Institute – featured several examples ofnew approaches to such assessments (see http://businessfightspoverty.ning.com).The second constraint on partnerships is that they are hard to replicate. Successfulprojects respond to specific local circumstances, and it is not easy to identify theelements that worked well in one situation that are likely to be effective in another.Some organizations, including the International Finance Corporation, have addressedthis issue by developing toolkits based on successful projects, such as the Mozlinksupplier development partnership in Mozambique.32 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramsANNEX2SummaryThe Resource Endowment initiative (REi)studies of Chile, Ghana, Peru and Tanzaniahave provided the Mining: Partnerships forDevelopment program with six “prioritythemes” around which partnerships betweencompanies and others have demonstrablepotential to improve the economic and socialdevelopment status of communities. The sixpriority partnership themes are:1. mining and poverty reduction;2. mining and economic development:revenue management;3. mining and economic development:regional development planning;4. mining and economic development: localcontent;5. mining and social investment; and6. mining and disputes resolution.The six themes will not only provide acoherent structure for a country case study,but also enable comparisons betweendifferent country case studies. You aretherefore encouraged to organize findingsaround these six themes.Co-operation and Development (OECD) andthe World Bank. You are encouraged todiscuss the six themes during interviewswith stakeholders in module five (or duringinterviews to supplement the module twoinformation if necessary) and to develop anddocument operational definitions that suitthe location and make sense to the peoplewho live and work there.The next section captures the relationshipsbetween the six partnership themes andthe respective roles of potential partners.These relationships and the implicit interestsand responsibilities of the partners lie at thecore of the framework of Mining: Partnershipsfor Development.For clarity, the six themes are discussedbelow one by one (even though they overlapand most partnerships will explicitly addresstwo or more themes in the one program).The annex concludes with an examplepartnership database organized around thesix themes.This annex should be read in conjunctionwith modules two and five of the toolkit.There are, however, no universally agreeddefinitions for these themes. In fact, differentinterpretations may have, in part, led todifferences of opinion about mining’s actualand potential economic and social effects.What follows, therefore, is general guidanceon the issues that each theme covers. It hasbeen based on interpretations by suchorganizations as the International MonetaryFund (IMF), the Organisation for EconomicMining: Partnerships for Development TOOLKIT33

Six priority partnershipthemes for socio-economicprogramscontinuedANNEX 2Conceptualizing the six themesICMM has developed the diagram, shownbelow, to help convey visually the roles andresponsibilities of partner organizations foreach of the six themes.This diagram has proved to be a useful andrelatively simple way to representpartnerships visually. The four outer boxesrepresent the four main partners involved incross-sector collaboration. Indicative rolesand responsibilities of the partners are listedPartnership diagram templatein the bullet points (‘Text here’). The centralbox shows which of the six themes is beingdescribed, for example ‘Mining and povertyreduction’. Note that while partnerorganizations have different roles andresponsibilities, their efforts should all bealigned on this central challenge – the fourorganizations are not working in isolation.In order to show how this diagram works inpractice, this annex shows several illustrativeversions, drawing on ICMM’s work aroundthe world.Companies:• Text here• Text here• Text here• Text hereDonor agencies:• Text here• Text here• Text here• Text hereMining and THEME(e.g. poverty reduction)Host governments:• Text here• Text here• Text here• Text hereNGOs, civil society, communities:• Text here• Text here• Text here• Text here34 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramscontinuedMining and poverty reduction“Poverty reduction” refers to economic andsocial policies and programs that promotegrowth and reduce poverty in a community, agroup of people, or a country. Such initiativeswill be generally aligned – where possible(and where quantifiable) – with the UN’sMillennium Development Goals. 25 They maycreate jobs and micro-enterprises. Or theymay increase access to basic goods andservices for vulnerable and economicallymarginalized groups, such as women,unemployed youth, indigenous communities,or small-scale miners. As well, povertyreduction will usually be a consequence ofstrategic social investments in other areas,such as health and education.Large-scale mining often occurs in remoteregions of developing countries, wheresubsistence agriculture may be the onlyother form of economic activity. Partnershipsfor agricultural improvement are thereforean important element of the mining andpoverty reduction agenda.ANNEX 2Mining and poverty reduction partnership diagramThis diagram (a working version) comes from a mapping of partnerships in the Lao PDRCompanies:• Implement community developmentplans• Undertake biennial household surveysto understand mining’s impact onpoverty reductionInternational organizations:• Provide technical assistance and capacitybuilding to government• Establish guidelines and social safeguards• Undertake local projects e.g. supportingproducers of traditional goodsMining andpoverty reductionGovernment:• Implement national growth and povertyeradication strategyCivil society:• Undertake business and biodiversityprograms with local communities25 www.un.org/millenniumgoals.Mining: Partnerships for Development TOOLKIT35

Six priority partnershipthemes for socio-economicprogramscontinuedANNEX 2Mining and economic development:revenue management“Revenue management” is defined for thepurposes of this toolkit as steps thatcompanies can take to ensure effective useof revenue received from mining, particularlyat a subnational level. This may involvesupport for government capacity building,technical assistance projects, or revenuetransparency projects. The ExtractiveIndustries Transparency Initiative (EITI) 26 isyielding a growing body of data on revenueflows. In principle, the case for action in thisarea seems to be self-evident. In practice,however, there are political sensitivities ofappearing to influence a host country’sdecisions on public expenditure.Nevertheless, it is useful to explore theissue during interviews with miningcompanies and other stakeholders because,either way, it is a widely held view that theissue of revenue management holds one ofthe keys to leveraging economic and socialdevelopment from mineral wealth.Mining and economic development: revenue management partnership diagramThis diagram is taken from a summary of findings from Chile, Ghana, Peru and Tanzania 27Companies:• Support Extractive IndustriesTransparency Initiative (EITI)• Risk analysis extended to national andsubnational governance risk• Support capacity buildingDonor agencies:• Capacity building and transparentrevenue management to subnationallevels• Sound investment climate• Reform mineral legislationPartnership forenhanced revenuemanagementHost governments:• Adopt EITI• Sound macro management• Sequenced, decentralization of fiscalauthority to subnational level + publicadministration reformNGOs, civil society, communities:• Hold governments to account formineral revenues• Develop local capacity26 http://eiti.org. 27 ICMM Spotlight series 03: Ways Forward (2006).36 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramscontinuedMining and economic development:regional development planning“Regional development planning” can bedefined as public planning that supportslonger-term economic diversification at asubnational level. It is relevant to miningcompanies for three reasons. First, mininginfrastructure investments can, in somecircumstances, bring regional benefits ifthey can be planned and designedaccordingly. Second, large mines can createcultures of dependency, leading to a postclosureeconomic void, unless efforts aremade to diversify the local and regionaleconomy. And third, the extension of miningbased on exploration success will benefitfrom established infrastructure andappropriate planning provisions over areasknown to be prospective for minerals.The following diagram is taken from asummary of findings from Chile, Ghana,Peru and Tanzania. Each of the five boxescan be further elaborated. The pull-out boxin the diagram on the following page showsan elaboration of the central box, drawingon input from a global workshop onpartnerships for regional developmentplanning, hosted by ICMM in October 2010.ANNEX 2Mining companies may engage in regionaldevelopment planning either as participantsin a government- or donor-led process or asinitiators of a collaborative, participatory andcommunity-owned process.Mining: Partnerships for Development TOOLKIT37

Six priority partnershipthemes for socio-economicprogramscontinuedANNEX 2Mining and economic development: regional development planning diagramCompanies:• Link mine infastructure to regionalplanning• Participate in subnational developmentplanning• Sponsor economic diversification initiativesDonor agencies:• Provide resources to support regionaldevelopment planningPartnership forregional developmentplanningHost governments:• Invite corporate participation in regionalplanning• Opportunities for economic diversification• Consider regional/local developmentagencyNGOs, civil society, communities:• Participate in regional developmentplanning• Deliver development/diversificationprojects1. Leverage resources (funds, skills, networks)2. A clear split of roles e.g MoU is essential (but not enough)3. Good communications with communities are essential4. Evidence based ‘business case’ – focus government priorities5. Engage as part of an industry body (or avoid duplication)6. Cross sector partnerships may be vital for long termsustainability e.g. Tourism7. Understand what government needs – align, don’t fightagainst it8. Think strategically, but be pragmatic; quick wins build trust38 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramscontinuedMining and economic development:local content“Local content” can be defined as thesourcing of labour, materials, goods andservices from small businesses andcommunities close to a mine site. The exactgeographical area constituting “local” willdepend in large measure on what is availableand on cost, but the meaning of “local”should in principle be discussed and agreedon a site-by-site basis with communities.From a mining company’s viewpoint, the costor inconvenience of a broader definition oflocal content (rather than looking only atlocal employment or local procurement)needs to be balanced against the broaderbenefits that it will bring.It is also possible to go into more detail on aspecific subject area. For example localcontent covers a range of topics, including:1. Forming clusters and establishingsupplier development programs2. Strengthening enabling environment forsmall business/micro-enterprisedevelopment3. Providing access to finance for smallbusinesses/micro-enterprises4. Providing local employment and trainingopportunitiesThe following diagram looks at one of theseaspects in detail, providing some examplesunderneath.ANNEX 2Partnerships to promote local content willoften need to ensure that local labour,materials, goods and services meet thequality standards for companies. The theoryand organizing principles for partnerships ofthis sort are not well defined and would be auseful focus of your research addressing thistheme. 2828 See Developing SMEs through Business Linkages:A manual for practitioners based on the MozLinkmentorship experience in Mozambique, available athttp://commdev.org.Mining: Partnerships for Development TOOLKIT39

Six priority partnershipthemes for socio-economicprogramscontinuedANNEX 2Mining and economic development: local content partnership diagramCompanies:• Collaborate with peers and lead contractorsto transfer skills and knowledge to localbusinesses, e.g. ISO certification• Encourage participation of Artisanal andSmall-scale Miners (ASM) in clusters,where good relationship exists• Expand scope of clusters to includeregional development planningGovernments:• Incentivize and enable groups oflocally-based companies and suppliersto form clusters• Encourage public agencies to participatein clusters• Facilitate the development of localindustrial/supplier parksEnhancing local contentin the mining sectorForming clusters andestablishing supplierdevelopment programsDonors:• Facilitate public/private dialogue toidentify opportunities for clusterformation• Provide technical assistancee.g. supplier development training• Co-fund establishment of supplierdevelopment programNGOs, civil society, communities:• (Development NGOs)Encourage minority- or female- ownedsuppliers to participate• (Technical institutions and universities)Provide training for small businessesExamples• Antofagasta mining cluster• IFC/Newmont/technoserve linkages program in Peru• ODI/EAP guidance notes on working with lead contractors40 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramscontinuedMining and social investment“Social investment” can be defined as theprovision and use of finance to generateeconomic and social returns in the localcommunity, typically in health, education orhousing. 29 Social investment by miningcompanies has traditionally been undertakenad hoc or on a philanthropic basis. However,many mining companies now see that socialinvestment is in their strategic interest.They are therefore starting to align theirinvestments, where possible, with communityneeds, with the long-term objectives ofstrengthening community self-reliance,building the capacity of local authorities tomeet local needs, and reducing dependenceon the company.A narrow, philanthropic view persists in manycountries of “social investment” as short-term,discretionary spending, rather than as the sumtotal of a mining company’s contribution toeconomic and social development. You shouldbe sure to be clear on what your documentarysources and interviewees mean by the term.ANNEX 2Mining and social investment partnership diagramThis diagram (a working version) comes from a mapping of partnerships in the Lao PDRCompanies:• Wide-ranging community developmentcommitments at local and regional levels• Encouraging community self-governancevia participatory planningInternational organizations:• Facilitation of social developmentprojects at provincial levelMining and socialinvestmentGovernment:• Delivery of projects funded by SeponDevelopment Trust Fund• Government staff secondments tocompanies, partly to build capacity onsocial issues managementNGOs, civil society, communities:• Project on forestry and naturalresources management (with Phu Biaand communities)• Projects in collaboration with mineslinking conservation and livelihoods29 See Strategic Community Investments: A Quick Guide(2010) produced by the International FinanceCorporation and available at http://commdev.org.Mining: Partnerships for Development TOOLKIT41

Six priority partnershipthemes for socio-economicprogramscontinuedANNEX 2Mining and disputes resolutionMining will inevitably bring some negativeimpacts. “Disputes resolution” is a processto investigate complaints, resolve disputes,and settle grievances between communitiesand companies. It requires a reciprocalaccountability for allegations, statements,and commitments and a process in whichaffected communities have confidence.Mining and disputes resolution partnership diagramThis diagram is taken from a summary of findings from Chile, Ghana, Peru and TanzaniaCompanies:• Establish disputes resolution proceduresearly on• Link to local trusted and legitimateinstitutions• Have open dialogueDonor agencies:• Develop/spread best practice in disputesresolution• Help strike balance between individualand national need• Engage as honest brokerCollaborativeapproaches for disputesresolutionHost governments:• Adopt leadership role by establishingcredible disputes resolution mechanisms• Adopt international best practice oncontentious issues, e.g. resettlementNGOs, civil society, communities:• Support the creation of credible disputesresolution mechanisms42 Mining: Partnerships for Development TOOLKIT

Six priority partnershipthemes for socio-economicprogramscontinuedAn example partnership databaseTable A.2.1 is the Summary table from anexample partnership database built fromthe experience of a number of large miningprojects in Ghana using Microsoft Excel.Each cell of this particular Summary tableprovides a hyperlink to a more detailed table(which you can view using the electronicversion of this database that is availableat www.icmm.com/mpdtoolkit; examples areprovided in Table A.2.2: Table ONE, ahyperlinked interview table from theexample partnership database andTable A.2.3: Table THREE, a hyperlinkedinitiatives table from the examplepartnership database ), but a table of thistype would still be useful as a simple listingof the mining operation’s initiatives underthe same headings, with a brief explanationof each. Or it might be extended to capturethe parallel or complementary initiatives of,say, the government, of international donorsor, indeed, of any of the other stakeholdersthat are listed in the rows of the matrix.The same database can also holdstakeholder opinions as non-companyreference points by which to evaluate theprogress of an initiative. In Ghana, forexample, the hyperlinked Tables ONE to SIXinclusive were assembled from structuredfield interviews with each of the stakeholderslisted in the matrix. The results of theopinions could be presented as discursivetext in the corresponding sections of theinitiatives tables (Tables SEVEN to ELEVENin the example).However, since the two sets of data can beaccessed by hyperlink from the singleSummary table (as illustrated), the readercan view both the descriptions of particularsocio-economic initiatives (see the exampletable in Table A.2.3) and the opinions aboutthe initiatives from a variety of stakeholders.The structure of the example database alsoallows the researchers themselves to addtheir own comments and assessments tothe opinion tables (see the final row ofTable A.2.1 and of Table A.2.2).ANNEX 2A database similar to the example can begradually developed over time; it need notbe treated as a one-off exercise. It willhave value even if it can only be partlyfilled initially (as, indeed, is the case in theGhana example in Table A.2.1). Its merit isthat it shows that a mining operation’ssocio-economic initiatives are not standaloneactivities but take place in the contextof broader initiatives in which other partieswill have both a stake and responsibilities.Mining: Partnerships for Development TOOLKIT43

Table A.2.1: Summary table for an example partnership databaseISSUESONEPovertyreductionTWORevenuemanagementGovernment –central and localOpinions frominterviewsTable ONETable TWOInitiatives/actionsTable SEVENTable EIGHTMiningcompaniesOpinions frominterviewsTable TWOInitiatives/actionsDonorsOpinions frominterviewsInitiatives/actionsTable SEVENTable EIGHTNGOsOpinions frominterviewsInitiatives/actionsCommunityorganizationsOpinions frominterviewsInitiatives/actionsLocalcommunitiesOpinions frominterviewsInitiatives/actionsResearcher’scommentsTable ONETHREERegionaldevelopmentplanningTable THREETable NINETable THREETable NINETable THREEFOURIncreased localcontentTable FOURTable FOURTable TENTable FOURFIVESocialinvestmentTable FIVETable FIVETable ELEVENSIXDisputesresolutionTable SIXTable SIXTable SIXTable SIX44 Mining: Partnerships for Development TOOLKIT

Measuring themining industry’scontribution tothe host countryMODULETHREE

“HOW HAS ECONOMICGROWTH AND SOCIALDEVELOPMENT CHANGEDIN PERIODS OF MININGEXPANSION?”Image courtesy of Xstrata

Measuring the miningindustry’s contribution tothe host countryMODULETHREEPurposeThe purpose of module three is tounderstand how economic growth andsocial development have changed in thehost country on a national level duringperiods when mining has assumed agreater or lesser relative importance.The correlations that appear may or maynot point to cause and effect. They shouldat least, however, help to interpret otherdata, inform future refinements of dataspecifications, or encourage partnerships.You should precede your commitment tomodule three by confirming that the miningindustry is large enough to influence thebroader economy (as was the case inTanzania between 1999 and 2009, whenfive large new mines opened). If “yes”,then module three will be particularlyrelevant to the country case study or to ashorter paper on mining, especially if youaim to draw some comparisons with othercountries in the ICMM series (Chile, Ghana,Peru, Tanzania and the Lao PDR).On the other hand, you may decide thatmining has occurred too recently or beentoo limited to represent more than a smallelement in the economy, in which casenational-level contributions may not yet bevisible in the economic data. In this case,module three may not be worth pursuing.This will be the case whether you arewriting a country case study, limited issuespaper that picks up a few of the modules,or shorter paper on mining.Gathering the dataMeasurement at the national level isundertaken and presented in two steps:• Step 1: economic growth; and• Step 2: poverty alleviation and relatedsocial investment.STEP 1: Economic growthFor Step 1, you will need to gather data onthe history of mining in the host country,such as the dates when significant miningactivity began, grew, declined or ended,as well as data on economic growth.Data sources for mining history includegovernment departments responsible formineral exploration and mining, thedatabases of companies currently exploringin the country, 30 and country histories.Economic growth should be measured byexamining standard national income data ontwo variables:• the growth rate of gross domestic product(GDP); and• the growth rate of non-mineral GDP.You can extract data on these variablesfrom the World Bank’s World DevelopmentIndicators (WDI) (available atwww.worldbank.org). The data should coveras long a period as possible either side of30 Modern mining companies will always base theirexploration programs on an understanding of themineral geology of the country, starting withhistoric exploration data and, especially, the miningrecords that show them exactly what the mostaccessible areas have already yielded. Start withthe company participating in the module two work,but also ask other mining companies currentlyexploring in the host country.Mining: Partnerships for Development TOOLKIT47

Measuring the miningindustry’s contribution tothe host countrycontinuedMODULE THREEthe main episodes of mining. Short dataperiods can be supplemented if countryleveldata are available (for example, fromthe national central bank or statistics office).The longest sets of GDP-per-capita timeseries have been developed by the lateProfessor Angus Maddison and colleaguesat the Growth and Development Centre ofthe University of Groningen. 31 These datacover almost every country in the world andcan set recent growth in any economy in atime context of decades or even centuries.Be aware, however, the GDP indicator haspitfalls, as well as benefits (Box 3.1).Box 3.1: Measuring development withgross domestic product –a warning!The development of a country is toocomplex and multi-dimensional aprocess to be definitively tracked by asingle indicator. The standard metric,GDP, offers simplicity and a usefulstarting point but has basic weaknesses.You cannot, for example, measure theproduction of all activities with equalprecision, particularly in an economywhere outputs like subsistence foodproduction are never formally priced ina commercial market.Similarly, GDP assumes that all outputshave a value equal to the price at whichthey are sold and so cannot, forexample, fully represent the overallvalue of hospitals, schools, or publicgoods and services. Services deliveredfree to a family member likewise havea nominal value of zero. Nor can GDPmeasure positive or negative nonquantifiableeffects, such as leisuretime and environmental degradation.31 Professor Maddison’s two-volume work, The WorldEconomy, contains GDP-per-capita estimates foralmost all countries of the world for many decadesand, in some cases, centuries. It can be ordered inpaperback or as an E-book (PDF format) from theOECD bookshop, online at www.oecdbookshop.org.32 Available via the UNDP Human Development Reportwebsite at http://hdr.undp.org/en/statistics.You are therefore recommended tocombine GDP with other socialindicators into a composite measure ofdevelopment, or the “quality of life”.The UNDP’s human development index(HDI) is the most well-known of suchcomposite measures 32 and takes accountof more fundamental aspects of people’slives, such as life expectancy andliteracy, than the narrow, monetaryscope of GDP.48 Mining: Partnerships for Development TOOLKIT

Measuring the miningindustry’s contribution tothe host countrycontinuedSTEP 2: Poverty alleviation and relatedsocial developmentYou will be able to measure povertyalleviation and related social developmentby the indicators established to monitorcountries’ progress towards the UnitedNations Development Programme’s(UNDP’s) Millennium Development Goals.The Millennium Development Goals websitelists the eight goals broken down into 21quantifiable targets that are measured by60 indicators. 33 The relevant indicators areavailable for most countries from the UNDPand can be individually selected from a longlist to create a customized set of data forone or more countries or regions that canthen be downloaded as a Microsoft Excelfile. (Go to http://hdr.undp.org/en/, select thetab “Countries”, then the country of interestand then “Build Your Own Tables”.)Millennium Development Goals monitoringis relatively recent, and earlier data maybe obtained from the World Bank’s WorldDevelopment Indicators. 34 As well, manylower-income countries now monitor theirprogress in these areas, for example, inspecialized surveys, national census data,poverty reduction studies and sector surveys;and these data may be available from acountry’s national statistics office, fromother government departments or fromdonors. Alternatively, you may find somedata available on your country from theMultidimensional Poverty Index (MPI). 35Intra-country comparisons of local orregional versus national socio-economicdevelopment trends is covered later in33 The full list of goals, including targets within eachgoal, is available at www.undp.org/mdg/basics.shtml.34 http://data.worldbank.org/indicator.module five, but you may find that modulethree is a convenient opportunity to tapnational and international sources for dataat the levels of local and regional government.UNDP, for example, produces regional-levelstatistics for some countries.There are limits to how much a normalmining operation can reduce local povertydirectly: employment, for example, willtypically not be large; the most expensiveconsumables will be imported; and mostdirect payments will go to the nationalgovernment. However, the indirect potentialto improve human welfare in the vicinity of amine can be considerable, for example, ifrevenues from mining are put to good use atlocal (not just national) level. Module fiveaddresses mining impacts at the local scaledirectly, but you should be alert to anyevidence at the national level of localinitiatives of government, as this willinvariably be a focus of future criticalscrutiny of toolkit results. 3635 In addition, it is worth checking whether yourcountry is one of 104 that have been the subject ofanalysis by the Oxford Poverty and HumanDevelopment Initiative and the UNDP HumanDevelopment Report ,which in November 2010launched the Multidimensional Poverty Index (MPI).This is an innovative new measure that gives a vivid“multidimensional” picture of people living inpoverty by assessing the nature and intensity ofpoverty at the individual level in education, healthoutcomes, and standard of living. If you do use theMPI data in your study, please cite it as: Alkire,Sabina and Maria Emma Santos. 2010.Multidimensional Poverty Index: 2010 Data. OxfordPoverty and Human Development Initiative.Available at:www.ophi.org.uk/policy/multidimensional-poverty-index/.36 The World Bank website provides information on awide range of useful tools for conducting economicanalysis in poverty and social impact analysis and anumber of case studies (including information on theDemocratic Republic of the Congo Poverty and SocialImpact Analysis Mine Sector Reform).MODULE THREEMining: Partnerships for Development TOOLKIT49

Measuring the miningindustry’s contribution tothe host countrycontinuedMODULE THREEHow to present your findingsGenerally, the data you gathered in Step 1should be presented as graphs or tableswith an accompanying narrative drawingattention to the main points illustrated bythe graphs or listed in the tables. Figure 3.1provides an example of how you mightpresent the GDP information.You should present information for Step 2as graphs or tables with a brief explanatorynarrative. (Box 3.2 illustrates the kind ofconclusions that these data might support.)If you can, benchmark the host countryagainst countries in the same geographicalregion or in the same World Bank incomegroup.The benefits of benchmarking by the humandevelopment index are apparent in Figure3.2, which shows how GDP and the HDI cangive different results for different countries.Angola, for example, has a large petroleumindustry, investment in which will make alarge contribution to GDP per capita.However, the Sao Tome and Principeexample shows that a low GDP may havelittle bearing on the more completeindicators of “quality of life” measured bythe HDI.Azerbaijan (Table 3.1) provides anotherexample of how the Human DevelopmentReport data available on the UNDP’s websitecan be used to illustrate the widely divergingHDI scores in countries with similar levelsof income measured by GDP.50 Mining: Partnerships for Development TOOLKIT

Figure 3.1: Graphic example presenting growth rates of GDP per capita, 1956–201210%8%1986Reform program starts1998Currency crisis followingmonetary expansion6%4%2%0%-2%-4%-6%-8%-10%2002New mining law kick-startslarge scale investments195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012NOTE: Data from Professor Angus Maddison/University of Groningen and World Bank figures.Mining: Partnerships for Development TOOLKIT51

Measuring the miningindustry’s contribution tothe host countrycontinuedMODULE THREEBox 3.2: Findings on economic growth from four country case studiesThe Chile, Ghana, Peru and Tanzania case studies all show a relationship betweenmining investment and sustained national economic improvement. In each case, thenational government had laid the policy foundation for growth by a combination ofmacroeconomic stabilization and mineral legislation reform.The case studies also show the role of mining companies in local projects, such asschools and hospitals. The social investment budgets were modest (for example,US$5.6 million a year for Peru’s US$2.3 billion Antamina mine), but they werenonetheless locally significant. Meanwhile, the tax revenues from mining were potentiallybringing growth and socio-economic development locally, as well as nationally.For all these positive indicators, however, the striking finding has been of persistentlocal dissatisfaction, even in these relatively successful countries. Obviously, levels ofpoverty could always have fallen faster; but the root cause seems to have been morecomplex and, hence, more difficult to address than mere improvement in performance.Rather, companies were facing a vexing coincidence of local dissatisfaction and distrustduring (and indeed in spite of) a general economic boom. This paradox fits researchfindings in many (and indeed not only) mining countries: growing horizontal inequalitybetween rich and poor induces social tension and conflict even as general incomes rise.The six most common specific problems found across the four case studies were:• the adequacy and fairness of the tax regime for mining in the host country;• the revenue allocation system, particularly when it constrains the efficient andeffective use of public resources, including those generated by mining taxes androyalties;• conflicts over land use and property rights;• environmental damage and concerns;• conflicts between large-scale and artisanal mining; and• the problems associated with mine closure.Source: ICMM Spotlight Series 02: The Challenge (2006).52 Mining: Partnerships for Development TOOLKIT

Measuring the miningindustry’s contribution tothe host countrycontinuedFigure 3.2: Human development index provides a useful accompaniment to narrowdefinitions of income as measured by GDP per capitaHuman development index0.70GDP per capita PPP US$6,000MODULE THREE0.685,500Sao Tome and Principe0.660.645,0004,5000.624,0000.603,5000.583,000Angola0.562,5000.542,0000.521,5000.501,000NOTE: The maximum value for the human development index is 1.0.Source: Indicator table H of the UNDP Human Development Report 2009.Mining: Partnerships for Development TOOLKIT53

Table 3.1: Example presentation of human development index data for AzerbaijanHDI value-ranking(and value of index);maximum value = 1.0Life expectancy at birth;ranking (and years)Adult literacy rate(% ages 15 and above)1.Norway (0.971)1.Japan (82.7)1.Georgia (100.0)84.Armenia (0.798)99.Indonesia (70.5)11.Russian Federation (99.5)86.Azerbaijan (0.787)101.Azerbaijan (70.0)13.Azerbaijan (99.5)87.Thailand (0.783)102.Egypt (69.9)14.Armenia (99.5)182.Niger (0.340)176.Afghanistan (43.6)151.Mali (26.2)Source: UNDP, Human Development Report.Combined grossenrolment ratio(%)1.Australia (114.2)118.Albania (67.8)120.Azerbaijan (66.2)121.Syrian Arab Republic (65.7)177.Djibouti (25.5)GDP per capita(PPP US$)1.Liechtenstein (85,382)82.Thailand (8,135)84.Azerbaijan (7,851)85.Peru (7,836)181.Congo (DemocraticRepublic) (298)54 Mining: Partnerships for Development TOOLKIT

The proximateaspects ofgovernance thathelp or hindermining’s economicand socialperformanceANNEX 3Calculating and reportingtax paymentsMODULEFOUR

“IMPROVEMENTS INGOVERNANCE, ALONGWITH REFORMED (ANDMORE PREDICTABLE)MINERAL LEGISLATIONAND SIGNIFICANTLYIMPROVED MACROECONOMICMANAGEMENT, ARETHE THREE FACTORSUNDERPINNING MINING’SCONTRIBUTION TOECONOMIC GROWTH ANDPOVERTY REDUCTION.”Image courtesy of Nippon Mining & Metals

The proximate aspects ofgovernance that help orhinder mining’s economicand social performanceMODULEFOURPurposeGovernance consists of the traditions andinstitutions by which authority in a countryis exercised. This includes the process bywhich governments are selected, monitoredand replaced; the capacity of the governmentto effectively formulate and implementsound policies; and the respect of citizensand the state for the institutions thatgovern economic and social interactionsamong them. 37The purpose of module four is to identifyand discuss proximate elements in the hostcountry’s governance that could affect, orhave affected negatively or positively, theeconomic and social benefits of mining. 38Such elements include good governance,a sound exchange rate policy, and goodmacroeconomic management. In contrastto proximate influences, fundamentalinfluences include direct contributions togovernment revenues, gross domesticproduct (GDP), and the balance of payments.These are assessed in module six.Understanding the main governanceindicators at this point will help youranalysis (for example, of national andregional differences) during subsequentmodules of the toolkit (and especiallymodule seven).37 This definition of governance is from the WorldBank’s Worldwide Governance Indicators projectwebsite athttp://info.worldbank.org/governance/wgi/index.asp.38 A proximate cause is an event that is closest to, orimmediately responsible for causing, some observedresult. An argument often put forward in the“resource curse” debate is that a large volume ofminerals exports in a small economy can lead to anappreciating real exchange rate.Gathering the dataModule four requires data about two of theproximate components of governance:• Step 1: the quality of governance; and• Step 2: the quality of macroeconomicmanagement.STEP 1: The quality of governanceThe main purpose of this part of modulefour is to identify factors in governance thatare potential pre-conditions to the size ofthe impacts that mining can or might haveas identified in the other modules. A numberof standard indicators provide a basis fordoing this.General governance indicatorsThe World Bank’s Worldwide GovernanceIndicators project has reported governanceindicators for 221 countries for the period1996 to 2008. 39 You are recommended tomake use of their six aggregate indicators:• Voice and Accountability: the extent towhich a country’s citizens are able toparticipate in selecting their government,as well as freedom of expression,association, and the press;• Political Stability and Absence of Violence:the likelihood that the government will bedestabilized by unconstitutional or violentmeans, including terrorism;39 The World Bank’s Worldwide Governance Indicatorsreflect the grouping of several hundred individualvariables measuring perceptions of governancedrawn from 25 separate data sources andconstructed by 18 different organizations into thesix aggregate indicators of quality of governance.Mining: Partnerships for Development TOOLKIT57

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOUR• Government Effectiveness: the quality ofpublic services, the capacity of the civilservice and its independence from politicalpressures, and the quality of policyformulation and implementation, and thecredibility of the government’scommitment to such policies;• Regulatory Quality: the ability of thegovernment to formulate and implementsound policies and regulations that permitand promote private-sector development;• Rule of Law: the extent to which agentshave confidence in and abide by the rulesof society, including the quality of contractenforcement, property rights (Box 4.1),the police, and the courts, as well as thelikelihood of crime and violence; and• Control of Corruption: the extent to whichpublic power is exercised for private gain,including both petty and grand forms ofcorruption, as well as “capture” of thestate by elites or private interests.The first and fifth of the indicators togethercharacterize human rights in a givencountry. 40The detailed information underlying each ofthese six indicators is presented in a varietyof forms (including times series in chart ortable format). You should analyze theseindicators in some detail for influences thatare helping or hindering the host country’sability to convert mining wealth into broadereconomic and social development.40 For more information on this topic, see the ICMMpublication Human Rights in the Mining & MetalsIndustry: Overview, Management Approach andIssues, 2009.Try wherever possible (and especially withissues such as “government effectiveness”and “control of corruption”) to differentiatethe situation at national, regional and locallevels.The broad institutional aspects ofgovernance structures that could be relevantto a country case study or shorter miningissuespaper are:• features of the political and administrativesystem;• features of the legislature;• federalism or devolution of powers; and• electoral rules.You might also draw on other indicatorsof governance, if appropriate, such as theState Fragility Index, which compares theeffectiveness and legitimacy of politicaland economic systems across the world,or the Corruption Perceptions Index, whichmeasures the perceived level of public-sectorcorruption in 180 countries and territories. 41You should be aware that the link betweengood governance and economic growth isnotoriously hard to establish empirically, sothese governance indicators by themselvesare unlikely to lead you to fundamental orspecific explanations for good or badeconomic performance. Nonetheless,mining’s potential contribution to broader41 The State Fragility Index is included in each year’sGlobal Report, available from the website of theCenter for Systemic Peace (affiliated with theCenter for Global Policy at George MasonUniversity, USA) at www.systemicpeace.org; seeTransparency International’s website atwww.transparency.org for the CorruptionPerceptions Index.58 Mining: Partnerships for Development TOOLKIT

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedBox 4.1: Conflicts over property rights – findings from the inital four country case studiesCompetition for land between agriculture and large-scale (especially surface) mining isa serious political and economic issue in countries where mineral deposits and mininginfrastructure occupy land already settled or under productive use. This is the case inGhana, Tanzania and Peru: the poorest families are typically subsistence agriculturalistsor pastoralists, whose livelihoods and income have often improved little despitemacroeconomic recovery (even in Ghana, where poverty reduction has been otherwiseimpressive). Of four case study countries, only Chile has shown broad-basedimprovement, not primarily through redistributive policies but rather through thecreation of alternative employment opportunities.MODULE FOURLand use conflicts typically arise when local communities do not concur with centralgovernment decisions over the property rights granted to (foreign) mining companies.Such contention may arise because formal property rights are inconsistent withtraditional claims (e.g., in communal farming areas) or simply because local communityrepresentatives have not been (sufficiently) involved in policy decisions that haveaffected “their” land. Weakly governed countries may use clumsy methods to enforcethe resettlement of populations to which they have committed in their agreements withthe mining companies.The nature of land disputes varies. In Peru, property rights have been contested becausepeople do not accept the political legitimacy of government policy decisions. In Ghana,NGOs have argued that many concessions in Wassa West (Western Region) andelsewhere are far too large (up to 150 km 2 ) and that too many livelihoods and households(running into the thousands) have been unnecessarily affected. The recent mines inTanzania have given rise to similar conflicts, and it seems that the social policies andcommunity relations arrangements of mining companies were either absent at crucialtimes or simply unable to settle fundamental differences over land use rights.Mineralization on the leases granted to large companies will also attract small-scaleminers, with attendant problems, mainly of safety and security. These issues requireclear and broadly accepted governance structures, decision-making processes andcommunication channels to balance different interests and achieve equitable butenforceable compromises. The Tanzania of the mid-1990s did not have the structuresand arrangements to settle these issues; and the situation persisted into 2006, witheruptions of conflict between small-scale miners and large mines over access toprospective ground. The small-scale miners will often have no legal licenses to mine;but, when they have no other income, they understandably do not see why they aredenied access to land that appears to be lying fallow.Mining: Partnerships for Development TOOLKIT59

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOUReconomic and social development will beseriously compromised where publicresources are misallocated by a politicalsystem that rejects freedom and entrenchespolitical elites.Remember, the main purpose of this partof module four is to identify factors ingovernance that are potential pre-conditionsto the size of the impacts that mining can ormight have as identified in the other modules.For this reason, we have included Annex 3on the transparency of fiscal revenues andoutlined how to go about collecting andpresenting this data.Governance indicators of greater relevancefor miningThe main problems created for miningcompanies by governance weaknesses aredelays to project approvals, the imposition ofhidden costs in the form of bribes or otherunproductive charges, and lengthy litigationover matters in dispute.These problems can not only affectoperability and profit, but also diminish thebenefits from a company’s socio-economicprograms. Indeed, operability and profitare prime factors in a private company’sdecision to invest, without which issuesof the benefits from a company’ssocio-economic programs become academic.and lack of consistency between regionaland national governments, or serious ethnicimbalance in the institutions charged withthe equitable distributions of benefits.In particular, examine the World Bank’sannual Doing Business reports, 42 which in2010 ranked 183 economies both overall andagainst ten specific aspects of the conductof business. This information can be easilyassembled to complement the more generalgovernance information from other sources.There are, in addition, mineral developmentand conservation issues on which governmentswill have views not necessarily aligned withthose of mining companies and investors(Box 4.2).You are therefore encouraged to assembleindicators that refer most directly to theproblems that a mining company (and itslocal business partners) may have doingbusiness in the host country. These indicatorsmight show high levels of centralizedcorruption, inappropriate use of force inimposing property rights, poor co-ordination42 Available from www.doingbusiness.org.60 Mining: Partnerships for Development TOOLKIT

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedBox 4.2: Mineral development policyA mining company will decide to investwhen a mineral deposit meets its rateof-returntargets and when the projecthas advantages over rival projectsproposed either within the companyitself or by competitors.A government, on the other hand, willlook at a mining investment proposalfrom a quite different perspective of theshort- and long-term national interest.A government, therefore, will ask itselfa correspondingly different range ofquestions, such as:1. What is the economic value to thecountry of leaving the asset in theground?2. What are the costs and benefits ofdelaying extraction into the future(both in total and at the margin)?3. Could the reserves be used morestrategically for economic orindustrial diversification or for moreeffective management of the timingof revenue flows?4. Has the potential for extracting thereserves locally been fullyinvestigated?5. Is the country getting the best valuewith a particular investor ascompared with a competitor?STEP 2: Macroeconomic managementStep 2 addresses a group of “proximate”influences on the economic and socialbenefits of a mine, which cluster underthe term “macroeconomic management”.The data gathered during Step 2 shouldallow you to:• assess the general quality of the hostcountry’s macroeconomic managementand pinpoint the aspects that could eithermagnify or diminish the broad economicbenefits of mining; and• identify elements of the host country’smacroeconomic policy, institutions andmanagement structures that mightreasonably be attributed to new miningactivity or to the expansion of existingactivity.You will need to access data on economicindicators of the type used in InternationalMonetary Fund (IMF) Article IV assessments(often referred to as Staff Reports(www.imf.org/countries)) and other standardassessments of a country’s macroeconomicperformance. Many of these indicators canbe found in official publications of the ministryof finance or central bank. Others arediscussed in IMF Article IV Staff Reports forindividual countries. 43 The official countrydata and IMF reports should provide youwith a reasonably complete picture of thehost country’s macroeconomic management.See Box 4.3 for a short explanation of thekey macroeconomic aggregates to look outfor in undertaking Step 2.MODULE FOURNOTE: Further information on this issue andmore from the Natural Resource Charter isavailable at www.naturalresourcecharter.org.43 Select the “Country Info” tab on the IMF’s websiteat www.imf.org.Mining: Partnerships for Development TOOLKIT61

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOURBox 4.3: MacroeconomicsMacroeconomics is the study of themajor economic totals (aggregates) of acountry. It is concerned with questionsinvolving the country’s overall economicperformance:• Do people find it easy or difficult tofind jobs?• On average, are prices rising quickly,slowly, or not at all?• How much total income is the countryproducing per year, and how rapidly istotal income growing?• Is the interest rate charged to borrowmoney high or low? Rising or falling?• Is the government spending morethan it collects in tax revenue?• Is the country as a wholeaccumulating assets in othercountries or is it becoming moreindebted to them?• What is the exchange rate for thecurrency? Will it rise or fall?Evidence of macroeconomic instabilityincludes a large current account deficitfinanced by short-term borrowing, high andrising levels of public debt, double-digitinflation rates, and stagnant or decliningGDP. Macroeconomic instability hurts poorpeople disproportionately, and Box 4.4outlines why this happens. By contrast,macroeconomic stability may be seen incurrent account and fiscal balancesconsistent with low and declining debtlevels, inflation in the low single digits, andrising per-capita GDP and gross nationalincome (GNI).Once you have assembled and analyzed thegeneral macroeconomic data, you shouldsummarize the changes in the conduct ofmacroeconomic management that mightreasonably be attributed to new miningactivity or to the expansion of existingactivity. 44 For example, increased volatility ingovernment spending may reflect changinginternational prices for minerals. Sometimesthis manifests itself in the need to resort to(inefficient) cash budgeting in times of taxrevenue shortage. Similarly, increasedgovernment spending and more borrowingmay point to an appreciating real exchangerate, which in turn has made interestpayments on debt cheaper. On the other hand,the existence of a sovereign wealth fundSource: Adapted from lecture notes by ProfessorRobert Marks, former head of the EconomicsCluster at the Australian Graduate School ofManagement, available atwww.agsm.edu.au/bobm/teaching/MM/lect01.pdf.44 There is no suggestion here that the approachesproposed can result in any formal and rigorousattribution of particular macroeconomic change tothe presence or activity of the mining sector. Moreformal statistical approaches that also control forthe effects of various other, non-mining influencesare possible and are desirable. However, becausethese approaches are more resource intensive andtechnical, they do not fit easily with the philosophyof the toolkit, namely, that it can and should beused on a relatively small resource budget and by avariety of interested parties.62 Mining: Partnerships for Development TOOLKIT

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedBox 4.4: Macroeconomic instability hurtsthe poorThe low (and sometimes even negative)economic growth rates typical ofmacroeconomic instability can bringother problems that place a heavyburden on the poor. Inflation, for example,is a regressive and arbitrary tax, whichis typically borne disproportionately bythose in lower income brackets.The reason for this is twofold. First, thepoor tend to hold most of their financialassets in cash, rather than in interestbearingassets. Second, the poor aregenerally less able than the better-off toprotect the real value of their incomesand assets from inflation.The simple consequence is that risingprices generally erode the real wagesand assets of the poor more than thoseof the non-poor. Moreover, beyondcertain thresholds, inflation also curbsoutput growth, which will affect eventhose among the poor who use moneyfor economic transactions infrequently.Source: Brian Ames, Ward Brown, ShantaDevarajan, and Alejandro Izquierdo (2002)“Macroeconomic Issues”, ch. 12 in Jeni Klugman(ed.) A Sourcebook for Poverty ReductionStrategies, World Bank.specifically to manage resource revenues may,in part, reflect a government’s intention toprotect the broader economy from an excessiveappreciation of the real exchange rate.You should also look for new fiscal policiesthat may reflect:• central governments succumbing topressure to decentralize fiscal systems sothat the resource-rich regions receivesome compensation for “their share”; or• government attempts to protect a falteringnon-minerals sector through greaterdirect support, including via tradeprotectionism.The data should be assembled for as long arun of years as possible and certainly longenough to embrace the period of operationof the country’s main mines. This is possibleusing data from the IMF’s InternationalFinancial Statistics (IFS) department,available online for many years back to 1948.These data are available electronically via asubscription to IFS (available atwww.imfstatistics.org/imf) or, for staff andresearchers (and others) at any furthereducation or higher education institution inthe United Kingdom, at www.esds.ac.uk.Gaps in the data series may be able to befilled by reference to national sources,such as budget documents or other officialpublications of government. Remember thatthe main purpose of Step 2 is to show theelements in the country’s macroeconomiccircumstances that may have enhanced ordiminished the overall economic and socialimpacts of mining.MODULE FOURMining: Partnerships for Development TOOLKIT63

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOURIf possible, try to collate and analyze thisinformation around eight indicators:• the fiscal deficit as a percentage of GDP –as a proxy for good revenue management;• the trends and variability of totalbudgetary revenues – it is not always easyto obtain consistent long-run data onmineral royalties and taxes alone orthe proportion of total revenue that theyrepresent, but these should also becompiled where available. They willprovide a broad indication of the consistencyof fiscal policy. They can be supplementedby data about the variability of mineralprices;• the non-mineral primary balance 45 – this isan important fiscal indicator for a resourcericheconomy. Excluding mineral-relatedrevenues, expenditures and net interestfrom the overall fiscal balance provides agood picture of the fiscal situation in theother sectors of the economy. The nonmineralprimary balance can provide ananalytically important insight into thefiscal effort and underlying fiscal policystance of the government. It can thereforebe a key input for fiscal sustainability andinter-temporal analysis;• inflation – either the consumer price indexor the wholesale price index or both wheredata permit (see Box 4.4 on how inflationhas a disproportionately large effect onthe poor);• the trends and variability of the exportrevenues of the country, especially thepart that can be associated with mineralexports – this will indicate how vulnerablethe country is to mineral exports and theforeign revenues they earn. Alternativelylook for changes over time in the monthsof import cover the country has;• the real exchange rate – see Box 4.5; 46• the trends and variability of the direct andportfolio capital flows (foreign directinvestment) into the country, especiallythe variability that can be associated withmining investments – this provides anindication of whether the nationaleconomy (and specifically those taskedwith smoothing the flows of foreignexchange) has to deal with the changingfortunes in mining; and• the share of the private and public sectorsin total credit allocations – a proxyindicator of the size of the state in theoverall economy.45 The non-mineral primary balance is computed asthe difference between non-mineral revenue andexpenditure (excluding interest receipts and interestpayments), divided by non-mineral GDP. (Source:International Monetary Fund Public InformationNotice No. 10/68.)46 If data on the real exchange rate are not availablefrom these sources, the real exchange rate can becomputed by adjusting the movements of thenominal exchange rate for domestic inflation.64 Mining: Partnerships for Development TOOLKIT

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedBox 4.5: Importance of the real exchange rateThe introduction of large, natural resource–based export projects into a poor andrelatively undiversified economy will lead to the creation of at least some new jobs andnew productive possibilities, especially for those activities that can directly supply thenew project. At the same time, however, these positive effects can easily be offset, inwhole or in part, if a rise in the real exchange rate (RER) increases the cost to foreignbuyers of existing (and future) internationally tradable products. An appreciating RERhas two critical effects on the host economy:MODULE FOUR• First, producers of cash crops are price takers on international markets, so anappreciating currency makes their products more expensive than competing productsfrom other exporting countries. This, in turn, reduces the amount they can sell.For some farmers and businesses, this will directly affect their livelihoods unlessthey are able to find alternative goods or services for export or domestic markets.Over time, an appreciating RER will discourage non-mineral exports (see the muchquoted example of “Dutch disease” below).• Second, an appreciating RER makes imported goods relatively cheaper, whichstimulates increased demand for imported goods and undermines the competitiveposition of locally produced goods in the domestic market.• Third, when competition for labour increases the wage bill of employers outside theminerals industry, they often increase their wages, resulting in more expensiveproducts and therefore less sales“In the 1960s, the Netherlands experienced a vast increase in its wealth after[developing] large natural gas deposits in the North Sea. Unexpectedly, this ostensiblypositive development had serious repercussions on important segments of the country'seconomy, as the Dutch guilder became stronger, making Dutch non-oil exports lesscompetitive. This syndrome has come to be known as ‘Dutch disease’. Although thedisease is generally associated with a natural resource discovery, it can occur from anydevelopment that results in a large inflow of foreign currency, including a sharp surge innatural resource prices, foreign assistance, and foreign direct investment.”(Source: IMF’s Finance & Development, March 2003, 40(1), “Back to Basics”, by Christine Ebrahim-zadeh.)Mining: Partnerships for Development TOOLKIT65

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOURHow to present your findingsInformation from Step 1 should be presentedas a description of those aspects of the hostcountry’s governance that could most affect:• mining in general;• the broader benefits of mining revenuesto government;• mining companies’ social programs; and• the ability of mining companies’prospective business and non-businesspartners to operate.Where you can, highlight trends over time(improvements and deterioration) andinclude comparisons with other countries,so as to place your findings in context.Highlight the indicators that are of particularrelevance to mining for possible moredetailed analysis during stakeholderinterviews (for example, in module five) orby other means. Annex 3 shows how tocollate fiscal revenues paid by mines in theformats provided by the Extractive IndustriesTransparency Initiative (EITI), and you maywant to include this information in tableformat.Describe your Step 2 findings onmacroeconomic management on the basisof the eight macroeconomic indicators.Include numerical indicators in the text,where possible, as they can highlight majortendencies and policy shifts at certainpoints in time. Highlight improvements anddeterioration over time and any particularaspects of macroeconomic management (ormismanagement) most likely to affect theeconomic and social impacts coming frominvestments in mining. An example of howto present data is shown in Figure 4.1, withthe changing fortunes of the public-sectordebt illustrated by the scale on the right(shown as a percentage of GDP).Box 4.6 summarizes the findings ofmacroeconomic mismanagement from thefour country case studies. However, do notbe concerned if Step 2 does not yield a clearpicture from which conclusions about thecauses of sound management or otherwisecan be drawn. The general purpose of Step 2should be to identify major tendencies andchanges in macroeconomic managementthat may be linked to mining.66 Mining: Partnerships for Development TOOLKIT

% of GDPFigure 4.1: Example to show how to present the financial situation of governmentGross financing need of government – US$bn – left scalePublic sector debt (% of GDP) – right scale141210864202009 2010 2011 2012 2013 20142015 2016 2017 2018 201980%75%70%65%60%55%50%US$bnSource: IMF.Mining: Partnerships for Development TOOLKIT67

The proximate aspects ofgovernance that help orhinder mining’s economicand social performancecontinuedMODULE FOURBox 4.6: Macroeconomic mismanagement – findings from the initial four countrycase studiesAll four case study countries have shared the experience of severe macroeconomicmismanagement in recent decades. For extended periods, especially in the 1970s and1980s, they all maintained seriously distorted macroeconomic and structural policies –the antithesis of the so-called “Washington Consensus” package. In the cases of bothChile and Ghana, these damaging macroeconomic and structural policies started to becorrected successfully only in the mid-1980s. In Peru and Tanzania, the correction hadto wait until the 1990s. In three of the four cases, the correction of economic policieswas presided over by political regimes that were seriously autocratic and in whichabuses of basic human rights and other principles of good governance certainlyfeatured as unpleasant accompaniments: Pinochet in Chile, Rawlings in Ghana andFujimori in Peru.The co-existence in the case study countries for some years of indicators of improvingmacroeconomic and structural policies with indicators of poor governance in otherareas is an important part of the problem to be understood. Indeed, it is the sort ofcombination with which mining companies considering new overseas investmentsfrequently need to contend. The mining companies are unlikely to be attracted tocountries where economic policies are grotesquely distorted. But, once economicpolicies provide a minimal structure that allows a reasonable prospect of commercialsuccess, then mining investment may occur, even when the normative quality anddemocratic legitimacy of governance is poor.As some of the case studies demonstrated, new mining investment can be an importantearly source of private-sector activity in economies that are recovering from extremeeconomic malfunction. However, the four case studies also showed that macroeconomicsuccess does not automatically guarantee trickle-down mechanisms that reduce povertyand inequality. Correcting macroeconomic policies is a necessary, but hardly a sufficient,condition for more broad-based social development. Equally, economic reforms at thecentral government level are no substitute for fundamental reforms and capacitybuilding at the local and regional levels.68 Mining: Partnerships for Development TOOLKIT

Calculating and reportingtax paymentsANNEX3This annex provides guidance on how tocalculate the payments made to publicauthorities broken down primarily into thecategories defined by the ExtractiveIndustries Transparency Initiative (EITI).The objective of the EITI is to strengthengovernance by improving transparency andaccountability in the mining, oil and gas,and forestry sectors. The EITI is a globalstandard that requires participatingcompanies in the extractive industries topublish what they pay and participatinggovernments to publish what they receivefrom the extractive industries. A workinggroup comprising representatives from thegovernment, companies and national civilsociety oversees the process.All ICMM member companies are requiredto implement the ICMM SustainableDevelopment Framework. This includescommitments to implement 10 principlesthroughout their businesses, to report inline with the Global Reporting Initiative’s(GRI) Sustainability Reporting Guidelinesand Mining and Metals Sector Supplement,and to obtain independent externalassurance that the ICMM commitments arebeing met (this framework is described indetail at www.icmm.com).The ICMM principles of particular relevanceto revenue transparency are:• Principle 1: Implement and maintainethical business practices and soundsystems of corporate governance.• Principle 10: Implement effective andtransparent engagement, communicationand independently verified reportingarrangements with stakeholders.To this end, you should contact ICMMmember companies to see if they havereported all material payments to the bodyassigned responsibility for reconcilingpayments provided by companies andrevenue data provided by governmentaccording to the agreed national template.If they have collated and provided this detailthen it should be easy to reproduce this dataas per the EITI benefit streams shown inTable A.3.1. The EITI defines benefit streamsas “any potential source of economic benefitthat a host government receives from anextractive industry. They are not assumedto include indirect economic benefits, suchas construction of infrastructure oremployment of local personnel.” 47 6947 Extractive Industries Transparency Initiative Sourcebook, March 2005, p. 26. The source book can bedownloaded from http://eiti.org/document/sourcebook.Mining: Partnerships for Development TOOLKIT

Calculating and reportingtax paymentscontinuedANNEX 3The host countries that have committed tothe EITI may already publish the benefitstream information, disaggregated at acompany level, needed to complete thissection in an EITI report (typically accessiblefrom the host country’s EITI website). If not,this information can often be accessed fromthe most recent financial reports (or onrequest from the accounts department ofthe company). If possible, also presentthese data for previous years (by lookingat previous years’ audited annual reportsor company sustainability reports).The following template (Table A.3.2) is basedon a sample EITI reporting template formining companies. 48 For each of thepayments listed:1. measure how much was paid for each typeof payment in the most recent fiscal year;and2. wherever possible indicate the amount oftaxes paid to each level of government -that is, national, regional or local. Notethat:• this varies significantly between eachcountry; for instance, some countrieswill have a relatively streamlinedapproach with only one level of payment,while others may levy the same tax butat the local, regional and national levels;and• sometimes, a mine’s nationalcontributions eventually go to the localadministrations; treat these as nationallevelcontributions, unless the allocationof funds is known exactly (for example,half national and half local).48 See Advancing the EITI in the Mining Sector:A consultation with stakeholders, March 2005,available at www.eiti.org.70 Mining: Partnerships for Development TOOLKIT

Table A.3.1: EITI Source Book listing of key benefits companies pay to host governmentsProfits taxesTaxes levied on the profits of a company’s upstream activities.RoyaltiesRoyalty arrangements will differ between host government regimes. They can include a company’s obligationto dispose of all production and pay over a proportion of the sales proceeds. On other occasions, the hostgovernment has a more direct interest in the underlying production and makes sales arrangementsindependently of the concession holder. These “royalties” are more akin to a host government’s productionentitlement.Host government’sproduction entitlementThis is the host government’s share of the total production. This production entitlement can be transferredeither directly to the host government or to the national state-owned company. In addition, this benefit streamcan either be in kind and/or in cash.National state ownedcompany productionentitlementDividendsThis is the national state-owned company’s share of the total production. This production entitlement is derivedfrom the national state-owned company’s equity interest. This benefit stream can either be in kind and/or incash.Dividends paid to the host government as shareholder of the national state-owned company in respect ofshares and any profit distributions in respect of any form of capital other than debt or loan capital.Bonuses (such as signature,discovery, production)Payments related to bonuses for and in consideration of:• Awards, grants and transfers of the extraction rights;• Achievement of certain production levels or certain targets; and,• Discovery of additional mineral reserves/deposits.License fees, rental fees,entry fees and otherconsiderations for licensesand/or concessionsPayments to the host government and/or national state-owned company for:• Receiving and/or commencing exploration and/or for the retention of a license or concession(license/concession fees);• Performing exploration work and/or collecting data (entry fees).These are likely to be made in thepreproduction phase; and,• leasing or renting the concession or license area.Other significant benefitsto host governmentsThese benefit streams include tax that is levied on the income, production or profits of companies. These excludetax that is levied on consumption, such as value-added taxes, personal income taxes or sales taxes.Source: Based on Extractive Industries Transparency Initiative Source Book, March 2005, p. 27.Mining: Partnerships for Development TOOLKIT71

Table A.3.2: Template for recording benefit streams the mine pays to its host governmentsValue (US$ or local currency)CategoryTotal National Regional Local1)EITI covered payments – ‘scope one’ benefit stream1a)Profit taxes1b)Royalties- in cash- in kind1c)License fees, rental fees, entry fees and other considerationsfor licenses/concessions1d)Signature bonuses and production bonuses1e)Dividends1f)Other payments to host governments, (including productionentitlements and other royalty type arrangements)72 Mining: Partnerships for Development TOOLKIT

Measuring theparticipatingmine’s positiveand negativecontributions tolocal communitiesANNEX 4Guidelines for fieldinterviewsANNEX 5Notes on calculatingemployment impactsMODULEFIVE

“PARTNERSHIP ARRANGEMENTSINVOLVING MINING COMPANIESIN LOCAL PROCUREMENT ORSOCIAL INVESTMENTS CANPROVIDE SIGNIFICANT INDIRECTGAINS TO PEOPLE AND THEIRCOMMUNITIES.”Image courtesy of Xstrata

Measuring the participatingmine’s positive andnegative contributionsto local communitiesMODULEFIVEPurposeThe purpose of module five is to describethe economic and social impacts at projectand local level of the mine participating inthe assessment. The data should reflectstandard indicators of human developmentand be broadly organized under the sixpartnership themes defined in Annex 2.Module five addresses two critical premisesof the toolkit: first, that the legitimacy ofmining in low- and middle-incomecountries requires it to drive or catalyzebroader economic and social developmentand, second, that mining can, in principle,achieve this.Module five findings are about miningimpacts at the local level and so will inlarge measure determine both the substanceand the credibility of your country casestudy. You can expect them to be closelyscrutinized. 4949 For an example of where the overall positiveeconomic effects of a large gold mine in Mali fellshort of the community’s expectations, see “Socialand Economic Impacts of the Syama Mine” bySeydou Keita, ch. 5 of Tarnished Legacy: A Socialand Environmental Analysis of Mali’s SyamaGoldmine, available at www.oxfamamerica.org.Gathering the dataTwo major data sources for module fiveModern mining methods are capitalintensive, and direct employment will nottypically be large. In general, therefore, amine that is able to substantially reducepoverty and improve human welfare at thelocal level will do so mainly by its indirecteffects, in other words, by how itsoperational expenditure, social investmentand payments to government translate intolocal procurement, local social investments,local workforce expenditure and productivelocal partnerships.These indirect, local-scale impacts areinherently informal and not well documented;and it will take a thorough engagementwith the local community to identify indirecteffects and trace their consequences.Accordingly, Step 1 of module five providesfor interviews of stakeholders and otherinformants. This can be time-consuming;and the results will be uneven andinconsistent and will reflect the memoriesand apprehensions of individuals. You willneed to devote sufficient resources andeffort to collecting, cross-checking andanalyzing this information to the standardthat subsequent scrutiny will demand.However, the responses gathered during theinterviews will help to provide depth to thedata gathered in the other data-gatheringsteps of module five.Information on direct impacts, on the otherhand, should be more accessible. Mostmining companies conduct socio-economicsurveys (whether legally required to or not);and formal environmental and social impactassessments (ESIAs) have, in recent years,Mining: Partnerships for Development TOOLKIT75

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEbecome a standard requirement of mostgovernments and of lenders adopting theEquator Principles. 50 An ESIA typically willinclude a pre-project baseline and willestablish a program to monitor operationsimpacts to validate the ESIA predictionsand to test the objectives, focus and successof social initiatives. This sequence – froma pre-project ESIA through operationsmonitoring – should provide answers tomany of the questions asked by module five.You are encouraged to go to some lengthsto obtain the full sequence of a project’shistorical documentation, keeping in mindthat early pre-development reports mayprecede the tenure of current mine staff,who may not know what is in the project’sarchives.Older mines may not have established thepre-project baseline of environmental, landuse, economic and social conditions that isnow standard ESIA practice. However, mostmining companies will address the ongoingissues of local communities, such as50 These studies have various names: environmentaland social impact assessment (ESIA), socialimpacts assessment (SIA) or human rights impactassessment (HRIA). These studies will all, to someextent, address the economic and social changesbrought about by projects. An HRIA may or may notbe part of an ESIA, but it will be an importantmodule five data source where available. An HRIAhelps a company (1) gain a thorough understandingof the (potential) impact of corporate activities,(2) obtain a better understanding of thestakeholders’ perspectives, and (3) discover waysto manage corporate impacts in a process thatbenefits all involved. For more information andpractical tools, see www.aimforhumanrights.organd also the 2008 paper by John Gerard Ruggie,Protect, Respect and Remedy: The United NationsFramework for Business and Human Rights.For more information on what comprises GenderImpact Assessment (GIA) of mining projects,see www.oxfam.org.au orhttp://empoweringcommunities.anu.edu.au.resettlement, indigenous peoples initiatives,employment, procurement or businessdevelopment, and will monitor the mine’simpacts on society, the economy and theenvironment. 51 As well, some companies willtry to reconstruct a picture of life as it wasbefore the mine; and, despite the problemsof hindsight, the stakeholder interviews willgo some way towards a belated, qualitativecharacterization of pre-project conditionsagainst which mine-induced changes mightbe seen. If attempting this yourself, do notignore historical documents from otherfields, such as anthropology, culturalheritage, travel and natural history.Either way, your first and best source ofinformation for module five will be thesocio-economic assessment reports carriedout by the mining company or by otherparties. Reading these reports before youundertake the steps involved in module fivewill also help you to identify potential issuesto incorporate into your interviews, datagaps 52 and where potential partnershipactivities could be strengthened. 5351 www.csrm.uq.edu.au has more information on howto monitor and report the community impacts ofmining (covering economic impacts and employment,community support and engagement processes,environmental and demographic impacts).52 For sources of further information on how toconduct SIAs and stakeholder engagement, seethe Bibliography in the ICMM/World BankCommunity Development Toolkit, 2005, availableat www.icmm.com.53 ICMM’s Community Development Toolkit provides17 tools for use throughout the project cycle thatcover the assessment, planning, management, andevaluation phases of community development, aswell as stakeholder relationships.76 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedOverview of the module five stepsIt is recommended you conduct your datagathering and analysis using a number of stepsoutlined in this module. Wherever possible,you should aim to organize your findingsaround the six priority partnership themes.The above six steps are not an exhaustivelist, and they could fit under a number ofthe priority themes. Therefore, if you haveidentified other relevant issues from readingESIAs, SIAs and other assessment reports,organizing these findings around the sixpriority partnership themes is a clear way –but not the only way – to present the material.To help you in this task, the six steps havebeen linked with a certain theme eventhough they overlap and could be linked totwo or more of the themes. You shouldadapt the presentation of your findingsunder the themes accordingly:• Step 1: Stakeholder interviews (Mining andpoverty reduction);• Step 2: Employment and dependents(Mining and economic development: localcontent);• Step 3: Procurement of local goods andservices (Mining and economicdevelopment: local content);• Step 4: Human capital development andtraining (Mining and economicdevelopment: local content);• Step 5: Social investment andinfrastructure development (Mining andeconomic development: regionaldevelopment planning); and• Step 6: Comparing local and nationaleconomic and social development trends(Mining and poverty reduction).STEP 1: Stakeholder interviews (Mining andpoverty reduction)Stakeholder interviews need structure andconsistency so that local communities indifferent areas are asked similar questions,the answers to which can be compared.There will also be questions that are specificto each mining operation, so the topics andquestions set out here are not definitive buta starting point for your stakeholderinterviews.Table 5.1 gives examples of communityconsultation questions, and Annex 4 givesguidelines for conducting field interviews.In general, questions will be of two maintypes: those about the mining activity and itsimpacts in general and those explicitly aboutthe mining company’s economic and socialactivities. You will notice that the suggestedquestions in Table 5.1 will not be relevant toall respondents.MODULE FIVEMining: Partnerships for Development TOOLKIT77

MODULE FIVETable 5.1: Example questions for community consultation1. Demographic and social changeHave the community characteristics (e.g., gender, ethnicity, religion, language, culture, place of origin,residential location, age) changed over time because of the mine?Have there been positive impacts because of this change, such as more jobs, better services supportedby a bigger population, or higher standards of living?Have there been negative impacts, such as communal tensions, conflict, crime levels, overcrowding, orexcessive demands on local services?How has the mining company attempted to help manage these impacts to minimize the negative andmaximize the positive?2. HealthHas the health of the local community been affected (positively or negatively) by the mine?Is the impact positive (e.g., because of better environmental, health, and safety standards or the provisionof health services for employees and the broader community)?Is the impact negative (e.g., because of pollution, poor safety practices, or the introduction of diseases bymigrant workers)?How does health assistance provided by the mine compare with that provided by the government or byother companies or organizations?3. Food SecurityHas the mine had any effects (positive or negative) on the availability and cost of the food supplies that youneed? Have there been inflationary pressures in key food stuffs (or other basics, such as fuel)?Is the mining company monitoring the prices of basic goods (such as food) in the affected areas? Is itcomparing this data with prices elsewhere?Potential partnership themeMining and poverty reductionMining and poverty reductionMining and disputes resolutionMining and disputes resolutionPotential partnership themeMining and poverty reductionMining and social investmentMining and social investmentMining and social investmentPotential partnership themeMining and economicdevelopment: local contentMining and disputes resolutioncontinued78 Mining: Partnerships for Development TOOLKIT

MODULE FIVETable 5.1: Example questions for community consultation continued4. Community resourcesHas the mine used or damaged resources that were previously important to the local community membersto support their livelihoods?Have agricultural land or water resources or sites that were important for cultural purposes or localtourism been impacted by the mine?Have other communities not immediately adjacent to the mine been impacted by the knock-on effectsof the mine on community resources?How has the mining company responded?5. Local infrastructureWhat impact (positive and negative) has the mine had on local physical and social infrastructure?What has been the mine’s impact on roads, railways, air transport or port facilities; leisure, sports andrecreational infrastructure; schools, hospitals and clinics?What has been the mine’s impact on the supply of electricity, fuels, water and waste water treatmentfacilities, solid waste management, telecommunications and postal services?Has the mine affected the community or the local authorities in terms of new requirements forinfrastructure (e.g., for waste management)?What has been the mine’s impact on infrastructure vis-à-vis local government provision?6. Environmental and social nuisanceAre there positive or negative environmental or social nuisance impacts upon the local community, andare these impacts equitably distributed? What about communities not immediately adjacent to the mine?Are there any examples of positive or negative impacts on noise amenity, air quality, water quality,waste generation or waste management services?Potential partnership themeMining and poverty reductionMining and poverty reductionMining and disputes resolutionMining and disputes resolutionPotential partnership themeMining and economic development:regional development planningMining and economic development:regional development planningMining and economic development:regional development planningMining and economic development:regional development planningMining and economic development:regional development planningPotential partnership themeMining and poverty reductionMining and disputes resolutioncontinuedMining: Partnerships for Development TOOLKIT79

MODULE FIVETable 5.1: Example questions for community consultation continued7. Local businessesHas the mine contributed to the development of local businesses?To what extent has the mine placed contracts with local businesses?How much has the mine spent in US$ through local content execution plans?Do the mines have local content execution plans? Are these well known by stakeholders?To what extent has the mine shared skills, facilities or expertise to make local firms more competitive?Have they invested in the development of local businesses through social investment programs or helpedregional, national or international development organizations to develop the local economy?8. Benefiting from miningAre there any barriers that prevent the local community (or sections of it) from benefiting from thepresence of mining operations?Are there real or perceived barriers, such as a lack of appropriate skills, inadequate infrastructure,management practices at the mine, access to capital?How has the mine responded?9. Relations with governmentWhat interaction does the mine have with government agencies at the local, regional or national level?What is the impact of this interaction on both parties? How transparent do other members of thecommunity consider these relationships?Potential partnership themeMining and economicdevelopment: local contentMining and economicdevelopment: local contentMining and economicdevelopment: local contentMining and social investmentPotential partnership themeMining and poverty reductionMining and poverty reductionMining and poverty reductionPotential partnership themeMining and economicdevelopment: regionaldevelopment planningMining and economicdevelopment: regionaldevelopment planning80 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedThe credibility of the interview resultsdepends absolutely on questioning a rangeof stakeholders about both positive and –especially – negative impacts. The latter gonot only to the objectivity of the process, butalso to the discovery of weaknesses that canbe remedied. A usually small minority ofrespondents will give you a vigorous accountof their opinions; but shyness, reticence inthe face of more forceful peers or simplenatural courtesy will discourage manypeople from speaking frankly. Be prepared,therefore, to discuss people’s views in somedepth and across different groups, so youraccount is representative of the populationas a whole.For example, it will probably only be throughinterviewing different communities that youwill be able to discover whether localinflationary pressures on food have arisenthat can be attributed to the mine, whatincome opportunities have been displaced bythe mine, or whether procurement policieshave excluded certain local suppliers.Prepare questions for the stakeholderinterviews on the basis of the different areasof a mine’s potential impact – social, economicand environmental. It may be that the peoplemost impacted by the project are not thoseimmediately adjacent to the mine. 54 Forexample, communities downstream from amine or further down a mountainside may54 See ch. 9, “Local Communities and Mines,” inBreaking New Ground: The Report of the Mining,Minerals and Sustainable Development Project, andspecifically the section “Gains and Losses at theLocal Level – An Economic Perspective, A SocialPerspective, A Cultural and Political Perspective andAn Environmental Perspective”, available atwww.iied.org.find their agriculture, water sources, orfishing affected. (All of the four country casestudies reported that competition for waterwas a contentious issue requiring greaterattention in future studies.)The responses should represent a range ofattitudes and opinions, and you could takethe following broad categories ofinterviewees as a starting point:• community liaison panels and othercommunity or civil society representatives(these should be representative of thelocal community in terms of gender,ethnicity, religion, language, culture, placeof origin, residential location, age);• development agencies active in the area,including domestic and internationalcharities and NGOs;• mine employees and their representatives(e.g., unions);• suppliers to the mine;• other local businesses (possibly viachambers of commerce);• international financial institutions orbilateral aid agencies;• local, regional and national governmentauthorities across a range of agencies(not just the mining and developmentministries); and• health, education and other serviceproviders.MODULE FIVEMining: Partnerships for Development TOOLKIT81

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVESome communities may have been directlydisplaced (physically or economically; seeBox 5.1), others indirectly (for example, bypressure of in-migration and also by theeconomic and social consequences ofenvironmental impacts; see Box 5.2).Extend the scope of your interviewee listto cover both. Do not prejudge their status,but rather try to record their perceptionsverbatim, then add a clearly separate andattributable comment if the situationwarrants qualification.Box 5.1: International Finance Corporation (IFC) handbook on resettlementDisplacement may be either physical or economic. Physical displacement is the actualphysical relocation of people resulting in a loss of shelter, productive assets or accessto productive assets (such as land, water and forests). Economic displacement resultsfrom an action that interrupts or eliminates people’s access to productive assets withoutphysically relocating the people themselves. The IFC’s policy on resettlement applies ineither situation. While land acquisition does not necessarily require the displacementof people occupying or using the land, it may have an effect on the living standards ofpeople who depend on resources located in, on, or around that land. For example, afarming family may lose a portion of its land to a mining project without having to vacateits homestead. Nevertheless, the loss of even a portion of its land may reduce theoverall productivity of that farm. This threat is magnified among agrarian populationsof low- and middle-income countries where farm fields are typically small and oftenwidely scattered.Alternatively, land acquisition may restrict a community’s access to resources held incommon, including rangeland and pasture, non-timber forest resources (such asmedicinal plants or construction and craft materials), woodlots for timber and fuel,or fishing grounds. Similarly, the acquisition of water resources by a project may entailneither land acquisition nor physical relocation but could, nonetheless, have negativeeffects on the livelihoods of people living in the project area. For example, the diversionof a river’s flow for the generation of hydroelectric power may affect positively ornegatively the livelihoods of downstream farmers who rely on minimum flows forirrigating crops. A coastal power plant or factory using ocean water for cooling purposesmay affect fish habitats, thereby affecting the livelihoods of people who fish the coastalwaters.Source: Adapted from Handbook for Preparing a Resettlement Action Plan, p. 5, available at www.ifc.org.Another resource on the problems of mining-induced displacement and resettlement and the major risks itposes to societal sustainability can be found in Avoiding New Poverty: Mining-Induced Displacement andResettlement available at http://commdev.org/content/document/detail/1376/.82 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedThe stakeholder interviews will contribute toan understanding of qualitative aspects of amine’s performance, such as:• the scope of the existing stakeholderengagement undertaken by the mine;• the responsiveness of the mine’smanagement to community issues;• the extent to which positive and negativeimpacts are distributed (or are perceivedto be distributed) among differentstakeholder groups;• the economic and social make-up of thesurrounding communities (household sizeand number of dependents);• the approaches taken by the mine whenengaging with or helping to develop themembers of the community that work andthose that do not;• the nature of interactions between themine and government agencies and theextent to which these may impact on thequality or quantity of public services;• the quality of the mining company’sresponses to environmental concerns,including impacts with economic andsocial ramifications;• whether stakeholders understand themining company’s exploration programand its role in the long-term future ofmining in the region; and• whether an adequately funded mineclosure plan has been communicated tostakeholders and whether they have beenconsulted on economic diversificationinitiatives prior to mine closure. 55STEP 2: Employment and dependents(Mining and economic development:local content)Employment is one of the most visibleeconomic impacts of mining in a community,and jobs are often eagerly sought by localpeople. 56 Employment depending directly orindirectly on the project will include jobswith the mining company itself, with on-sitecontractors, with other contractors, withsuppliers and with the company’s communitysocial investment initiatives. The amount ofemployment will vary through the phases ofthe mine, from initial exploration throughdevelopment drilling, engineering siteinvestigations, construction, operations,decommissioning and rehabilitation. It willalso vary according to the type of projectinfrastructure at a specific location. Types ofjobs will range from the highly specialized totrades to unskilled labouring. Workers willbe recruited locally, from elsewhere in the55 Dealing with mine closure is such a large andcomplex task that it has not been addressed in thistoolkit. Useful resources include an ICMM toolkittitled Planning for Integrated Mine Closure, whichprovides practical guidance on closing a mine in asustainable manner, and the World Bank’sGuidelines for the Implementation of FinancialSurety for Mine Closure, by Meredith Sassoon, aworking paper by the Oil, Gas, and Mining PolicyDivision.56 In many mining areas, there may be competition forthe mineral resources between large- and smallscaleminers, with large mines often accused oftaking jobs away from artisanal and small-scaleminers (ASMs). This is discussed in the ICMMTanzania Country Case Study, 2007, pp. 35–7, 39–41.It may be necessary to estimate whether ASM jobshave, indeed, been lost if this is an issue in a certainlocality. Further information is available from theCommunities and Small-Scale Mining (CASM)organization at www.artisanalmining.org. The ICMMdocument Working Together: How large-scalemining can engage with artisanal and small-scaleminers brings together, for the first time, a numberof practical approaches and tools for companies toengage with artisanal and small-scale miners.MODULE FIVEMining: Partnerships for Development TOOLKIT83

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEBox 5.2: Economic and social consequences of environmental impactsMining projects, like all large-scale undertakings, have a range of impacts. The potentialimpacts of mining projects may be both positive and negative in nature. This applies toenvironmental impacts, as well as to economic and social impacts. Clearly, primaryextractive activities, such as digging and blasting, are damaging to the environment.Other activities, such as fencing areas that then become (unofficial) sanctuaries forendangered wildlife, sealing roads to suppress traffic-induced dust, and constructingimproved water supplies and solid waste management infrastructure, can all lead toimprovements in the environmental conditions surrounding a mining project.Mining companies are normally required to prepare environmental impact statementsand to develop impact management plans. This is almost universally mandated, unlikeSIAs, which are still comparatively in their infancy (and HRIAs even more so). It is notone of the central purposes of this toolkit to assess the technical aspects of themanagement of the environmental impacts of mining. This is typically done elsewhere(see ICMM Environment Work Program). However, it is important in the interests ofcomprehensiveness of toolkit applications to note that some environmental impactshave economic or social consequences. Frequently, the potential for negative impactson their living environment can be of major concern to people living in the vicinity of amining project. The major areas of concern you should be alert to include:• noise and vibration – from traffic, blasting and machinery;• dust – from excavation and transportation, causing air quality degradation;• water – quality and quantity;• pollution – chemical contamination of any aspect of the environment, especiallycroplands;• traffic – safety, as well as noise issues;• visual amenity – spoiling of landscapes; and• effects on wildlife – all of the above could affect wildlife.All of these impacts are expected to be mitigated, managed and rehabilitated, as far aspossible, in any modern mining operation meeting international industry standards andcertainly any project operating to Equator Principle and World Bank Group standards.Ideally, companies should utilize participatory monitoring and evaluation processes forall environmental impact programs, so that communities or their selectedrepresentatives may be fully involved in ensuring the maximum protection of theenvironment. Offsets – that is, positive initiatives to balance the negative environmentalimpacts that may be of a socio-economic nature, such as small enterprises andeconomic training initiatives – should also be part of the package.84 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedhost country, or from other countries.Localization brings costs and politicalbenefits to mining companies, and trainingprograms are standard practice. It is,however, a truism to say that such trainingcould always, to the eyes of frustrated localpeople, be started earlier and raise skilllevels higher.This characteristic employment profile of amodern mine reflects operability imperatives:a mine needs to be efficient if it is to keepthe competitive advantage on which thedecision to build it was based. However, thisemployment profile will also create a numberof issues for local people: the temporarynature of jobs that simply disappear when aparticular project phase or task is completed;competition for jobs with outsiders; theresentment of a new pecking order basedon job status; the health, law and order,food security and other social impacts ofimported workers; conflict over status withjob-seekers from elsewhere (if they aresuccessful) and over land, resources andservices (if they are not and remain assquatters); the disappointment of localbusinesses if their products cannot meetproject specifications; and perceived ceilingsto promotion. These issues will becompounded by usually unrealisticexpectations when the project is proposed;a lack of understanding of operabilityimperatives; a sense of frustratedentitlement, when they, the local people,find themselves playing second fiddle tooutsiders; and the paradox discussed inBox 3.2 of dissatisfaction rising even asmaterial standards also rise.A gap between the understanding and theexpectation of local people lies at the heartof these specific issues. The employmentprofile of a typical mine is difficult to changewithout jeopardizing the operation; but theseissues are predictable, and there remainsa great deal of scope to anticipate andmoderate the frustrations that arise. Socialinitiatives, such as training, are an obviousoption; but all options will be better directedand scoped if the nature of the problem isquantified and then communicated to andunderstood by the local people.The project’s SIAs, ESIAs or HRIAs willprobably have anticipated these issues; andit will be important to test the success ofthe mitigation measures during stakeholderinterviews (see Step 1 above) and highlightwhere they are absent or deficient. 5757 For further information on how companies managecommunity grievances, see the Corporate SocialResponsibility Initiative at Harvard Kennedy School,available at www.hks.harvard.edu/m-rcbg/CSRI.Here, they describe an effective grievance mechanismas an essential addition for any responsiblecompany to its tools for monitoring, auditing andstakeholder engagement. They provide a wealthof information for companies and their localstakeholders jointly to devise rights-compatible,effective grievance mechanisms that maximize theopportunities to achieve sustainable solutions todisputes.MODULE FIVEMining: Partnerships for Development TOOLKIT85

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVETotal direct, indirect and inducedemployment over timeYour first task in Step 2 is to calculate andpresent the total employment generated bythe operation under the following threecategories: 58• direct employment by the operation (thosestaff that are on the payroll and anycontractors permanently based on site);• indirect employment in the regioncomprising:– off-site contractor employees workingfor the operation (i.e., those staff on thecontractors’ payrolls who are employedto fulfill contracts at the operation);– employees working at the operation’ssuppliers and at any contractor’ssuppliers or subcontractors whoseemployment is attributable to businessgenerated by the operation; and– employment generated in the region by(community) social investment activities,including local business development, inwhich the mining operation is aparticipant; and• induced or “multiplier” employment inlocal communities generated by thespending of direct and indirect employees,such as employment in local businessesand services (e.g., shops, transport andpublic services).Accurate estimates may only be possible forthe current year, but attempts should bemade to describe how employment haschanged in the past and how it is expectedto change in the future. 59 In addition to theemployment changes over the period duringwhich the participating mine has beenoperating, employment estimates should besought for five to 10 years prior to the minestarting operations, and forecasts should besought for employment in five and 10 years’time (even if these estimates are lessaccurate than those for the current year).Mine construction typically generates farmore employment than operations do.If major capital expenditure has occurred inrecent years or is forecast to occur in five to10 years (e.g., associated with “staying-inbusiness”capital expenditures), this shouldbe noted; and, if known, the approximatenumber of temporary construction jobs thatwere or will be created should be included.Data sources will most likely come from themining company’s records, but noticeablechanges in employment may be recorded innational census or household budgetsurveys.Detailed guidance on how to calculate eachof these employment categories is providedin Annex 5.58 The definition is based on the Anglo AmericanSocio-Economic Assessment Toolbox (SEAT) and isreflected in the diagram in Annex 5.59 Owing to the receipt of additional taxes, thegovernment may choose to provide additionalgovernment jobs at the local level or nationally.However, this will be a much harder metric toattribute to a specific mining activity, so werecommend you do not attempt to measure thisadditional “indirect” employment impact.86 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedCharacteristics of employeesYour second task in Step 2 is to gatherinformation for the three categories ofemployment on the various characteristicsof the people employed as discussed below.Historical data sources for these parametersagain will largely come from the HumanResource departments of the miningcompany.“Local” compared with national andexpatriate employmentMany mines feature substantial inwardcommuting by the workforce. If the miningcompany does not hold data in a disaggregatedformat, you will have to estimate the numberof jobs that are local. 60 The definition of“local” will vary markedly from country tocountry and from community to community.For example, in some densely populatedareas where mobility is limited, “local” mayrefer to distances of just a few kilometres,whereas in remote areas where mobility ishigh (such as parts of Western Australia),“local” may cover communities manyhundreds of kilometres away. You shoulddefine “local” to fit the mine’s context andcould usefully ask the mining company’scommunity development team how the localcommunity itself defines “local”.60 The definition of “local” should relate to whereworkers have their permanent home and theirfamilies. If workers have migrated to the definedlocal area with their families, they should beconsidered to be locals; if they commute to the minefrom non-local areas and stay in mine hostels orother accommodation, they should not beconsidered to be locals.You should be able to extract data on theemployment of domestic (i.e., both local andnational) and expatriate workers from themining company’s records. Similarly, thewages and some of the benefits associatedwith that employment will be of interest tomost readers of the country case study.Wherever possible, include these findings asthey are an important indicator of domesticcapacity and the company’s efforts toincrease local content.Social distribution of employmentIf basic data on levels of employment can bedisaggregated by gender, ethnicity, religion,language, culture, place of origin, residentiallocation or age, then inferences can betterbe drawn about the effects of new cashemployment within a previously subsistenceor artisanal local economy. These effectsmay include a gender bias towards theemployment of men that forces women totake on even more responsibility for growingstaple food or cash crops for the family.Similarly, the proportion of employmentgoing to different groups can create tensionand conflict within communities. This, inturn, can be related back to particularfeatures of the host country’s politics andgovernance (as identified in modules fourand seven) or to the mining company’spolicies and practices. Relevant groupscould include:• expatriate and host country workers;• local and non-local host-country workers;• males and females; and,• ethnic, religious, language, age or culturalgroups.MODULE FIVEMining: Partnerships for Development TOOLKIT87

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEDependentsThe families of those employed directly orindirectly by the operation receive a tangibleeconomic benefit, which should be recordedalongside any negative effects arising fromthe new social distribution of work (seeabove). The number of dependents cansimply be calculated by multiplying the totalnumber of employees by the average familysize. However, note these three points:1.The average family size can vary betweendifferent parts of the country. An estimateof this can be ascertained from a householdor employee survey of a representativesample of workers.2.You will need to avoid double-counting, forinstance, part-time employees, who mightalso be counted as dependents.3.If there is more than one income earnerin the household, then the number ofdependents counted should be proportionateto the contribution to household incomefrom the mining project.STEP 3: Procurement of local goods andservices (Mining and economicdevelopment: local content)Money spent by mining operations onprocurement (purchasing and outsourcing)of goods and services from the domesticeconomy is normally large enough to boostsubstantially local production and thedevelopment of new industries. Therefore,any increase in local content is potentiallyof immense importance in improving theeconomic and social benefits of the mine atthe local level. Examples of the sectors thatcan benefit in this way include utilities;construction; manufacturing; food supply;hotels, bars and restaurants; road, rail andair transport; and banking and insurance.It may be that the mining company alreadycollates metrics on the sourcing of labour,materials, goods and services from smallbusinesses and communities close to a minesite because of regulatory requirements;and you should start your enquiries there.Another data source for this step is themine’s local content execution plan (seeBox 5.3), if it has one.You will need to gather data from the miningcompany or its suppliers on three aspectsrelated to the purchase of local goods andservices. These comprise:1.a profile of the supply chain;2.the value of domestic procurement; and3.the social distribution of procurementexpenditure.88 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedBox 5.3: Partnerships for local contentLocal content execution plans providefor the mining company and itssubcontractors to engage local (andhost-country) firms in their supply chainsand are an important and increasinglystandard part of mine planning.To ensure economic opportunities arenot lost in the design, feasibility,construction, commissioning andoperational phases of a mine, technicalor financial support is sometimesprovided to local businesses to helpthem develop goods and services forthe supply chain. It is the responsibilityof the mine operator to ensure localcontent execution plans are cascadeddown to all levels of activity (owner’steam, contractors and direct employees)and are made available to the public.To this end, some mine operatorsestablish dedicated offices with teamsof procurement staff close to the minesite to ensure local content executionplans are realized.A profile of the supply chainThis information should be available fromthe procurement or accounts departmentsof the mine. You should aim for more thanjust one year’s data. Try to collect data foras long a period as is possible so that it isrepresentative of a number of project phases(exploration, construction, operation andmine closure). Develop the profile by seekinganswers to the following questions:• How many suppliers are there in total,both domestic and foreign? What is thelevel of the mining company’s expenditureon the goods and services they provide?• How many of these suppliers are baseddomestically (locally or in the hostcountry)? Is it possible to say whether theyare truly locally owned firms or merelylocal branches of suppliers based inanother country?• What goods and services do they provide? 61The value of domestic procurementThe mine’s procurement department should,in the first instance, be able to provide thesedata. If it cannot, it may be possible topersuade suppliers of the importance ofproviding the relevant information. For thesecalculations, it will normally not be possible(or necessary) to contact all domesticsuppliers; rely instead on a few of the largerones, as this way you could capture a largeMODULE FIVENOTE: Further information and practicalexamples on local content initiatives can befound in the January 2010 ICMM documentMapping in-country partnerships.61 Note that “domestic” companies are often actuallylocal branches of international suppliers, such asthose for fuel, vehicles and explosives. They arelocally incorporated for tax purposes and wouldcertainly be employing local people, but they arenot exactly “local” companies. However, thedistinction between ownership structures (i.e., localor foreign subsidiaries) and the share of businessthat represents local “value added” is not alwaysclear cut.Mining: Partnerships for Development TOOLKIT89

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEproportion of the local supply chain.Alternatively, seek out a sample that isrepresentative in terms of type of supplier,geography, size of purchase, and skillsrequired. Then:• calculate the value of procurementpurchased through these suppliers;• multiply this up to estimate the total valueof procurement sourced domestically(assuming that the sample is accuratelyrepresentative of the domestic supplychain). For instance, if the value ofprocurement for a third of domesticsuppliers was calculated, then multiplythis value by three to get the total value ofdomestic procurement; and• divide this value by total procurement(domestic and foreign) to estimate thepercentage of total procurement that isdomestic.It would also be useful to estimate theproportion of local businesses that are notdirect suppliers but who are also partlydependent upon the mine (e.g., because ofemployee retail or leisure spending). Thisestimation is best achieved through lookingfor secondary sources of information, suchas small surveys of local businesses ordiscussions with representative groups.A local chamber of commerce or aid donormay have conducted a business linkagessurvey at some point in the past. Any negativeimpacts the mine has had on local businessesor commerce should also be recorded here.Major new capital investments will alsorequire procurement, but the value will bemuch greater than that of operationalexpenditure. Therefore, if there has beenrecent capital investment (e.g., in the lastfive years) or if there is current or plannedcapital investment, describe the scale of theexpenditure and where construction servicesand capital equipment has been or will bepurchased. If data are available, use a similarprocess to that described above. If not, amore qualitative description of the investmentshould be provided, describing the value ofthe works, the number of people employedor to be employed, and the location of theconstruction and capital equipment suppliers.The social distribution of procurementexpenditureWhen you quantify procurement, if at allpossible try to identify which sections of thepopulation are the providers and to whatextent, disaggregated by ethnicity, religion,language, culture, place of origin, residentiallocation and age. This may be able to bedone by analyzing the types of companiesproviding the goods and services.Time periodIn analyzing the three aspects above, youshould try to develop a picture of howprocurement expenditure has changed andwill continue to change over time. Therefore,in addition to data for the current year, try toget figures for the previous five to 10 yearsand estimates for the next five to 10 years.As with employment, more approximateestimates can be produced for these futureyears (based on existing long-term contracts)than for the current year if data are notavailable.Table 5.2 is an example of a table you canuse to organize some of the data from thesethree aspects.90 Mining: Partnerships for Development TOOLKIT

Table 5.2: Example questionnaire on supplies purchased from the host economyItemApproximate value(US$/year)Company/productLocation1. Mine-relatedservices (bar,shop)US$100,000Bar and Shop Inc.On-site2. Camp foodUS$175,000Fresh meat andvegetablesSurrounding villages3. FuelUS$2 millionState fuel companyNational capitaldistrict4. TransportUS$7 millionLogistics Inc.National capitaldistrict5.Disadvantagedsupplier (Y/N)NoYesNoNoComments and examplesof initiativesStarted just with shop but nowhas long-term contract for barand shopBought through cooperativeestablished by the miningcompanyLong-term contractCompetitively tendered contractMining: Partnerships for Development TOOLKIT91

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVESTEP 4: Human capital development andtraining (Mining and economicdevelopment: local content)Training will always be an important part ofa mining company’s local contribution andneeds to be carefully and fully documentedand broken down by the culture, place oforigin, residential location, gender, ethnicity,age, language and religion of the trainees.The benefits of training can often beextended to or can spill over to the employeesof suppliers and typically come in the formof vocational training (directly job-related).Training’s value to society would often beassessed as greater than the costs incurredby the mining company itself: skills may betransferable from the trainees to familymembers or friends; and the people trainedadd to the human capital base of the hostcountry, to the advantage both of presentand future mining operations and of othersectors of the economy.It is recommended you assemble the datashown in the Table 5.3.In addition, try to profile how investment inhuman capital has changed over time andhow it is expected to change, using five and10 years from the past and into the future asreference points. In many mines, employmentwill have decreased because of productivityimprovements, so note both the positive andnegative implications.STEP 5: Social investment andinfrastructure development (Mining andeconomic development: regionaldevelopment planning)The objective of this step is to describe themining company’s social investment andinfrastructure development initiatives. Suchinitiatives will always be needed in low- andmiddle-income countries. However, theirform and extent will be influenced not onlyby the latent demand in the local community,but also by the fresh demand for which thenew mine is responsible. For instance, theinflux of outside workers and their familiesmay have obliged the company to build ormaintain schools, hospitals, clinics, policestations or public libraries. Mining companiesthat face these demands will struggle withthe demarcation line between their reasonableresponsibilities and those of the governmentto whom they pay taxes. Good intentionsnotwithstanding, the drift by the miningcompany into a quasi-government role bringsdifficulties. For example, governments willbe tempted to leave social investment andinfrastructure development to the company,which exposes the mine-assisted facilitiesto consistent underfunding in the long term.In addition, the company will be left with aresponsibility for which it has no mandate ormoral authority, 62 and this will be compoundedby the resentment of the formal agencies ofgovernment that become underfunded andmarginalized. As a rule, mining companiesshould support local initiatives by formingpartnerships with local government andcommunity groups rather than supplantingthem. 6362 The moral hazard is most evident in the field of lawand order, with numerous examples of companiesbeing caught between practical necessity and thelack of moral authority to act on that necessity.63 This is discussed in detail in the ICMM/World BankCommunity Development Toolkit, pp. 8–10.92 Mining: Partnerships for Development TOOLKIT

Table 5.3: Questionnaire on training activities undertakenQuestionNumber of employees that received any employment-related training in the lastfinancial year?Were these manual, professional, or technical staff?What type of training was undertaken in the last financial year, including very basicthings if appropriate, such as literacy or health and safety?Amount of time dedicated to training in the last financial year for each type of trainingand, on average, across trainees?How much was spent on training in the last financial year?What were the resulting outcomes from the training provided?How many formal qualifications were achieved – academic, certificates forvocational training?Were there any measurable or observable increases in labour productivity?Reduced staff turnover?Improved safety performance?Reduced pollution incidents/emissions?Is there any anecdotal evidence of improvements in employee performance, evidenceof promotions from previously disadvantaged groups?Metric(e.g. number ofstaff/hours, US$)CommentMining: Partnerships for Development TOOLKIT93

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEFor each area of social investment andinfrastructure development, you should:• describe the initiative;• indicate the approximate cost (US$ peryear or initial investment cost). If theseefforts are carried out in co-operationwith government or other institutions(e.g., NGOs), you should note the portionof costs borne by the different partners;• describe and quantify, where possible,other company contributions to theinitiative, such as staff time and otherin-kind support. If it is time dedicated byemployees through a staff volunteeringprogram, then calculate the equivalentwages earned for that amount of time;and• note whether there is a perceived benefitof the investment by different groups.Table 5.4: Questionnaire on socialinvestment and infrastructuredevelopment (this table is available atwww.icmm.com/mpdtoolkit) provides astructure for collecting and presenting thisinformation broken down into five categories.The table includes a broad cross-section ofexamples of different types of activities. 64The list is not exhaustive, and additionsshould be made as needed. Many initiativesmay not be documented or otherwiseimmediately evident, and you may need toconsult widely within the mining operationto capture the full picture.In your interviews in Step 1 with localcommunity and government stakeholders,they may have provided opinions aboutaccess to infrastructure. It will be importantto record the end users’ opinions on thesuccess of the mining company’s socialinvestment and infrastructure developmentinitiatives. Try to keep the infrastructuredeveloped solely to meet the needs of thecompany separate from specifically socialinvestment or common-user facilities.For example, a road within the concessionarea that is restricted to mining companyvehicles will not provide the local communitywith any benefits.In addition to the facts and figures thatquantify the contribution, you should alsoinquire about more qualitative dimensionsto social investment and infrastructuredevelopment expenditure:• Identify the interactions between thecompany and employees, nationalgovernment, local community leaders andother government representatives whendetermining what support to provide.For example, did the company plan physicalinfrastructure so it would also be of use toother local businesses and residents? Did itsave funds that might otherwise have hadto be committed by government by adoptinga co-operative regional planning approachand avoiding duplication of efforts?• Although it may be practically difficult todo this, provide if possible a briefassessment of which groups within thecommunity may be benefiting most fromthe investment in terms of gender, ethnicity,religion, language, culture, place of origin,residential location, and age and whetheror not the benefits are distributed equitably.64 Definitions differ, and some of these items may notbe considered to be social investment in all countries.94 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedSTEP 6: Comparing local and nationaleconomic and social development trends(Mining and poverty reduction)In many instances, the economic and socialimpact of mining operations at the locallevel can point in the opposite direction tonational trends. Indeed, one would expectthis to be the case where a very large mininginvestment is inserted into a formerly verypoor local economy. It is, therefore, importantin assessing local economic and socialprogress to make selective comparisonsbetween local and national levels ofdevelopment.The majority of the indicators recommendedfor Step 6 come from the UNDP humandevelopment index (HDI) 65 and are linkedwith the Millennium Development Goals.development status of the local area fromsuch sources as:• country-level human development reportsprepared by the UNDP or other agencies,which may have disaggregated data forregions, larger towns, or otheradministrative areas;• reports from the local healthcommissioner, education department, orministry of finance;• reports from the mining company, such associal reports, SIAs, or HRIAs; and• data on some Millennium DevelopmentGoal variables at the local level for thosecountries that have prepared povertyreduction strategy papers for theInternational Monetary Fund.MODULE FIVENational-level indicatorsFor national-level indicators, definitions anddata are typically available on the UNDPHuman Development Reports website, andyou should summarize them as outlined inTable 5.5.Try to use the same or similar indicators forthe local-level indicators as you have usedfor the national-level indicators so thatcomparisons can be made easily (as shownin Table 5.5).Local-level indicatorsNo standard local-level indicators exist asyet for estimating economic and socialdevelopment trends for the local economy –that is, for the area of influence of themining operation. Often the closestapproximation will be regional indicators.The extent to which these will reflect thecircumstances at the local level is verymuch site specific. However, you may beable to assemble a characterization of the65 Annual Human Development Reports, which containthe HDI data, are available from http://hdr.undp.org.Mining: Partnerships for Development TOOLKIT95

Table 5.5: Human development indicatorsIndicatorHDI reference*Human development index (value)Table HLife expectancy at birth (years)Table HAdult literacy rate (% aged 15 and above)Table HCombined gross enrolment ratio in education (%)Table HGDP per capita (PPP US$)Table HLife expectancy indexTable HEducation indexTable HGDP per capita rank minus HDI rankTable HPopulation not using improved water source (%)I - 1Children under weight for age (%)I - 1Ratio of estimated female to male earned incomeKUnemployment1-2* The references in the UNDP Human Development Reports (HDR) change from year to year.Table 5.5 is based on the 2009 HDR edition, which details national level indicators from A to N.National Local96 Mining: Partnerships for Development TOOLKIT

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedHow to present your findingsThe various individual impacts assembledand assessed in detail in the six steps ofmodule five should allow you to presentan overall economic and social net impactmainly at the local level (the macroeconomicimpacts are covered in module six).However, scoring and weightingperformance across qualitatively differentissues (where perceived success differsfrom individual to individual) is notstraightforward and can be contentious.Therefore, this toolkit does not offer a formal“scorecard” that integrates performanceover different issues. Rather, you shouldwrite a discursive summaryof the main quantitative and qualitativefindings, supported with graphs and tables,and identify the implications for the miningcompany’s initiatives and partnerships.The employment data from Step 2 can bepresented in a time series graph of both theemployment numbers and the wage andsalary numbers.The main results from Step 3 can be laid outas in Table 5.2 accompanied by a discussionof the main features and issues of localprocurement. Discuss the mine’s specificinitiatives designed to increase the levels oflocal procurement and whether these havebeen successful.Step 4’s findings can be presented in a tablesimilar to Table 5.3 with a narrative discussionof the positive and negative implications ofthe operation’s training activities.Table 5.4 from Step 5 can form the talkingpoint for the discussion about socialinvestment and infrastructure development.MODULE FIVEReview all the findings gathered from theStep 1 stakeholder consultations, so as toensure that your overall assessment of thenet local impact gives a full account of allthe positive and negative contributions ofmining at the local level. If you managedto conduct the stakeholder interviews andconsultations in a thorough manner, thereshould be a great deal of qualitativeinformation with which to support or disputesome of the more quantitative findings.For example, discussions with stakeholderson physical or economic displacement andon the demographic and social changes thathave arisen in the communities as a resultof the mine, both positive and negative,will complement the data elicited from themining company on social initiatives andinfrastructure development or employment.Using the data gathered in Step 6, you maybe able to compare the economic and socialdevelopment status at the national and locallevels by calculating the ratio of the indicatorvalues at the local level to the correspondingindicators at the national level. These ratioscan be presented in a histogram (an exampleis provided in Figure 5.1).Interpretation of the hypothetical resultsfrom Figure 5.1:• If the value is greater than 1, this indicatesthe local level is performing better thanthe country as a whole on that particularsocio-economic aspect.• If the value is less than 1, then the locallevel is performing worse than the countryas a whole on that particularsocio-economic aspect.Mining: Partnerships for Development TOOLKIT97

Measuring the participatingmine’s positive andnegative contributionsto local communitiescontinuedMODULE FIVEWherever possible, you should attempt todescribe the net impacts (net benefits andcosts) for different stakeholder groups.It is recommended that you organize thissummary narrative around the sixpartnership themes:• mining and poverty reduction;• mining and economic development:revenue management;• mining and economic development:regional development planning;• mining and economic development: localcontent;• mining and social investment; and• mining and disputes resolution.You should pay particular and frank attentionto the strengths and weaknesses of themining company’s performance againstthese six themes, because the credibility ofthe assessment and properly directedpriorities for future company or partnershipinitiatives both depend on it.Figure 5.1: Comparing local with national socio-economic performance(a score of “1” indicates equality of local with national performance)Life expectancy at birthPeople with sustainable accessto improved sanitationPopulation with sustainableaccess to an improvedwater sourceGDP per capitaCombined gross enrolmentratio schoolsAdult literacy rate0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.698 Mining: Partnerships for Development TOOLKIT

Guidelines for fieldinterviewsANNEX4This guidance and the tools in this annexwere designed by Environmental ResourcesManagement (ERM) 66 to assist the consultantsresponsible for interviewing stakeholdersabout the socio-economic initiatives of theparticipating mining operation. The guidancehas two steps: organizing inputs andorganizing outputs. They should be read inconjunction with module five and used toplan the field work and to present theresults (with tailoring as appropriate). It isalso essential that all interviewers are fullytrained before commencing work in thefield and that an experienced surveysupervisor is engaged to oversee the workboth of the design and of the execution inthe field.STEP 1: Identifying and prioritizingintervieweesIt is essential to select the appropriatestakeholders for interview if you are toobtain an accurate picture of the level ofproject knowledge, attitudes and opinions oflocal people. The text and table that followprovide guidelines about how to achieve this.In particular, the following considerationsarise in making this selection:• fully representing the different stakeholdergroups (e.g., NGOs, governments);• ensuring good representation fromstakeholders who:– have relevance to the mining sector onone or more of the six partnershipthemes;66 www.erm.com.– have a broad level of understandingabout local conditions and also have asenior position in their organization; and– are known to have good knowledge (and,perhaps, strong views) about particularissues locally but do not hold a majorlocal office;• achieving an appropriate geographicalcatchment area for the assessment, andensuring a good balance of stakeholderswithin this (i.e., stakeholders close tomining activity as compared with thoseimpacted by mining but located furtheraway); and• giving a full account of the views ofpro-mining, neutral and anti-miningstakeholders.Once this initial assessment has beenundertaken, prioritize the stakeholderswithin each group, especially if there aretoo many to interview in the timeframe.Focus on interviewing those of higherpriority. Send your prioritization to the leadconsultant for feedback prior to arrangingmeetings. Table A.4.1 is a guide to the typeof information to be collected. You will needto use your own judgement in deciding thecriteria for prioritizing these groups.The guidance in Table A.4.2: Informationfrom interviews (this table is availableat www.icmm.com/mpdtoolkit) on the typeof information or perspective that eachstakeholder group would be expected toprovide will help you to plan your interviewsand define the questions to be asked.In addition, Table A.4.2 information willhelp to refine or expand the examplequestions in Table 5.1.Mining: Partnerships for Development TOOLKIT99

Table A.4.1: Prioritizing intervieweesOrganizationContact nameand positionRelevance tomining andthematic issueGeographicalrelevancePro-mining,Anti-miningor Neutral?Prioritya) Local governmentb) Mining companies (and their employees)c) NGOs/donor agenciesd) Other NGOs/Civil Society Groups as Representatives of Community Groupse) Local businesses, community groups and local people (where no available interviewees in d); ensure a representative range ofinterviewees or focus group representatives, including women)100 Mining: Partnerships for Development TOOLKIT

Guidelines for fieldinterviewscontinuedSTEP 2: Presenting outputs from theinterviewsTable A.4.3 is a template with which tocapture stakeholder responses andstructure them according to the sixpartnership themes. For each theme andorganization or contact, you should aimto capture the following:• background context – method andstatistics;• initiatives ongoing, with summary ofimpacts;• opportunities for improvement; and• remaining challenges to address in eachtheme in order to drive improvements.ANNEX 4Mining: Partnerships for Development TOOLKIT101

Table A.4.3: Presenting resultsOrganization/contact Mining andMining andpovertyreductionMining andeconomicdevelopment:revenuemanagementMining andeconomicdevelopment:regionaldevelopmentplanningMining andeconomicdevelopment:local contentsocialinvestmentMining anddisputesresolutiona)Local government/authoritiesb)Mining companiesc)Donor agenciesd)NGOse)Civil society groups as representativesof community groupsf)Community groupsNOTE: This table has a similar structure to Table A.2.1, the summary table for the example partnership database. Your findings from these interviews might help you further developthe partnership database suggested in module two and described in Annex 2.102 Mining: Partnerships for Development TOOLKIT

Notes on calculatingemployment impactsANNEX5Annex 5 provides guidance on how tocalculate the three categories of employment:direct, indirect, and multiplier or induced.For all three of these definitions ofemployment (direct, indirect and induced) itwill often be of interest to readers of thismodule’s findings to know what proportionof indirect employment is retained “locally”.So wherever possible ask or make anestimate of what proportion of jobs arecreated “locally” by the mine.Calculating employmentAll employment should be expressed as fulltimeequivalents for a year. A full-time job isone that occupies employees for 30 hours ormore per week. Therefore, if the mineemploys two part-time staff, each of whomworks two full days per week throughout theyear this is counted as one full-timeequivalent position.Direct employmentAs shown in Figure A.5.1, direct jobs comprisethe mining company’s employees andpermanent on-site contractors. The total isthe number of individuals on the respectivepayrolls but expressed as full-timeequivalent positions.Where there are headquarters or otheroverhead staff employed within the hostcountry, the proportion of these that relateto the mine should be included.Indirect employmentIndirect employees are those who work offsitefor the operation’s suppliers andcontractors and whose employment isdependent upon custom from the operation.(Indirect employment includes communityservice investment employment, but this isdiscussed in the next section as it iscalculated in a different way.)While not as accurate as those figures fordirect employment, reasonable estimatesas to indirect employment (particularly forfull-time contract workers) may be availablefrom the mining company’s personnel orhuman resources department or fromsuppliers and contractors.Employees of suppliers or contractors donot have to be permanently engaged in workfor the operation for the employment to becounted. For example, a maintenancecontractor who employs 100 full-timeequivalent staff and who sells 10% of his orher output in a year to the operation wouldhave had the equivalent of 10 full-timeequivalent jobs created by the operation’scustom. Again, this information should beavailable from the mine or from theirsuppliers and contractors.If a portion of the work is subcontracted toother companies, similar calculations shouldbe done for them.Table A.5.1 summarizes how to calculatesupplier and contractor employment. If theoperation has major contractors or supplierswho themselves source a major part of theirwork from outside their companies, they canMining: Partnerships for Development TOOLKIT103

Figure A.5.1: Types of employmentKeyDirect jobsIndirect jobsInduced jobsForeign jobsNOT includedForeign supplychain jobsIn-country,off-site supplychain jobsDitto DittoEtc. Etc.Source: The Anglo AmericanSocio-Economic Assessment Toolbox(SEAT), available atwww.angloamerican.co.uk.Boundary of employment estimates included in SEATCompanyemployeesPermanenton-sitecontractorsJobs created incountry byemployee spendingJobs createdabroad byemployee spendingDitto DittoEtc. Etc.104 Mining: Partnerships for Development TOOLKIT

Notes on calculatingemployment impactscontinuedalso use this form. When collecting thisinformation, a sampling approach shouldbe adopted. A representative number ofsuppliers that comprise the majority ofthe operation’s procurement expenditureshould be contacted. The sample should berepresentative in terms of type of supplier,geography, size of purchase, and skillsrequired. The information gathered shouldthen be grossed up to reflect totalexpenditure. It is not necessary to contactall suppliers, as this would be very timeconsuming.Indirect employment created bycommunity social investmentCommunity social investment employmentis a type of indirect employment, but it iscalculated in a different way. Mining operationscan affect society in a number of waysthrough the provision of social investment.For instance, they may build or maintainschools, hospitals, clinics, police stationsand public libraries. This, in itself, cangenerate employment in the community.The mining operations may also becontributing to job creation schemes as apart of their social investment initiatives.Identifying the number of full-timeequivalent jobs attributable to employees(or, in the case of job creation schemes orother schemes that provide livelihoods,beneficiaries) of community social investmentinitiatives is a simple four-step process:1. Identify the number of employees orbeneficiaries of the initiative. This is thenumber of individuals who directlyparticipate in the initiative (i.e., notincluding non-participating dependents).2. Estimate or ask about the averagepercentage of their working day that isdedicated to supporting or working at theinitiative.3. Estimate the percentage of the operation’scontribution to establishing and maintainingthe initiative. This can include in-kindcontributions (e.g., of land, materials ortime). To ensure the answer is balanced,the operation should attempt to agree onthis with other initiative partners,including beneficiaries.4. Calculate full-time equivalent jobs usingthe following formula:a. number of employees or beneficiaries,multiplied byb. average percentage of incomes oremployment derived from the initiative,multiplied byc. the percentage of the miningoperation’s contribution to the initiative,equalsd. full-time equivalent jobs.For example, if a local hospital had 200employees who derived their entirelivelihoods from working there full-time andif the mine was responsible for 50% of thesupport provided, the employment generatedwould be: 200 beneficiaries x 0.5 (minecontribution) = 100 full-time equivalent jobs.Table A.5.2 provides a format for calculatingand summarizing employment fromcommunity social investment.ANNEX 5Mining: Partnerships for Development TOOLKIT105

Table A.5.1: Calculating indirect employment (excluding community social investment employment)Number of off-site staffName ofcontractor/subcontractor/supplier(a)Number ofpermanent on-sitestaff (1) (includescontractors)(b)(c)Total number Percentage ofof employees business within company (1) the operation(d)Total off-siteemployees(b x c)1.2.3.etc.TotalNOTE: (1) Staff and employee numbers should be expressed as full-time equivalents.(e)Total indirectemployees(a + d)(f)Percentage ofemploymentthat is local106 Mining: Partnerships for Development TOOLKIT

Table A.5.2: Calculating an operation’s contribution to indirect employment from community social investmentName of initiative(a)Number ofemployees orbeneficiaries frominitiative(b)Average percentageof employees’ orbeneficiaries’incomes derivedfrom the initiative(c)Mining operation’scontribution toestablishing initiative(%)(d)Full-time equivalentjobs attributable tocommunity socialinvestment(a x b x c)1.2.3.4.5.6.(e)Number of jobsthat are localMining: Partnerships for Development TOOLKIT107

Notes on calculatingemployment impactscontinuedANNEX 5Induced employment throughemployee spending (multipliers)The spending of direct and indirect(including community social investment)employees generates induced employmentin the local economy. This employmentresults from spending on housing; food;clothing; leisure activities; personal services,such as hairdressing and cleaning; businessservices, such as banking; transport; utilities;and public services, such as education andhealth care. As can be seen, while mostspending is by employees themselves, thepublic sector may also provide some serviceson their behalf (for example, education).It is possible to calculate accurately themultiplier effects on employment by usingbusiness surveys and economic modelingtechniques such as input–output andcomputable general equilibrium (CGE)models. 67 However, these econometrictechniques can be time and resource intensive;67 Note: Input–output tables describe the sale andpurchase relationships between producers andconsumers within an economy. The OECDInput–Output Tables are produced by illustratingflows between the sales and purchases (final andintermediate) of industry outputs but can also beproduced by illustrating the sales and purchases(final and intermediate) of product outputs. Forfurther information, see the OECD website wherethe latest set of OECD Input–Output Tables consistsof 42 countries with data for years from around2005. The Input–Output Tables can be accessed viaOECD’s data dissemination service OECD.STAT andas a suite of Microsoft Excel files. To access the fulldataset, go to the themes “Industry and Services”,“Structural Analysis (STAN) Databases” and “InputOutput Database”, at www.oecd.org. A goodexample of applying an input–output model forthe mining sector (in Chile) can be found atwww.unctad.org. For further information on CGEmodeling, see Computable General EquilibriumModels and Their Use in Economy-Wide PolicyAnalysis: Everything You Ever Wanted to Know (ButWere Afraid to Ask), available at www.rri.wvu.edu.and, notwithstanding their simplicity andwidespread use, such models have a numberof limitations that need to be borne in mindwhen assessing the results. In particular:• the structure of the model might notaccurately reflect the economy, inputtechnologies might change, or changesin relative prices may lead to substitutionsbetween inputs; and• there may be supply constraints in somedomestic sectors or in the availability ofcertain kinds of labour. If so, then themultiplier effects obtained will beoverestimates.For the purposes of developing a countrycase study or a shorter mining-issues paper,it is recommended you make use of robustmultiplier estimates, wherever possible.However, in the absence of reliable data,crude approximations on induced employmenteffects of mining can be estimated fromexisting empirical studies. Two of these arediscussed here. The first study estimatedthat, for every job created in a mine, a further1.65 to 2.5 jobs are created elsewhere. 68The second study estimated that, for everyjob created in a mine, a further 1.25 to 2.37jobs are created elsewhere, the higherfigure relating to “world-class mines”. 69These estimates accord with the authors’experience of undertaking socio-economicimpact assessments using input–output andCGE models.68 This is based on the World Bank study Large Minesand the Community. If there is research that is moreaccurate that has been calculated for the operationor country (for example, as part of a socio-economicimpact study), that should be used instead.69 Schodde and Hronsky, The Role of World-ClassMines in Wealth Creation, Society of EconomicGeologists, Special Publication 12, 2006, pp. 71–90.108 Mining: Partnerships for Development TOOLKIT

Analyzing thelife cycle impactof the participatingmine on thehost country’smacroeconomicaggregatesANNEX 6Template for collectinglife cycle dataMODULESIX

“LIFE CYCLE ANALYSIS ALLOWSAN UNDERSTANDING OF WHATIS INVOLVED IN EXPLORING,DEVELOPING AND OPERATINGA TYPICAL MINE, PARTICULARLYIN ‘NEW’ MINING COUNTRIES.”Image courtesy of Anglo American

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatesMODULESIXPurposeThe purpose of module six is to analyzethe impact of the participating mine on thehost country’s macroeconomic aggregatesover the mine’s life cycle, which typicallyfollows a number of phases: exploration,feasibility, design, construction, operations,extensions and closure.In addition to royalties and taxes, theinvestment of capital, financing andoperational expenditures, communitycontributions, and mine closure provisionsfor works and performance bonds will allinfluence a host country’s macroeconomicaggregates over the mine’s life cycle.Moreover, these contributions can rise andfall dramatically over time, either in thenormal and predictable course of a mine’slife cycle or in response to external factorsoutside a company’s control.Your quantitative life cycle analysis willadd hard numbers to the evidence base forconstructive debate about fiscal policy inparticular and about mining’s economic andsocial contribution in general. In particular,this module recognizes explicitly that themine’s contribution to an economy can varygreatly from year to year over its life cycleand that debates in country are frequentlyreaching erroneous conclusions by failingto recognize this.Gathering the dataCollecting all the data required to analyzethe macroeconomic impacts over the mine’slife cycle may seem like a daunting task.However, module six is worth the effort.The REi’s report entitled Mining in Tanzania– What Future Can We Expect?, for example,was able to explain the life cyclemacroeconomic contributions of mining toa lay audience and bring perspective to apolitically heated debate especially aboutminerals taxation.You will need to gather data about the mineand about the country’s macroeconomicaggregates in the following categories forthe period covered by the life cycle of themine (starting with the first drilling program,even if this means estimating the expenditureby previous operators of the explorationlicence):• Step 1: the mine’s annual production;• Step 2: the mine’s annual payments thatcontribute to gross domestic product(GDP) (i.e., the value-added of the mine)and gross national income (GNI), as wellas data on levels and growth rates of thehost-country’s GDP and GNI;• Step 3: the mine’s annual contribution togovernment revenues and total annualgovernment revenues; and• Step 4: the mine’s annual contribution tothe balance of payments and the country’sannual balance of payments.Mining: Partnerships for Development TOOLKIT111

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedMODULE SIXUsing constant dollars and projectingfuture valuesTo enable meaningful comparisons fromyear to year over the mine’s life cycle, themonetary amounts used in the analysesneed to be comparable. This is done byconverting current dollars (i.e., the actualdollar amount of income or expense at thetime) into constant dollars (i.e., the actualdollar amount of income or expense at thetime adjusted to a base year, usually themost recently completed financial year,to account for inflation or deflation). 70 Makesure you know which type of dollar, currentor constant, is being used in the data yougather. US dollars are typically used in thistype of exercise because they are the unitof currency in which many mining companyaccounts are likely to be collected. However,this is not essential; and an alternativeinternational currency could be used if moreappropriate. Some items may be betterexpressed in local currency terms forpresentational purposes to local audiences(e.g., how big is the revenue contribution tothe national budget) and then re-expressedin US dollar terms for the purposes ofmaking comparisons.In addition, if you cannot find a source thatprovides the data for the macroeconomicaggregates in US dollars, you will need toconvert the macroeconomic aggregates fromthe host-country’s currency into US dollars.You can do this by finding out the relevantexchange rate for that period from anynumber of websites. 71For projected values (such as future oreprices or future government revenue), makesure you indicate the assumptions on whichthese are based. In many cases, it may bepreferable to indicate a range of values.Also, for government data, such as thefuture levels of total GDP, ensure that thenational projections are also presented on aconstant dollar basis.Data on the mineA template in which you can organize therequired mine data is provided in Annex 6.A feasibility study for a new mine will bebased on financial modeling of investmentreturn, which enables the project scope tobe optimized and informs the investmentdecision. A typical financial model willaccount for all major costs over a project’slife cycle, from the development drillingrequired to upgrade resources to reservesthrough to the detailed design, construction,operation, and closure of the mine. Theseoutgoings will include all the main paymentsthat will affect the macroeconomicaggregates of the host country. Thus, thefinancial elements of the mine’s feasibilitystudy are an important potential source ofdata for module six. As well, the project will70 One quick constant-dollar converter for US dollaramounts is available from the U.S. Bureau of LaborStatistics at http://data.bls.gov/cgi-bin/cpicalc.pl.71 For example, www.oanda.com. A number ofwebsites also have historical exchange rate datathat you may need if the baseline year you areusing is some years in the past.112 Mining: Partnerships for Development TOOLKIT

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedhave incurred the sunk costs of the earlystages of exploration, engineering andfeasibility analysis leading up to the decisionto invest, for which company records willalso exist (or, failing which, the records ofprevious operators or, if these are unavailable,estimates based on what is known of thescope of the early exploration work).Feasibility studies become dated, and in manycases you will do better to rely on a company’shistorical accounts and the forwardprojections based on the financial modelingthat all companies regularly update.In addition, these models can also simulatethe consequences of probable but unpredictablefuture influences on expenditure and income,such as mineral prices, fuel costs and othermine consumables, which will all in turnaffect a mine’s performance and hence itscontributions to the country’s macroeconomicaggregates. 72A mine may also have defined or be seekingresources outside the ore reserve parametersof the feasibility study or current mine planfor which future development scenarios andtheir macroeconomic impacts could alsobe modeled.Financial models may contain commerciallyconfidential information. However, experiencewith ICMM’s REi has shown that the datathey develop can be readily generalized totell the story of a mine’s likely life cyclemacroeconomic impacts. The story will becredible, because projects are very sensitiveto costs and companies go to some lengthto take them into full account.The taxes, royalties and fees that miningcompanies pay to government take manyforms and are often paid at national,regional and local levels. These will bedocumented in company records; and,provided the mining company is willing toshare this information, they should be yourmain source of information. As well, mostcompanies maintain up-to-date estimatesof likely future payments. If companies areunable to share information, you may needto exclude this section, unless revenuedata can be taken from other documents.Ideally, this would be the Extractive IndustryTransparency Initiative (EITI) reports.However, the data is not always shown in adisaggregated form, company by company,nor has every country signed up to the EITI. 73In writing up your findings, you should stateyour sources and, where there is onlypartial information, the reasons for this.MODULE SIX72 See ICMM’s report Mining in Tanzania – What futurecan we expect? as an example of a life cycleapproach to assessing the macroeconomic impactsof the mining sector, available at www.icmm.com.73 See www.eiti.org where, as of October 2010,23 countries have published EITI reports, bringingthe total number of EITI reports to 52.Mining: Partnerships for Development TOOLKIT113

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedMODULE SIXThe EITI reporting template in Annex 3(Table A.3.2) or the life cycle data template inAnnex 6 (see Item Six in Table A.6.1) providesa typical listing of taxes. You should aim tocollect the data to this level of detail wherepossible (but you may need to qualify orgeneralize this information if it iscommercially confidential or politicallysensitive).You should be aware that the data requestthat you make to mining companies willinvolve some overlap from one module toother modules (especially modules five andsix). In the light of this, you are encouragedto plan carefully so that you can coordinatethese requests in a manner that minimizesthe workloads on the companies or indeedon any other stakeholders. It is noted alsothat time periods and the definitions of someapparently similar variables may alterbetween modules. The problems causedby this can also be limited by carefulpre-planning of all data requests.Data on the macroeconomic aggregatesData on the host-country’s macroeconomicaggregates (GDP, total government revenue,exports, imports, interest on internationaldebt, dividends paid abroad, investmentinflows and debt repayments) can beobtained from national statistical sources,from national public finance documents orfrom the IMF datasets as found, for example,in the IMF’s routine staff reports on eachmember country (commonly referred to asArticle IV Staff Reports).114 Mining: Partnerships for Development TOOLKIT

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedHow to present your findingsIt is recommended that you conduct youranalysis and present the data under fourheadings:• Step 1: production;• Step 2: GDP (i.e., the value-added of themine) and GNI: levels and growth rates;• Step 3: government revenues; and• Step 4: balance of payments.Wherever possible you should calculate andpresent the forward-looking macroeconomicdata alongside the historical data of themine so as to capture the full contributionfrom the early years of the investment.You should aim to capture all the exploration,construction and operating periods.STEP 1: ProductionYou should provide a summary of past andfuture mineral production by volume and bydollar value (see the template in Annex 6,Item One) as a time series graph that coversthe entire period of the mine’s life cycle.The volume data will allow comparisons tobe made between production levels to dateand the forward-looking production levels,showing how the future pattern of productionis likely to evolve. It will also allow futureproduction-based payments to government(such as royalties) to be calculated.The US dollar value data will merely indicatethe size of the mining activity both in the pastand prospectively into the future, includingin most cases the size of its main exportcontribution to a country’s balance ofpayments – in cases where all production isexported. This is crucial information for thepolicy debate in signalling whether the impactscurrently being realized might be expectedto rise or fall in future. It is often the casethat governments in particular assume thata large mining activity once established intheir country is there for the infinite future;this is frequently a wrong assumption.MODULE SIXFuture metal prices are never certain: usinga specific value will be both arguable andwrong, so you might want to adopt – or atleast explain the implications of – a credibleprice range instead.Mining: Partnerships for Development TOOLKIT115

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedMODULE SIXSTEP 2: GDP: levels and growth ratesCalculate the mine’s contribution to GDP(i.e., the value-added) as the annual sum of:• wages and salaries, including payments toexpatriate workers and any benefits paid;• profits before taxes, dividends anddepreciation; and• interest payments on debt.These three elements correspond withstandard UN “National Income” definitionsand so will enable the GDP (value-added)contribution of the mine to be compareddirectly with national aggregate GDP. (Thisdefinition may differ slightly from the conceptof “value-added from a mine” used by somemining companies.)For each year of the mine’s life cycle, extractthe data from each section of the filled-indata templates that has figures for one ormore of the three elements, then total thethree elements for each year and presentthem as a time series graph in constantdollar terms. In the case of the profit elementof GDP, you can normally assume that thiswill be the difference between TotalRevenues and Total Operating Costs (OPEX).However, a side check should be made incases where company reporting shows“other” costs that are not included in eitherOPEX or in taxes, dividends and depreciationcharges. In addition, you should expressthese data as percentages of the total GDPof the country in the year you have chosento base the analysis in (see discussion aboveon “Using constant dollars and projectingfuture values”). This will probably be thelatest year for which reliable national GDPdata are available.Some of the incomes created by the minewill leave the country: namely, the expatriatewages and benefits that are paid and spentoutside the host country, the interestpayments on international debt, and thedividends to non-resident shareholders.These payments can also be extracted, inpart at least, from the completed datatemplates. 74 The totals of these externalpayments from GDP can then be deductedfrom the earlier GDP totals for each yearto give a time series graph for the mine’scontribution to GNI. The time series graphfor mining’s GNI contribution over the lifecycle can be presented in the same way asthat for mining’s contribution to GDP (i.e., asa percentage of total GNI). (The concept ofGNI is recommended over the similarconcept of “retained value-added” becauseit conforms more closely to internationalconvention.)74 In previous applications of the toolkit, data on wagesand salaries paid to expatriates have been requestedseparately. It has then been assumed that the majorpart of this remuneration will actually be paidand/or spent abroad (perhaps 80% to 90%). This isadmittedly a second-best approach to eliciting fullinformation from such employees about how theyreceive and spend their remuneration: an approachthat would call for impractically time-consumingsurveys.116 Mining: Partnerships for Development TOOLKIT

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedSTEP 3: Government revenuesConstruct and present a time series graphof taxes, royalties, levies and fees; and, ifpossible, show whether these are paid atnational, regional or local level. Putpayments by the mine participating inmodule six in the context of both historicand, if national projections are available(e.g., from IMF documents), future taxesand fees received or to be received bygovernment from all sources.The diagrams and figures that you use topresent these data can be extremelyinformative about the large changes inpayments to government over the mine’slife cycle. The payment profiles for incomeandprofit-related taxes (such as corporateincome tax) are particularly important, buttaxes on production (such as royalties) andproduction inputs and services (such asimport duties) should also be taken intoaccount.In the presentation of your findings, youshould examine whether some taxinstruments (such as royalties) have beenused to ensure a minimum governmentrevenue flow from the mine. For example,in the early years of the mine’s operation,production- or value-based royalties may bethe only significant revenue that the countryreceives from the mine because accelerateddepreciation rates and the ability to carryforward losses have the effect of postponingrevenue from corporate income tax to lateryears. You will need, therefore, to put the lowgovernment revenues of the early years inthe context of the mine’s total tax payments(Figure 6.1 is an example).Taxation is always contentious and not alwayswell understood. A close reading of theAddendum to the toolkit, Guiding Principlesof Minerals Taxation, is recommended beforeyou begin your presentation of the findingsfrom Step 3.MODULE SIXMining: Partnerships for Development TOOLKIT117

200820092010201120122013201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040050100150200US$m250Construction(2010–2013)300Design engineering(2008–2010)350Feasibility(2008–2009)400Exploration (findingresources and provingup reserves) continuesup to 2008Production(2013–2037)Mine closure(2037–2043)Mining revenues as % of total government revenues – right scaleCorporate income tax (US$m) - left scale Royalties (US$m) – left scaleFigure 6.1: Example of how to present findings on corporate income tax and royalty payments over the project life cycle20%18%16%14%12%10%8%6%4%2%0%% of total government revenues118 Mining: Partnerships for Development TOOLKIT

Analyzing the life cycleimpact of the participatingmine on the host country’smacroeconomic aggregatescontinuedSTEP 4: Balance of paymentsUse a similar time series graph to presentthe mine’s contribution to the country’sbalance of payments, 75 based on a statisticalanalysis of the constituent parts:1. balance of trade: exports minus imports;2. balance on current account: balance oftrade minus interest on international debtand dividends paid abroad;3. balance on capital account: investmentinflows to country (debt and equity) minusdebt repayments; and4. overall balance of payments: sum ofbalance on current account and balanceon capital account.You can extract these data, some inconsiderable detail, from the template inAnnex 6 (Table A.6.1). However, theconstituent parts of the mine’s contributionwill need to be drawn together to present anintegrated picture of the mine’s impact onthe country’s balance of payments.Export data are straightforward and, for amineral such as gold, will normally be more orless the same as the total value of the mine’sproduction in any given year. However, youshould make a note if not all of the output ofthe mine is exported and if some is solddomestically.Imports have a more complex life cycle profile,with large quantities of specialized equipmentlikely to be imported in the early phases ofthe mine (exploration and construction) but75 The balance of payments is a statistical statementthat systematically summarizes, over a given periodof time, all the transactions of an economy with therest of the world.only small quantities thereafter. Ongoingimports of mine consumables may also reduceover time if local procurement sources arise.The timing and amounts of interest paymentsto foreign debt financiers will be determinedby the mine’s loan agreements.Dividends paid to foreign shareholders willreflect actual profit and company dividendpolicy and so cannot be easily quantified inadvance.The drawdown of the capital funds to financethe project (the investment inflow) willtypically offset the initial surge in imports.When you present the data, first show howthe constituent parts of the balance ofpayments – the mine’s imports, exports,dividends, and net debt – vary over the mine’slife cycle. Then present the overall balanceof payments picture per the example inFigure 6.2. Controversies over mining’s impacton developing economies often revolve aroundthe selective use of balance of paymentsindicators. On their own, for example, largeoutflows for imports or to service debt willpoint to a deficit in the current account.However, this picture is incomplete: theseoutflows are balanced by the large capitalinflows. As the example in Figure 6.2 shows,over the life of the project, the overall effecton the balance of payments can be largelypositive. 76 Misleading arguments of this typeare best addressed if you can present thecomplete picture of all four key balance ofpayments elements in one integrated figure.76 Because, at a national level, the current accountand the capital account always add up to the totalaccount, which is necessarily balanced, a deficit inthe current account is always accompanied by anequal surplus in the capital account and vice versa.MODULE SIXMining: Partnerships for Development TOOLKIT119

2000200120022003200420052006200720082009201020112012201320142015-300-200-1000US$m100200300400500600Impact on overall balance of payments (US$m)Current account balance (US$m) Capital account balance (US$m)Figure 6.2: Example of how to present findings on the balance of payments201620172018201920202021202220232024120 Mining: Partnerships for Development TOOLKIT

Template for collectinglife cycle dataANNEX6Table A.6.1: Template for collecting lifecycle data (this table is available atwww.icmm.com/mpdtoolkit) will guide you tocollect data that can be used to present acomplete picture of the impact on a country’seconomic growth, future national income,balance of payments, employment,government revenue and a number ofsocial problems.Your request for data needs to strike abalance. On the one hand, you will wantto minimize the work required by usingconcepts and aggregates that appear instandard company operating accounts and,thus, should be readily identifiable in anyfinancial model. At the same time, however,you may need to aggregate data acrossdifferent participating mining companies.Ask your respondents to fit their data to theformat in Table A.6.1 as closely as possible.If they cannot reasonably achieve this fit,ask them to nonetheless provide all the datathat they can (rather than summaries).You should try to ensure the data is given toyou in constant dollars as the aggregationwill be easier if all revenues and costs arestated in constant-price terms (e.g., theprices of 2008). Please note that we haveassumed the entire output is exported.However, if the product was sold domestically(even if only partially), you will need toreflect this in making revisions to the drafttemplate provided on the CD.You may find it easiest to work with the dataif it is entered into Microsoft Excel or a similarspreadsheet application. The worksheetcontained in the CD is in Microsoft Excel andis provided as a guide. As the data could beprovided to you in any number of ways, itwill be up to you to specify specific formulaeand derive totals.The template is intended to cover everyyear of the mine’s life cycle. So start with thefirst pre-production costs and the drillingprogram and include the costs associatedwith the prefeasibility and feasibility studiesand associated metallurgical, geotechnicaland environmental investigations. If possibleyou should aim to include all years up to theanticipated closure date of the mine.Mining: Partnerships for Development TOOLKIT121

Template for collectinglife cycle datacontinuedANNEX 6122 Mining: Partnerships for Development TOOLKIT

Impact of miningon governanceANNEX 7Detailed questions to helpassess the impact of miningon governanceMODULESEVEN

“MINING ACTIVITIESAFFECT INSTITUTIONSAND POLICY CHOICES ATNATIONAL, REGIONALAND LOCAL LEVELS.”Image courtesy of AngloGold Ashanti

Impact of mining ongovernanceMODULESEVENPurposeIt is a general principle of the toolkit thatyou have the option to undertake one ormore but not necessarily all of the modules.The exception is module seven. Becausethis module helps you pull togetherinformation found in earlier modules –so as to examine how mining operationsinfluence decision-making, governancestructures, institutions and policy choicesat different levels of government – it istherefore dependent on earlier findings.Module seven relies on an understanding ofwhat has happened in the host country overthe period during which mining hasassumed a dominant economic andfinancial position in the country. Therefore,at a minimum, the value of module sevenwill be greatly increased if you haveundertaken module four (examining theproximate aspects of governance that helpor hinder this contribution). 77 Ideally, youwill have also undertaken modules three(measuring the mining industry’s economicand social contribution to the host country),five (measuring the participating mine’spositive and negative economic and socialcontribution to local communities) and six(analyzing the life cycle impact of theparticipating mine on the host country’smacroeconomic aggregates).77 As defined in module four, governance consists ofthe traditions and institutions by which authority ina country is exercised. This includes the process bywhich governments are selected, monitored andreplaced; the capacity of the government to effectivelyformulate and implement sound policies; and therespect of citizens and the state for the institutionsthat govern economic and social interactions amongthem.If by the start of module seven you havebeen able to build up a comprehensivepicture of what has happened in the countrysince mining became more dominant youshould already have (1) a good understandingof the participating mine’s positive andnegative impacts on economic and socialdevelopment at local and national levelsand (2) an idea of the influence governancehas had on shaping this outcome.With this two-way interaction in mind,module seven takes this analysis further byaddressing perhaps the most subtle andelusive aspect of the toolkit scope: how aredecisions on mining taken and how do theyinfluence governance structures, institutionsand policy choices at different levels ofgovernment?At the mine level, it is generally assumedthat the host country’s political andinstitutional environment will operate ina more or less consistent manner,uninfluenced by the presence or absenceof the mine. However, the evidence ofICMM’s work to date is of a two-wayinteraction between mining and existingdecision-making processes, governancestructures and institutions. The economicand social importance of large-scalemining and minerals projects can renderthem politically powerful, thereby providinggovernments with clear incentives toaccommodate mining investments. It iswidely accepted that in any interaction ornegotiation with host governments, forinstance over investment incentives,mining firms are directly or indirectlyshaping the country’s decision-making andgovernance framework.Mining: Partnerships for Development TOOLKIT125

Impact of mining ongovernancecontinuedMODULE SEVENIn other words, the presence of a largeextractive industry can lead governmentsand communities into decisions that theymight not otherwise have made. It is thisinfluence that may explain a number ofthe differences in economic and socialperformance between one resource-richcountry and another. 78The poor economic and social performanceof many resource-rich countries suggeststhat many of these decisions – taken inresponse to changing circumstances arisingfrom a large minerals investment – runagainst the host country’s long-terminterests. For example, incentives tomaintain a broad economic (or tax) basemay be neglected (because of significantminerals taxes); the temptation to imposecounterproductive taxes and duties mayprove irresistible (to protect non-mineralssectors from deteriorating competitivenessdue to an appreciating exchange rate);heavy-handed security may be imposed toprotect an economically important minefrom civil unrest; or opportunists mighttake advantage of new wealth to subverttraditional authority or to corrupt the ruleof law.On the other hand the influence could bepositive. For example, the economicsuccess of the mining industry may providethe rationale and political impetus for moreeffective and efficient governmentexpenditure or for more robustmacroeconomic and microeconomic policies.Importantly, the influences of mining ondecision-making, governance andinstitutions is context-specific and can bepositive, negative or both. Often they willalso be unintentional.Despite difficulties in performing thisassessment and the fact that miningcompanies have only a limited directinfluence on a host country’s “governance”broadly defined, these influences definitelydo matter. In particular, measuring theimpact of the mining industry on decisionmaking,governance and institutions isnecessary to:• assess the social, economic and politicalrisks of mining investments;• identify the scope of mining companies’corporate social responsibilities; and• develop partnerships between companies,governments and communities to enhancethe contribution of mining to the hostcountry’s economic and socialdevelopment.78 See Chapter 2 of The Analytical Framework: Mainreport, August 2006, particularly the discussion ofFigures 4 and 5, available at www.icmm.com.126 Mining: Partnerships for Development TOOLKIT

Impact of mining ongovernancecontinuedModule four has examined the proximateelements of the country’s governance thatcould affect, negatively or positively, theeconomic and social benefits of mining.Module seven completes the picture of atwo-way relationship with an examinationof the reciprocal, less tangible andqualitative impacts of mining on governance,so as to explain why the proximate factors(identified in module four) are what theyare in the host country.Gathering the dataMany researchers have put significant effortinto searching for coherent and historicallydefensible explanations of the differences ineconomic and social outcomes betweensuccessful and less successful countries.ICMM’s Analytical Framework draws fromthis large accumulated body of research.There are five common features of efficientgovernance:• strong states, administrative capacity,credible government commitments;• limits to state strength;• compatibility of formal and informalpolitical institutions;• formal economic institutions; and• technical capacity.MODULE SEVENThese five high level conditions for effectivegovernance need to emerge from someprocesses and sets of actions, and the list onthe left side of Figure 7.1 identifies some ofthe key areas that the literature normallyassociates with those processes and actions.The arrows in the figure indicate thepotentially rich interactive relationshipbetween a major mining investment in acountry and the performance of thegovernance system. These relationships areexemplified by the following questions:• Is the legal and regulatory frameworkconducive to long-term investments, andhow is it influenced by the presence ofmining activity?Mining: Partnerships for Development TOOLKIT127

Impact of mining ongovernancecontinuedMODULE SEVEN• Does government have the capacity toformulate and implement macroeconomic,fiscal, social and industrial policies thatare conducive to private sectordevelopment-both in the mining sectorand in other main economic sectors-andthat do not fundamentally threaten socialcohesion and long-term effectivedevelopment?• How are crucial production inputs such asroads, ports and electricity affected byprevailing governance arrangements, andhow does mining activity affect them?• How is the economy’s ability toaccumulate human capital affected?• Does the society and its government havethe institutional and political capacity tocope with and adapt to external shocks tothe mining and other economic sectors inways that preserve rather than damagesocial cohesion?The hypotheses are that (i) where governancestructures, processes and institutions areefficient (as defined in the five high-leveldimensions listed above), they enhance thedirect and indirect effects of mining projects.But mining projects themselves have thepotential to affect efficiency (positively ornegatively) in some dimensions ofgovernance, as shown in the left hand listof Figure 7.1; and (ii) where governancestructures, processes and institutions areless efficient, or efficiency is deteriorating,they can undermine the direct and indirecteffects of mining projects-or cause theseeffects to be negative.In short “good governance” in all the maindimensions listed in Figure 7.1 will invariablyenhance the direct effects of mininginvestments. In contrast, when there areweaknesses or gaps in the structure ofgovernance, large-scale mining investmentscan still be a catalyst that helps to fill thegaps-again, the results should be positive.But we cannot rule out a third possibility:that there are cases of weak governancewhere mining projects may fail to createbroader based economic and social benefitsand where existing weaknesses may becompounded by mining activity.You should note that when you implementmodule seven only a limited subset of theissues can normally be examined in detail asmany of them are complex and inter-related.A detailed assessment will typically requirehelp from specialists in political economy,who should be directed to the detailedquestions about each of the five policydomains in Annex 7.Understanding why and how the miningsector impacts upon governanceIn order to understand the internalfunctioning of the mining sector, a numberof broad questions arise:• Who are the key people, organizations andinstitutions in the political andgovernmental system whose actions carryinfluence on the mining sector; and whatare their interests and incentives in light ofthe governance structures and institutionswithin which they are placed?• How do government, companies, localcommunities and other stakeholdersco-operate and co-ordinate?128 Mining: Partnerships for Development TOOLKIT

Figure 7.1: What makes for effective governanceNatural resourceendowment+ =+MiningactivitiesEfficientgovernance andinstitutionsPositiveoutcomeIndustry’s contribution todevelopment of ...OutcomeMore efficient governance structure andinstitutions that increase the socio-economicrate of return of extractive activitiesLegislative frameworkMacroeconomic and fiscal regimeand public administrative capacityProduction inputsHuman capital developmentSocial cohesion}• Strong states, administrative capacity, crediblegovernment commitments• Limits to state strength• Compatibility of formal and informal political institutions• Formal economic institutions• Technical capacityChallengesManagement of potential political-economicconflicts and power strugglesMining: Partnerships for Development TOOLKIT129

Impact of mining ongovernancecontinuedMODULE SEVEN• Is there a perception among stakeholdersthat, as a result of lobbying by miningcompanies, mining companies are able toexert influence on policy formation andimplementation?• Are specific administrative departments(e.g., in the legal or administrative system)thought to be better or worse in terms ofcorruption or bureaucratic inefficiencythan others?• What are the significant changes ingovernance structures, institutions andpolicy that have occurred over the pastyears or decades? What or who hasinitiated these changes? How thesechanges affect the current mininggovernance structures?• What specific disagreements havecompanies faced with communities?How have they been settled?The assumptions that underlie module sevenare that the impacts of mining operations ongovernance are conditioned by four broadsets of factors:• Contextual factors, including economic,historical, political and social issues.• Institutional factors, including the set offormal regulations governing the miningsector as well as informal factors suchas traditions, political culture and normsof behaviour.• Individual agents’ incentives and motivation,as well as the internal dynamics of policycommunities, which affect the waydecisions are taken.• Implementation factors, including thecapabilities of the government toimplement policies, the positive/negativereactions of stakeholders to policies andhow their reactions affect the way policiesare implemented.Based on these assumptions, we propose aframework (Figure 7.2) 79 to give structure tothe investigation of the complex processesof how mining investments contribute (or donot contribute) to better governance andinstitutions and to the host country’sprocesses of development and change.The relationships between the layers areas follows: at the centre of the process, wefind different stakeholders, each of themwith their own motivations and incentivesstructures. These structures are heavilyconditioned by the formal and informalinstitutions surrounding them. Theseinstitutions, in turn, are conditioned by widercontextual factors. Stakeholders incentivesare externally driven and therefore moreeasily modifiable than motivations, whichare internally-driven.The way in which tensions and conflictsbetween stakeholders are dealt with withinthe policy communities is important. It willbe a decisive factor in determining howpolicy decisions are implemented and inturn the ultimate outcome of policies. 8079 More information on Political Economy Analysisand this analytical framework is available atwww.opml.co.uk.80 One of the strengths of this analytical framework isits flexibility. However this should not rule out theuse of other analytical approaches that can be useddepending on the aims of the work. While institutionaland stakeholder analyses is relatively commonplace, other approaches (i.e. alternatives andreactions analysis, windows of opportunity analysis,contextual analysis, entry point analysis) can alsobe used to explore other angles and perspectives.130 Mining: Partnerships for Development TOOLKIT

Impact of mining ongovernancecontinuedFigure 7.2: Understanding the linkages between governance and the mining sectorContextual levelWider contextMODULE SEVENInstitutional levelFormal andinformalinstitutionsDecision-making levelIncentivesMotivationPolicy communitiesImplementation levelPolicy decisionsPolicy outcomesMining: Partnerships for Development TOOLKIT131

Impact of mining ongovernancecontinuedMODULE SEVENTable 7.1 connects the analytical frameworkof Figure 7.2 (and specifically the final stageof policy outcomes) with five key “policydomains”. These five policy domains, whichcan and have been influenced by miningactivity, comprise:1.legal and regulatory framework;2.fiscal regime, economic policies and publicadministrative capacity;3.production inputs;4.human capital development; and5.social cohesion.It is important to note that stakeholdersinvolved in each of the five policy domainsmay vary. Therefore, an individual analysisof each of the five policy domains maybe required as well as a wider analysisexploring the relationships betweenstakeholders across the different domains.This overview of the five policy domains willguide your broad assessment of the impactof mining operations on governancestructures, institutions and policy choices atdifferent levels of government. Annex 7contains a number of more detailedquestions organized around these five policydomains. In answering these questions, payattention to issues that:1. might have influenced the assessment ofthe quality of a host country’s governanceas identified in the descriptive work inmodule four;2. have been or have the potential to beinfluenced by the activities of miningcompanies in collaborative or competitivearrangements with the host-countrygovernment (at different levels), privateprofit and non-profit organizations, localcommunities and perhaps donors;3. illuminate what the interests of differentstakeholder groups are and the resourcesat the disposal of these groups as theyseek to achieve their aims; and4. have shown up as significant factors inother country case studies, includingthose with evidence of poor performance.Sources of the answers to these questionswill include:• general media commentary on the politicaland governance issue of particular concernin the country;• academic assessments by politicaleconomists; and• specialist reports on governance by donororganizations, such as the World Bank.132 Mining: Partnerships for Development TOOLKIT

Table 7.1: The taxonomy: linking common features of efficient governance with the operational issues of the policy domainsCross-cuttingtaxonomy ofefficient governanceLegal and regulatoryframeworkFiscal regime andeconomic policies andpublic administrativecapacityProduction inputsHuman capitaldevelopmentSocial cohesionStrong and capablestates, crediblegovernmentcommitmentsLimits to statestrength, checksand balancesagainst abuse ofstate powerCompatibility offormal and informalinstitutionsLegitimate formaleconomicinstitutionsTechnical capacity• Basic constitutionalissues• General legalframework• Political system,institutional accesspoints for differentstakeholders• Regulatoryframework forpublic-sectormanagement andinterface betweenpublic and privatesectors• Property rights andthe ability toenforce these in apeaceful manner• Sector-specificlegislation• Issues of companylegislation,ownership• Fiscal (revenue)regime: taxation,royalties, taxexemptions• Public expendituremanagement atdifferent tiers ofgovernment (national,regional and local)• Non-conflictingaccountabilityrelationshipsbetween theelectorate, thelegislature and theexecutive andwithin the executive• Macroeconomicmanagement:exchange rateregime, monetarypolicies• Public administrativesystem and capacityat different tiers ofgovernment (national,regional and local)• Infrastructure:national and regionalpolicies, public–private partnership,cooperationarrangements atdifferent tiers ofgovernment(municipalities,regional, national)• Utility provision:national andregional policies,public–privatepartnership,cooperationarrangements atdifferent tiers ofgovernment(municipalities,regional, national)• Domestic markets:development oflocal suppliers andcontractors (governmentpolicies, as wellas company initiatives),capacity building,transaction costs• Development ofsocial policy system• Development ofhealth care systems• Education policy,including basiceducation,vocational training,higher education,continuous adulteducation• Broader humancapital developmentissues (participationin decision-making)• Industrial/labourrelations (includingparticipation andshared ownershiparrangements)• Communitydevelopment, localorganizationalcapacity• Stakeholderengagement,including consensusbuilding andsocio-economicallyeffectivemanagement ofconflicting interestsSource: Based on Table 9 of The Analytical Framework: Main report, August 2006, p. 49.Mining: Partnerships for Development TOOLKIT133

Impact of mining ongovernancecontinuedMODULE SEVENHow to present your findingsPresent your findings as an analytical narrativethat refers to the five policy domains (andassociated questions) shown in Table 7.1 orAnnex 7. In doing so, note that many of thequestions in Annex 7 cut across the keyfeatures of efficient governance presentedin the first column of Table 7.1. To illustrate,across from “strong and capable states”,you should insert your findings to the policydomain questions that help inform thequestion of whether the country you areanalysing is “strong and capable”. Similarly,in the subsequent row you should put anyfindings from applying Annex 7 questionsthat help to provide the answer to whetherthere are “limits to state strength” in place,and so on.Note on processThe two-way linkages between miningoperations and governance structures,institutions and policy choices do not lendthemselves to general models: therelationships are dynamic, and both theconflicting interests of stakeholders and theinfluence they might exert on policy choicesare highly context-specific. Rather, theobjective should be to understand howexisting formal and informal interactionsbetween the mining company and itsstakeholders result in an influence onthe host country’s governance framework,see Figure 7.1. This requires placing thecompany itself in its wider context andunderstanding the interests, resources androles of government entities at differentlevels (e.g., national versus regional),communities and other stakeholders, as wellas the evolving policy frameworks withincompanies themselves. This understanding,in turn, should explain why differentstakeholders have been able (or unable) tocollaborate across the five policy domains.134 Mining: Partnerships for Development TOOLKIT

Detailed questions to helpassess the impact ofmining on governanceANNEX7Module seven of the toolkit has describedfive policy domains that can be used tocategorize the areas of a host country’sgovernance that influence the magnitudeand degree of the economic and socialimpact of mining. Boxes A.7.1 to A.7.5 givemore detailed questions within these fivepolicy domains. These questions are phrasedin rather general terms and do not need tobe strictly followed. They are a guide, andyou should use the findings from modulesone to six of the toolkit to concentrate onspecific issues and to integrate themeswithin or between the five policy domains.In any one country case study or miningissuespaper, only a selection of the fivepolicy domains will be explored in depth.It is recommended that an experiencedpolitical scientist be engaged to assist infinding answers to these more detailedquestions.Mining: Partnerships for Development TOOLKIT135

Box A.7.1: The legal and regulatory frameworkANNEX 7The questions for this first policy domain are aimed at establishing the broad legaland regulatory framework within which mining companies engage with government,communities and, perhaps, certain organized interest groups. The objective is to identifywhom the broader legal and regulatory framework puts “in charge”, how predictablegovernment actions are, and whether the given institutions and governance structuresfacilitate or undermine socio-economically beneficial collaboration and co-ordinationbetween government, companies and communities. If module four flagged relativelypoor performance under, for example, the “rule of law”, “government effectiveness” or“regulatory quality”, then the answers to these questions may reveal possible causes.QuestionsWhat political system does the constitution set out (i.e., presidential/parliamentarydemocracy, autocratic regime, centralized or decentralized system of government)?How are legislative, executive and judicial powers distributed across different levels ofgovernment (national, regional, local, municipality or village)?How are citizens represented (electoral rules, party structures, party discipline)?How is political representation structured across different levels of governance (national,regional, local, municipality or village)?What is the relationship between the legislature and the executive? Have legislativedecisions been challenged by ad hoc executive decisions? Have executive powers beenoverriding legislative powers?How is the executive or government administration structured across different tiers ofgovernance? What decision-making powers do different levels of the executive branchhave? How are lower levels of executive or administrative powers linked to lower levelsof legislative powers?What guides executive decision-making? How predictable are government’s decisions(at different levels) for the private sector in general and the mining industry in particular?How do senior officials at different government levels relate to the particular interestgroups or elite groups and broader society?How well are property rights and other rights enforced? What are the chances of, costsof, obstacles to defending one’s property rights successfully?What experience do companies have with the legal regime, legal tradition, functioning ofthe judiciary? Does the respective legal regime impinge on a company’s risk assessment?What laws, rules and regulations govern the conduct of private-sector business and, inparticular, the mining industry? What requirements are in place?What sector-specific legislation is in place (mineral laws, extraction rights,environmental requirements, labour laws, mitigation requirements, etc.), perhaps atdifferent levels of government? Is this legislation applied even-handedly and consistently,or is it “flexible” or unpredictable?136 Mining: Partnerships for Development TOOLKIT

Box A.7.2: Fiscal regime, economic policies and public administrative capacityThe questions for this second policy domain are aimed at: 1. establishing where fiscalauthority lies for revenue collection and expenditure management; 2. inferring howthe structure of the fiscal regime might impinge on different stakeholders’ interestsand incentives; 3. identifying in whose favour macroeconomic policy choices haveworked; and 4. identifying the incentives that the public administrative system andpolicy processes provide for positive or negative collaboration between the public sectorand the private sector.QuestionsWhat are the key tax and non-tax revenue items? How do revenues from miningoperations relate to overall revenue collection?At what levels of government are taxes and other revenue collected? Do lower levels ofgovernment have institutionalized rights to retain revenue? At what levels of governmentare revenue policies set?How is revenue distributed across different levels of government (e.g., constitutionally setrevenue-sharing formulas, centralized system of government spending)? Have there beensocial or intra-governmental tensions and conflicts over the sharing of revenue?How significantly do revenues from extractive industries feature in the government budget?Have there been major shifts in revenue policies in the past? If so, have these impactedupon extractive industry activities?Has access to mineral revenues insulated government officials from pressure to engagein reforms?For decentralized states or where social or intra-governmental conflicts and tensions oversharing of revenue have occurred, how do revenue collection powers link to politicalrepresentation?What agreements have been reached on tax and royalty payments between companies andgovernment? With whom have these agreements been reached? Have these agreementsbeen subject to renegotiations? How do country-specific agreements compare withagreements reached elsewhere by the same company(ies)?How does the budget allocation process work? How transparent and comprehensive is theprocess? Which parts of the executive and the legislative branches are involved in theallocative decision-making process? Are there fixed rules that are adhered to?What expenditure trends (over time) or patterns within any given year can be observed(look at Public Expenditure Reviews or other public finance diagnostics), and is there anyinference to be drawn on the driving forces or political economy behind expenditure trends?What is the general assessment of the public financial management system (look atCountry Financial Accountability Assessment or other diagnostics)? To what extent dofiduciary risks exist?Where are the weaknesses in the budget cycle? Is the approved budget a good indicatorfor actual spending? Has the public financial management system improved ordeteriorated in recent years?What role and power does the Supreme Audit Institution have? Are its reports meaningfuland proof of the propriety of the handling of public funds? Do other accountabilityinstitutions function (e.g., public accounts committee)?Have major macroeconomic policy shifts taken place, and who has initiated them?What is known about the direct or indirect involvement of elite or interest groups indomestic policy-making processes at different tiers of government? Are there strongprivate-sector interest groups defending a particular status quo?ANNEX 7Mining: Partnerships for Development TOOLKIT137

Box A.7.3: Production inputsANNEX 7The questions in this third policy domain probe whether the existence of a miningindustry has contributed to broader development of infrastructure and transportationsystems or to the cost-efficient provision of utilities and of other industrial inputs(technological developments, banking industry) that help to diversify the economy.Spinoff benefits for other industrial sectors have historically been important in anumber of countries that started with a high dependence on extractive industries buthave since diversified into leading industrialized and emerging market economies.An inability of the mining industry to contribute to such spinoff effects may reflectspecific government policies or constraints from other policy domains, such as theinability to establish the necessary fiscal and administrative capacity or the lack of anenabling regulatory framework.QuestionsDo mining companies and government co-ordinate on the development of basicinfrastructure and transportation systems? What agreements have been reached in thisrespect?Has mining investment influenced the development of basic infrastructure andtransportation systems by the government? If so, who have been the beneficiaries beyondthe immediate mining operation?What impacts have mining operations had on the national road and transportation gridsin relation to the administrative units of the host country?Are there signs of any negative impacts linked to mining-related expansion ofinfrastructure and transportation systems (for example, neglect of other areas,undermining of social cohesion in the area, migration movements, imbalance in provisionof other public goods and services)? If so, what are the reasons for such impacts (forexample, lack of administrative capacity to cope with induced economic and socialchanges)?What experience do companies have with the legal regime, legal tradition, functioning ofthe judiciary? Does the respective legal regime impinge on a company’s risk assessment?What regulatory frameworks govern the provision of utilities (public provision,public–private partnerships, partly private provisions)? What agreements havegovernment (at which level) and companies reached? Have these agreements beenupheld?Are there benefits or opportunities for other private-sector activities and domesticconsumption arising from the public or private provision of utilities for miningoperations?What other production inputs, excluding labour, can the domestic economy supply (forexample, technology)? In turn, what production inputs are sourced from abroad?Have there been technological or other spin-off effects on other industries (including thedomestic banking sector) that are linked to the existence of a mining industry?138 Mining: Partnerships for Development TOOLKIT

Box A.7.4: Human capital developmentThe questions in this fourth policy domain look at the extent to which the provision ofsocial services by the mining industry complements or substitutes for provision by thedifferent levels of government. A situation in which inadequate or skewed governmentprovision prompts a company to step in to alleviate its employees’ social risks isprobably a sign of weak administrative capacity, financial constraints, or some otherunwillingness or inability by the government to expand and pay for basic services.This, in turn, would point to the need for a company that is providing basic servicesalso to contribute, over the medium term, to improving government capacity (or todeveloping an affordable private industry that provides such services).QuestionsWhat are the broad organizing principles of the social policy system (health, unemployment,pension, other social risks)? What proportion of people and what categories of people haveaccess to this system. What entitlements do citizens have?Are social services provided through a taxed-funded system, an insurance-based system ora combination of the two?Who are the main providers of social services? What government providers are there, andat which level of government? What private-sector providers are there (for example, faithbasedorganizations)?Does government actually provide the social services for which it formally takesresponsibility? Is it capable of doing so? Is access egalitarian or skewed towards certainregions and areas (e.g., urban versus rural, coast versus hinterland)?In addition to the social services that government provides, what social services do miningcompanies provide? Are mining companies supplementing or substituting for governmentalprovision of basic social services? If the latter, what are perceived to be the major reasonsfor government’s inability or unwillingness to provide basic services?Do companies and government collaborate in the provision of social services or withrespect to inputs to the provision of social services (skills, training, capital investment)?For the health care system in particular, what are the organizing principles of the nationalhealth care system in terms of providers, funding, access and rights to health care (taxfunded,insurance scheme, mixed schemes)?Is project-level health care well integrated with the national health care system (eitherprivately or publicly operated)?For the education system, what are the organizing principles (for example, with respect tonational curricula, educational rights and requirements, education policies, professionaland vocational training schemes)?Are skills acquired through employment in the mining industry transferable? Have miningcompanies encouraged or restrained the transferability of skills? What incentives guidethe industry’s behaviour in this respect?Have there been any negative effects of the mining sector on other parts of the economyor society in terms of reducing the availability of skilled workers outside the mining sector(in effect, a “brain-drain”)?Does the national education system deliver the skills that the mining industry needs?If not, how does the industry supply its labour demand?Does the mining industry support the certification of skills and continuous education forstaff? Is this in any way co-ordinated with national education policies? Are there anygovernment regulations on certification and transferability of skills?ANNEX 7Mining: Partnerships for Development TOOLKIT139

Box A.7.5: Social cohesion (community development and industrial relations)ANNEX 7The questions for this fifth and final policy domain relate to: 1. how mining investmentsaffect the local and regional communities in which they are located; and 2. howindustrial relations are conducted. Social cohesion and social conflict have beenprominent, recurring and delicate issues during the establishment of mining in lowandmiddle-income countries. Thus, the manner in which both mining companies andgovernments relate to local and regional communities, and vice versa, is a criticalfactor in the broader economic and social impact of mining. You will need to identifythe governance and institutional conditions under which conflicts can be moderatedor avoided, and one of the first places to look will be the political and administrativecapacity of lower levels of government (regions, districts and municipalities) andsociety (community organizations).QuestionsHave there been instances of social conflicts between mine management and the workforce, between mining operations and communities, or between local or regionalcommunities and higher levels of government indirectly or directly linked to miningactivities?What have been the issues of contention? Have these issues been resolved?What factors have contributed to or undermined constructive solutions?What is the nature of the formal relationship between the mining company and the localcommunity? Who are the main local counterparts for the company, and how do these tie toofficial political representation and administrative jurisdiction?What is the organizational capacity of local communities and interest groups? Do local orregional communities carry responsibility for jurisdiction, revenue collection and provisionof some public goods and services (i.e., in decentralized states)? In both cases, how doesthis impact on local or regional relations between mining companies and communities?Are there tensions between different levels of government and society?Has mining-induced migration or commuting caused social changes that have caused ormight cause social tensions and conflicts? If so, has government (at different levels) reactedto such changes? Has it shown the ability to deal with such effects, either positively(brokering and mitigating) or negatively (suppressing)?Are there any civil society organizations at the local and regional level with whom themining company engages?Are there any tri-party arrangements for coping with negative mining impacts (social andenvironmental) between the company, governmental or public entities, and private citizenorganizations?Beyond those statutorily required, have mining companies institutionalized further channelsof constructive labour or industrial relations with the workforce (this could range fromadditional channels of “voice” for the workforce to shared ownership arrangements)?140 Mining: Partnerships for Development TOOLKIT

Communicatingyour findingsANNEX 8Workshop design tool topresent the country casestudy or mining-issuespaperMODULEEIGHT

“THE EVIDENCE GENERATEDFROM THE TOOLKIT CANBRING STAKEHOLDERSTOGETHER WITHIN ACOUNTRY TO DISCUSSFINDINGS AND DEVELOPAN ACTION PLAN.”Image courtesy of SNMPE

Communicating yourfindingsMODULEEIGHTPurposeThe purpose of module eight is toimplement two methods of communicatingyour findings about the relationshipbetween mining and economic and socialdevelopment in the host country to anaudience or audiences, with the aims ofhelping mining companies to better targettheir economic and social developmentinitiatives and of encouraging partnershipsbetween miners and other parties to helpmake these initiatives more effective.Reviewing and distilling your findingsThe volume of information you have gatheredwill be considerable and will containsurprises, contradictions and some answers.Unimplemented modules will leave gaps;and even if you have implemented all themodules, the findings will still leave openquestions. However, it would be unusual if areview of your findings did not allow you todistill two or three main issues for which thecase for action is evident. Such action mighttake the form of a partnership to promoteeconomic and social development underone or more of the six partnership themes,or it might point to a specific line of furtherinquiry, or both. This review should also helpyou to identify audiences for your findings.You might be helped in this task if yourevisit your scoping exercise (see “Using thetoolkit”), then examine your findings and askyourself the following questions:• What findings are relevant to the goal thatyou and your partners have set?• What findings have raised additionalissues that are relevant to the goal?• What messages can you convey to anaudience based on the findings?• What new or revised partnerships mightthe findings support?• What actions do your findings suggest thatmight improve the economic and socialcontribution of mining to the host country?• Which findings might encourage partnersto participate in a plan of action?• Who might those partners be?Mining: Partnerships for Development TOOLKIT143

Communicating yourfindingscontinuedMODULE EIGHTYou will have noticed by now that therecommended method of presenting yourfindings in the modules differs according tosubject matter. For example:• Module four says to organize the qualityof governance around the six WorldwideGovernance Indicators and to organizethe macroeconomic impacts around eightkey indicators;• Module six says to use production, GDPand GNI levels and growth rates,government revenues, and balance ofpayments; and• Module seven says to organize findingsaround five policy domains.These different structures have beendesigned to suit the subject matter of eachparticular module. Ultimately, however, thedata all address one or more of the sixpriority partnership themes of economic andsocial development, which, to recap, are:• mining and poverty reduction;• mining and economic development:revenue management;• mining and economic development:regional development planning;• mining economic development: localcontent;• mining and social investment; and• mining and disputes resolution.Your review of the findings of individualmodules should therefore identify the issuesand relate them to these six themes.How to present your findings• Step 1: prepare a country case study todocument your findings (or a short“mining-issues” paper if you have decidedto only address one or more of themodules); and• Step 2: hold one or more workshops topresent and discuss some or all of thefindings.STEP 1: Prepare a country case study (orshort mining-issues paper)The partnerships contemplated by thetoolkit between mining companies andgovernments, non-governmentalorganizations or local communities willcentre on one or more of the six partnershipthemes. The focus of your country casestudy or short mining-issues paper,therefore, must be to explain how yourfindings point to the specific partnershippriorities that one or more of the sixthemes represents.Take care to make clear the distinctionbetween evidence, on the one hand, andopinion and conclusions, on the other.The data have been hard won; try not toexpose matters of fact to misapprehensionor rejection because they are intertwinedwith opinions or conclusions with whichothers might not agree.In organizing the presentation of yourfindings (in a country case study or shortmining-issues paper), you should aim at aminimum to:• summarize all the findings but elaborateon the findings that address the two or144 Mining: Partnerships for Development TOOLKIT

Communicating yourfindingscontinuedthree major issues you have identified andpropose policies or initiatives to addressthe these issues;• pull together any areas of work that havebeen left unanswered or implications thatrequire addressing; and• remind the readers that the inherentincompleteness of knowledge on any topic,including the ones addressed by the casestudy, is not an excuse for inaction and ofthe importance of the 80:20 rule (in otherwords, that 80% of the effects come from20% of the causes and that this is why thetwo or three major issues are consideredmore important than the others).A country case study of 15 to 20 pages willnormally be sufficient and for a shortermining-issues paper perhaps only 5 to 10pages. Use annexes and appendices todocument your methods, data, calculationsand analysis, but try to avoid producing areport that is too long (we have aimed for atotal of 60 pages for a country case study).STEP 2: Hold one or more workshopsThe country case study or shorter miningissuespaper is the documentary evidence ofyour work. However, the value of this workwill not be realized unless it is disseminatedand debated by the people that you willdepend on to facilitate or take part inpartnerships for economic and socialdevelopment. The REi experience has beenthat a workshop format provides the rightmix of information dissemination and debateby which to move from analysis to action.Annex 8 sets out a six-week timeline forplanning, preparing for and conducting atypical workshop, with activities week byweek. Factors to consider are:• Invitees: your invitees should as aminimum include the relevant governmentofficials and (if they can be persuaded)ministers or their representatives, as wellas members of any other organizations withwhich a partnership opportunity might exist.• Pre-workshop reading: a good idea intheory, but may be a problem in practice ifthe findings are too controversial to releasewithout the concurrent explanation that alive presentation in a workshop allows.Make this decision on the merits of yourreport and the sensitivities of your attendees.• Clarity between data and conclusions: usethe format of your workshop presentationto reinforce this distinction. Separate sessionsmight be needed, the first session to shareand agree on matters of fact and thesecond, separate session to present anddebate matters of interpretation and opinion.• Structure and focus are in your hands.However, when designing the workshopsessions, bear in mind that you mustreconcile or, at the least, acknowledgecompeting viewpoints and priorities.On the one hand, you want to make as muchprogress as possible to agreement onpriorities and a platform for partnerships.On the other hand, attendees must have thechance to express and debate their views.Provide a structure for the former, but makesure there is plenty of time for the latter.• Two-way process: members of apartnership might share a high-level goalbut will certainly differ, sometime quiteMODULE EIGHTMining: Partnerships for Development TOOLKIT145

Communicating yourfindingscontinuedMODULE EIGHTmarkedly, in other respects. A failure to airand reconcile these differences willundermine the case for common action.At the same time, the workshop must retainstructure and focus, so a balance of bothobjectives will be needed.• The social dimension: the act of bringingpeople together around a common set ofinterests is a necessary foundation foraction. It is one thing to formally debateand agree on issues, but action on thoseissues requires mutual understanding.These relationships will form or not formdepending on individuals. What theworkshop organizer can do is create thecircumstances that encourage thepersonal interaction out of which suchrelationships might develop.• The workshop proceedings: the workshopproceedings will need to report fully andobjectively, so that participants can acceptthat the proceedings are accurate as to thefacts and as a true reflection of their views.• Remember the fundamentals: at everypoint, bear in mind that the origins of thistoolkit lay in polarized debate, largelyuninformed by evidence, about whether ornot mining was a help or a hindrance toeconomic and social development in lowandmiddle-income countries. This toolkithas, first and foremost, been designed toshow you how to build an evidence basethat can place this debate on aconstructive footing.to guide systematic discussion of engagementand partnerships. However, it does not providea menu of tools for building partnerships,which will need to be tailored to the specificlocal situation, your prospective partnersand the evidence itself.However, in the course of the workshop,you may well be expected to guide initialdiscussions on developing partnerships.Table 8.1 might help you with this: the lefthandcolumn lists economic and socialissues that may be similar to those raised byyour toolkit findings, while the right-handcolumn provides examples of partnershipsbetween companies, governments, donorsand civil society that have addressed theseissues at the local, regional or nationallevels. Some of these partnerships addressfundamental and recurring issues and willhave broad application. Others are specific tothe circumstances. Either way, they shouldstimulate discussion of how the evidencebase created by your country case study ormining-issues paper might point to theopportunities of your particular circumstances.Each example in the right-hand column hasbeen categorized according to the partnershipthemes to which it responds. If further detailis required on these partnerships, the “profilenumber” refers to the partnerships profiledin the ICMM report Mapping in-countrypartnerships (February 2010 edition).The toolkit is designed to show you how tobuild the evidence base and to systematicallypresent that analysis so as to improve thebasis for construction engagement ofdifferent stakeholders. 81 It can be employed81 For further information on using the findingsfrom the toolkit for advocacy purposes, seeAdvocacy in Action: A toolkit to support NGOs andCBOs responding to HIV/AIDS, availableat www.aidsalliance.org.146 Mining: Partnerships for Development TOOLKIT

Table 8.1: Examples of economic and social issues that partnerships can addressSocial or economic issue raised by evidence Possible partnership solution“In-migration into mining regions has led to unemployment andfewer income-generating opportunities”Implement a supplier development program to enable more local companiesto compete for contracts from the mine (profile 14) 82 (local content).Develop markets, provide business training and offer seed financing inthe agricultural and tourism sectors (profiles 2, 3, 5, 6) (poverty reduction).Provide technical assistance to strengthen livelihoods in the fishingindustry (profile 1) (poverty reduction/social investment).“Women are becoming increasingly marginalized, and most ofthe jobs in the mining sector are for men”Work with local women’s groups to turn traditional skills into incomegeneratingopportunities (profile 4) (poverty reduction).“Corruption is a big problem in the extractive sector in ourcountry”Discuss with the government and civil society groups (such as TransparencyInternational, the Revenue Watch Institute or the Open Budget Initiative)what activities could be undertaken to increase transparency andaccountability in the receipt and spending of revenues. Would implementingthe Extractive Industries Transparency Initiative be useful? (profile 7)(revenue management).“The government is receiving a great deal of revenue from themining companies, but there is insufficient legal and institutionalcapacity to use the revenue effectively”Engage in dialogue and explore opportunities for technical assistancewith the government or donors working in this area (profiles 8, 9) (revenuemanagement).“There is no transport infrastructure in the mining region, andanything that has been built only gets used by the company”Establish a public-private partnership to build transport infrastructure,e.g., port facilities, rural roads (profiles 10, 24) (regional developmentplanning/social investment).“There is no economic diversification; the region is completelyreliant on mining, and once the company leaves the area willcollapse”Build collaborative, locally owned development planning mechanisms(profiles 11, 12) (regional development planning);Build the capacity of non-mining business in the area (profile 16)(local content);Build local engineering and design capacity (profile 17) (local content).82 The profiles are in Mapping in-country partnerships,available at www.icmm.com.continuedMining: Partnerships for Development TOOLKIT147

Table 8.1: Examples of economic and social issues that partnerships can address continuedSocial or economic issue raised by evidence Possible partnership solution“The local community knows there is a significant mineraldeposit nearby but is worried that large-scale miningdevelopment will lead to social and environmental damage”Establish a local development forum prior to commencement of operationsto ensure local views are heard and that the mine is established in a waythat meets local development needs (profile 13) (regional developmentplanning).“The law, company policy, donors or investors require thatmining companies employ high numbers of local people andsource locally, but there is not sufficient capacity in the areato meet this requirement”Develop integrated approaches to local training, employment andprocurement via socio-economic monitoring agreements with communitiesand government agencies (profile 15) (local content);Establish “linkage” programs between large companies and the local privatesector to enable the transfer of skills, technology and experience (profiles16, 18, 20) (local content);Collaboratively invest in the training of young people in mining regions,especially where several mining companies (or other large companies) areoperating in the same region (profiles 19, 23) (local content/socialinvestment).“There is very limited health provision in the mining regionsand HIV/AIDS is a particular problem” 83Construct a community health centre in labour-supplying regions,set up collaboratively and handed over to the public sector once capacitybecomes available (profiles 21, 25, 26) (social investment).“The company is doing its best but the local community has along-standing resentment against mining due to poor treatmentin the past”Develop a disputes resolution process in collaboration with respectedindependent third parties (profiles 27, 28, 29) (disputes resolution).83 For more information on communicable diseaserelatedmortality and disability of relevance to themining sector, see ICMM’s, Good Practice Guidanceon HIV/AIDS, Tuberculosis and Malaria, available atwww.icmm.com.148 Mining: Partnerships for Development TOOLKIT

Workshop design tool topresent the country casestudy or mining-issuespaperANNEX8PurposeThis annex explains out how to prepare andconduct a workshop to present your countrycase study or mining-issues paper (theevidence). It should be read in conjunctionwith module eight and is based on thefollowing assumptions:• the workshop will last for one day;• the preparation time will be six weeks;• a cross-sector team of organizers hasbeen identified as a result of the toolkitimplementation process and an individualwithin this team has agreed to organizethe workshop (the Co-ordinator); and• funding for the workshop has beenconfirmed by the organizing team.It concludes with a section on suggestedmessages to attract government attendeesto the workshop.Planning the workshopPlanning a workshop typically involves thefollowing steps:• Step 1: preparation: process and timing;• Step 2: preparation: resourcerequirements;• Step 3: preparation: workshop agenda;and• Step 4: advice for the day of the workshop.STEP 1: Preparation: process and timingSix weeks in advance:• Agree roles and responsibilities betweenmembers of the organizing team.• Define broad objectives for the workshop;ask yourself “What would make this eventa success?”• Agree on an indicative audience profile andgeneral numbers.• Agree on a date for the workshop; prepareinvitee list; and send out “save-the-date”invitations, explaining that the full agendawill follow separately.• Once these action are finalized, prepareadvertising materials to publicize theevent and commission the preparation ofpresentational materials.Mining: Partnerships for Development TOOLKIT149

Workshop design tool topresent the country casestudy or mining-issuespapercontinuedANNEX 8Five weeks in advance:• Book a venue for the workshop; a neutralvenue is best.• Identify both a Chairperson and aWorkshop Moderator. The latter needs toset a positive tone for the workshop andwill summarize each session, keep theagenda on track and maintain a neutralstance throughout. This role is important,and you should search hard for someonewith standing as an “honest broker”.• Identify and discuss with your key speakersthe context and objectives of theworkshop, and agree who will presentwhich findings from your report. Once youhave agreed on the agenda, mail this toinvitees as soon as possible. A reserve listof speakers will be useful in case anybecome unavailable.• Contact government officials to securetheir attendance at the workshop. It will beimportant to have a strong turnout fromthe government, preferably at regional, aswell as national, levels. See ”Suggestedmessages to attract government attendeesto a workshop” below for suggested waysof attracting government attendees.Four weeks in advance:• Discuss your logistical requirements withthe workshop venue (e.g., what room, abigger alternative on standby if turnout isbigger than expected, audio visualequipment, catering).• Follow up the written invitations with aphone call to invitees that have not yetreplied, then close the registration, createa waiting list, and rearrange room size orlocation as necessary.• Follow up with company, donor, or civilsociety speakers and ask for a shortbiography and a copy of their intendedpresentations. It is a good idea for theCo-ordinator to talk to them by phone toexplain the context and objectives of theworkshop and revise the presentationswhere necessary.Three weeks in advance:• Send out the finalized agenda to participants(invitees who have responded to date andthe speakers); however, note that the precisedetails of the agenda could continue to berefined until fairly soon before the workshopdepending on the availability of speakers.• Continue to monitor acceptances toinvitations and chase up those who havenot replied.• Visit the venue in person to finalizelogistics (audio visual requirements, roomlayout, backup power supply).• Review responses from speakers(including biographies and draftpresentations) and follow up, if necessary,to ensure they have prepared theirpresentations and that these are in linewith the workshop objectives.150 Mining: Partnerships for Development TOOLKIT

Workshop design tool topresent the country casestudy or mining-issuespapercontinuedTwo weeks in advance:• Send out background documentation toattendees, such as (if appropriate) a copyof the country case study or shortermining-issues paper.• Keep track of and review biographies anddraft presentations and follow up withspeakers.• Address any logistical issues not resolvedin the previous week.• Clear invitee waiting list if one exists.• Arrange advance meetings with the mostimportant of your attendees. The moreadvance meetings that can be undertaken,the more successful the workshop is likelyto be, as it will help you to understandattendees’ objectives and needs.One week in advance:• Meet with the most important of yourattendees.• Continue to monitor and follow up onspeakers.• Address any last-minute logistical issues,and maintain regular contact with thevenue.STEP 2: Preparation: resource requirementsThe following resources will be required:• logistical support from, for example, theChamber of Mines or from an externalagency, to send out invitations, agendas,and background documentation;• venue hire: main meeting room plus“breakout rooms”, if appropriate, includinguse of the venue’s audio-visual or otherworkshop-support equipment;• equipment hire: equipment (not providedby the venue) might include a podium inthe main meeting room and audio visualequipment in one or more rooms(e.g., presentation screen, flip charts,microphones, and perhaps a video link forspeakers unable to attend in person);• food and drink for refreshment breaks andlunch;• food and drink if a dinner or a receptionfollowing the workshop is also required;and• where appropriate, travel andaccommodation costs of key speakers.Ensure the organizing team is kept up todate with progress.ANNEX 8Mining: Partnerships for Development TOOLKIT151

Table A.8.1: Example workshop agendaMining: Partnerships for Development Workshop, date and locationTime Activities Notes (Annotated to explain thethinking behind each session)08:30–09:00Welcome and introduction by chairperson to workshop, expectations and ground rules09:00–10:00Session 1 Presentation of key findings from Country Case Study10:00–10:15Break10:15–12:00Session 2 Nominate “breakout group”. Chair-persons to facilitate three Focus Groups toprovide examples on:(1) Existing Practice; and,(2) Possible new Partnership Arrangements.Rapporteurs should report back discussion to main workshop.Focus Group 1: Mining and Social and Economic DevelopmentFocus Group 2: Local Government Capacity and MiningFocus Group 3: Partnerships to Address Disputes Better12:00–13:00Lunch13:00–14:30Session 3 Developing an action plan (ideas from Focus Groups 1, 2 and 3). Each FocusGroup from the morning will provide a spokesperson to present two or three actionsemerging from the discussion.14:30–14:45Break14:45–16:00Session 4 Developing an action plan (distillation of priorities for follow-up) andConclusions, close of workshop, and actions for “next steps”.152 Mining: Partnerships for Development TOOLKIT

Workshop design tool topresent the country casestudy or mining-issuespapercontinuedSTEP 3: Preparation: workshop agendaAs mentioned under Step 1, you willrequire a workshop agenda, which shouldbe finalized and sent to invitees andspeakers three weeks before the workshop.An example agenda is shown in Table A.8.1.STEP 4: Advice for the day of the workshopPut people at easeThe workshop may be the first time that agroup of this nature has gathered in the sameroom, so it will be essential to put peopleat their ease. The pre-meetings with yourmost important attendees will help here.The Chairperson and Workshop Moderatorcan also set the right tone, including focusingpeople on developing an action plan to take upfollowing discussions in the workshop so thatis does not simply become a “talking shop”.ANNEX 8Set the “rules of engagement”Make it clear that the negative impacts andmissed opportunities of mining can be raisedat any time during the day, but only in thecontext of the workshop objective, which isto explore possible collaborative initiativesto tackle these issues rather than apportionblame.Make sure that people understand that theworkshop is not intended to start fromscratch, but to pursue in detail the mainissues identified during the country casestudy or mining-issues paper. For example,if there is local resentment about the lackof mining jobs, one of the workshop“breakout groups” can look specifically athow employment and local content mightbe developed and the partnerships that thiswill need.Try to arrange a progress meetingAt the end of the workshop, suggest that thegroup should meet again in a year to reportand review the progress of partnerships onthe initiatives proposed by the workshop.Mining: Partnerships for Development TOOLKIT153

Workshop design tool topresent the country casestudy or mining-issuespapercontinuedANNEX 8Suggested messages to attract governmentattendees to a workshop• We would like to invite you to attend aworkshop to look at mining’s economicand social contribution in your [specifycountry or region].• An ongoing, international research project,begun in 2004 and initially co-ordinated byICMM and in collaboration with the WorldBank and UNCTAD, has found that, underthe right conditions, mining has thepotential to make a significant economicand social contribution to host countries.• However, this contribution is neitherinevitable nor automatic; and partnershipsbetween companies, governments, donorsand civil society at the local, regional andnational levels are an effective way tomaximize this contribution.• A number of socio-economic assessmenttools have been implemented by anindependent team of researchers [namethe team if they are likely to be readilyrecognized as an unbiased source] toassess the current and potential economicand social contributions from mining.A [country case study or mining-issuespaper] has been completed that presents anumber of findings that may interest youabout the national-, regional- and locallevelcontributions of mining.• The workshop will first cover the mainfindings of the [study or paper] and thenexplore the potential for increasingmining’s economic and social contributionvia partnerships at local, regional andnational levels.• The basis for these partnerships has beenthe subject of research by ICMM andothers in a number of countries. The resultsof this work suggest that there are sixthemes around which partnerships canbe organized: mining and povertyreduction, mining and revenuemanagement, mining and regionaldevelopment planning, mining and localcontent, mining and social investmentand mining and disputes resolution.• We are keen to attract a stronggovernment representation at thisworkshop.• The workshop is based on similar eventsheld in Chile, Ghana, Peru, Tanzania andthe Lao PDR which led to concretefollow-up action.• The context and objectives will beexplained fully at the workshop; and, inaddition, we would be happy to provideyou with a briefing in advance.154 Mining: Partnerships for Development TOOLKIT

Guiding principlesregarding mineralstaxationTOOLKITADDENDUM

“THE REPORT IS ALAUDABLY EVEN-HANDEDTREATMENT OF THEMAJOR DEBATES INTHE FIELD.” ** Taken from a review at www.revenuewatch.org.Image courtesy of Xstrata

Guiding principlesregarding mineralstaxationTOOLKITADDENDUMPurposeThe purpose of this new section is toincorporate some additional points ofguidance on minerals taxation issuesemerging from a recent and more detailedstudy of the very extensive publishedliterature on this subject. This study, whichwas also commissioned by ICMM, wasfinalized in May 2008 and can be downloadedfrom the ICMM website. 84One conclusion of the 2008 ICMM study isthat it is nearly impossible to propose a“recommended”, let alone an “ideal”, taxregime that could apply to all mineralproducing countries. Neither is there anyobjective and scientific way to resolve thedebate currently raging in many countriesas to whether mineral companies pay toolittle or too much tax to governments.The existing literature – voluminous as itis – largely fails to direct us towards a single“correct” tax regime, and to the definition ofthe “most appropriate” tax bases and, thus,to a set of “correct” tax rates. Nonetheless,both mining companies and governments(national and local) should remain alert tothe points that:1. the structure of mineral taxation candirectly affect the magnitude of mining’ssocial and economic impacts, especiallyin the longer run; and,2. there are certain significant trade-offs,especially as between the short run andthe long run.The considerations about the design of an“acceptable” tax regime, which this sectiondiscusses, represent guidance notes on howto approach this, for both mining companiesand others interested in assessing theimpact of mining. The “guidance notes”are just that: they should not be read asstatements about best or even good practice– merely as indications of tendencies that,if followed, may help to foster congenialworking partnerships between miningcompanies and governments. Neither isthere any suggestion that mining companieshave any overriding influence over the shapeof the tax regimes in the countries wherethey operate: typically, they are merely oneamong several influencing parties.The taxation study analyzed a wide range ofissues pertaining to the principles andpractices for taxing mineral activities.However, it then utilized that analysis todistill a set of main observations. These ideasare reported below.84 The title is Mineral Taxation Regimes: A review ofissues and challenges in their design andapplication.Mining: Partnerships for Development TOOLKIT157

Guiding principlesregarding mineralstaxationcontinuedTOOLKIT ADDENDUMTransparencyMany of the in-country criticisms of mineraltaxation systems have their origins in a lackof transparency about how much revenue iscollected, and about how such revenue isused. It is, therefore, a basic first step toadvise both the companies and governmentsto aspire to the highest level of opennessabout these matters that is practicallyachievable. The obvious entry point is fullcompliance with the reporting suggestionsand formats of the EITI, which ICMMcompanies support. 85 Annex 3 to this toolkitdescribes the reporting formats that arerecommended, and provides the link to therelevant EITI website where greater detailcan be found. Even in those cases wherethere is not yet a formal countrycommitment to the EITI, the miningcompanies may wish to get ahead of thegame by preparing their statisticalinformation about tax payments to all tiersof government in accordance with EITIpractice. Many companies value greaterrevenue transparency and, in Ghana, weremaking this data available through theChamber of Mines a number of years beforethe EITI was formally launched.Since many of the criticisms of the revenueaspects of mining begin and end at the locallevel affected by the mine concession, it isimportant to do everything possible to makelocal governments and communities awareof the tax and other revenues that themining companies are actually providing togovernment. In some countries, there maybe a central government failure to ensurethat a reasonable share of the revenuescollected is made available for use at thelocal level. In one or two cases, this happensas a matter of official policy. However,efforts by the mining companies themselvesto publicize the revenue contribution theymake – even if this is mainly paid to centralgovernment – may still be helpful ininculcating a more positive local attitudeto the companies.Finally, the most difficult cases for themining companies arise where there areknown to be significant elements ofincompetence or corruption in thegovernmental systems that collect,administer and spend the mineral taxrevenues. This may result in revenuecollections being (or appearing to be)minimal relative to the known level of miningproduction and total revenue generation.In cases such as this, the companies areadvised not to take advantage of the poorquality of the tax administration – eitherillegally (by being party to corrupt practices)or legally (by negotiating tax agreementsthat are clearly too favourable relative tothe known international benchmarks).The overwhelming evidence is that any taxregime not perceived to be “fair” by allparties is inherently unstable.85 See Advancing the EITI in the Mining Sector:A consultation with stakeholders available athttp://eiti.org/document/mining158 Mining: Partnerships for Development TOOLKIT

Guiding principlesregarding mineralstaxationcontinuedThe level of taxationThe previous sub-section raises the questionof what is the “correct” level of taxation,and how might the companies assess the“fairness” of the overall level of taxationto which they are subjected by their hostgovernments. The various categories ofdifferent taxes that companies might beasked to pay in different countries are setdown in some detail in Annex 3. However,how do we assess whether the total of thesevarious impositions is reasonable and fairin the sense of capturing the realisticexpectations of the main stakeholders?Governments, for example, need the highestlevel of tax revenues they can raise.However, they will normally refrain fromseeking to collect the maximum possiblelevel of short-term tax revenues becausethis would deter future mining investmentand, so, actually lower the total tax takefrom mining in the longer term. The miningcompanies, by contrast, would like thelowest possible taxes, but would normallyaccept that excessively low taxes wouldeventually undermine their social license tooperate. A balance between these competingstakeholder objectives has to be found.The solution can be articulated by referenceto the broad proposition that governmentswill be well advised to try to maximizerevenue from mining over the long run.Translated into more practical terms, thissuggests that fiscal regimes should begeared towards achieving a level of taxationthat leaves companies with an adequateshare of the resource rent, taking intoaccount their incentives for continuinginvestment in the sector. In general, thisspeaks in favour of neutral and progressivetax systems that are better at adjusting tochanges in commodity prices, volumes andproject operational conditions. In addition tovolatile commodity prices, because of thelong lives of most mining projects it isinevitable that, at some point, they willface challenging economic circumstances;having a tax regime that can adjust to this isnormally an advantage. Even in the shortterm, if either party is doing too well out ofthe prevailing tax system then this indicatesthe system is likely to be unstable, withpressures building up in the longer term toredress the short-term imbalance.From a practical perspective, determiningthis level of “stable” taxation over the entirelife of a project can be extremely difficult.This is partly because it involves makingassumptions about the future that may nothold in practice. If consent about what is afair level of taxation has been determined atthe outset based on a set of assumptionsthat later prove to be incorrect, then thereshould be a presumption in favour of aperiodic and collaborative re-assessmentof those assumptions in order that consentmight remain stable over time. Companiesmight wish to note this shifts the emphasissomewhat away from debate about theactual level of the tax burden at any singlepoint in time and towards the processthrough which consent is brought aboutand then sustained. The risks for a companyinvesting in a country with no history ofmining are entirely different from a wellestablishedmineral rich country.Accordingly, there is a case for a newentrant to receive rewards that reflect higherrisk. However, the same company investingin a new mine ten years after the initialinvestment should expect a different taxTOOLKIT ADDENDUMMining: Partnerships for Development TOOLKIT159

Guiding principlesregarding mineralstaxationcontinuedTOOLKIT ADDENDUMburden based on a changed risk/rewardprofile.The recommendation that follows from theabove is that:1. companies are well advised to work inpartnership with government and otherstakeholders to promote overall neutraland progressive mineral taxationregimes; and,2. companies are also well advised to workwith others towards establishinginstitutionalized procedures that achieveand maintain multiparty consent on whatis a “fair” level of taxation.For the practical application of any fairsharing of the resource rent, governments,companies and, potentially, otherstakeholders are also well advised to shareand understand information about past,present and projected future performance ofthe sector, since this information is criticalto achieving a shared understanding of thelonger-term prognosis for the industry. Insuch collaboration, there is a clear role forbroadly respected industry associations.This observation about the need to seek acontinuous process of reaching andmaintaining consent does not renderinstruments such as stability clausesobsolete. However, they do require somechange in the shared understanding of thepurpose that such instruments serve.Stability of the level of taxation determinedat one particular point in time need not bethe same as stability in ensuring that fiscalterms support the economically efficientexploitation of resources and a fair sharingof the resource rent in the longer term.Again, this speaks for formalizingcollaborative arrangements that canmaintain mutual agreement about how bestto accommodate changing circumstances tobalance continuously the variousstakeholders’ interests.The mix of fiscal instrumentsThe 2008 Mineral Taxation report hasunderlined an important proposition that, inlower-income mining countries, mineraltaxation systems should involve as littlecomplexity as possible, even if this violatessome of the principles of optimum taxation.Two reasons support this proposition: first,simplicity in a tax system has its own merits,since this will make it easier both tocalculate the amounts of tax that are dueand to audit the amounts paid, whethernationally or with international support (e.g.via EITI-type audit arrangements). Second,and re-enforcing the first point, is theassertion that a standard problem in lowincomemineral-dependent economies isthat general administrative capacity – tocollect taxes and conduct many otheradministrative functions – is often low.Companies are well advised to remain alertto the practical constraints that affect theoperation of different tax regimes when theyconduct their discussions about suchmatters with their host governments.Simplicity, however, does not speaknecessarily in favour of a permanentreliance on taxes that are easier toadminister – typically, indirect taxes or taxeswhere the administrative burden can beshifted easily onto companies. The generaladvice to host governments is that theyshould commit to reducing, over time, their160 Mining: Partnerships for Development TOOLKIT

Guiding principlesregarding mineralstaxationcontinuedreliance on indirect taxes (especially unit orvalue-based royalties), and focus instead onincreased reliance on income taxes. If thetax system of a country can gradually bemoved in that direction, then this will also fitwell with the interests of the companies.Fortunately, governments can also drawadvantages from such a move, since thepolitical economy of taxation supports theargument that direct tax instruments, basedon profitability or some alternative definitionof “income”, carry a greater revenueimperative.The main challenge is there is noautomaticity in achieving the transition froma low capacity and mainly indirect-tax-basedsystem to a system based on greaterreliance on direct taxes. A second challengeis that direct tax systems, being moresensitive to volume and price movements,may create greater volatility of publicrevenues. Governments are not necessarily,by themselves, able, to improve capacity;neither may they have sufficient initialincentives. Therefore, the guidance note tocompanies is to recognize this challenge inadvance, and to be prepared to work withother relevant bodies (e.g. donor agencies)to stimulate such improvements. This islikely to include collaboration with thoseadvising on and technically supportinggovernments in public sector andadministrative reforms – that is,international and regional multilateralorganizations. There is also a key role forsuch advisory organizations to helpcountries manage the greater volatility ofdirect taxes, and to ensure there is a stableflow of resources to support efficient publicsector and administrative reforms. 86 Thecompanies themselves may not be primemovers in these efforts, but they should beprepared to operate in a collaborative andsupportive manner as the changes aredesigned and implemented.Working with others also includes the casefor forming strategic alliances with domesticconstituents with whom a common interestin better public sector performance isshared, either at the central or at a locallevel. Who to align with is a difficult andcontext specific question. Answers that canbe generalized are yet to be developed byresearch on the political economy of taxationin natural resource rich countries.Special tax regimes for mining?Some host country governments have, inthe past, relied quite heavily on specialarrangements and bilaterally negotiatedagreements with particular miningcompanies in order to secure investmentand government revenue. Such practices areparticularly prevalent in those host countrieswhere the legal and regulatory frameworkfor the sector is relatively poorly developed,and also in countries where mining revenuesconstitute a very large share of totalgovernment revenues and foreign exchangeearnings. The key issue for the companies iswhether, in the future, they should continueto seek such special deals – outside themainstream taxation regimes of countries –even in those types of mining country wherethe practices have been prevalent thus far.86 Experience with such reforms in the past hasshown that volatile revenue flows, including cashbudgeting in times of revenue shortages, have verydetrimental effects on the success of reformimplementation and their long-term sustainability.TOOLKIT ADDENDUMMining: Partnerships for Development TOOLKIT161

Guiding principlesregarding mineralstaxationcontinuedTOOLKIT ADDENDUMThe 2008 Mineral Taxation report concludedthat the case for special tax regimes formining is not clear-cut, even in thosecountries where the circumstances – lowfiscal capacity – give them an obviousappeal. The counter arguments include thepoint that, in countries where administrativecapacity is generally quite weak, theproliferation of different tax structureswithin the same country will run counterto the principle of keeping systems simple(as suggested in the previous point). Inparticular, special tax systems that createadministrative multiplicity in countrieswith limited capacity may result in poorexecution, relative to the theoretically“correct” revenue-take. This, in turn, cancreate its own problems for companies,including risks to the stability of the specialtax regime because of government or otherstakeholders’ dissatisfaction with therevenue outcome – that is, it can easilyundermine the companies’ social licenseto operate. On balance, the evidence seemsto indicate that civil society accepts thepresence of mining activity more readily inthose countries where mining companiesare not seen to be treated too differentlyfrom other sectors.So, the companies are encouraged torecognize that it is both feasible andpolitically preferable for mining companiesto be subject to a country’s general taxsystem, incorporating a few mining-specificfeatures that address some of its specialcharacteristics (e.g. special allowances).Putting taxpayers on equal footings canprovide greater certainty and stability, andincrease the incentives for government toimprove tax administration and fiscal policymakingmore generally. 87 In line with thereasoning of the political economy of taxation,greater commonality across a broadergroup of taxpayers should also increaseopportunities for strategic alliances tosupport contractual taxation and revenuebargaining for better public services, andto reduce the pressures for coercive taxationof immobile assets as responses to shorttermpolitical pressures. An addedadvantage would also be that it makes iteasier for companies to claim doubletaxation relief for taxes paid locally, whenprofits are repatriated offshore andpotentially taxed again.In summary, the recommendation here isfor companies to support an industrypreference for subjection, in principle, to acountry’s generally applicable tax system.Again, there is a key role here for miningindustry associations and their collaborationwith other business/taxpayer associations.International and regional organizations,to the extent possible, should discouragegovernments from engaging in bilaterallynegotiated agreements, and support thedevelopment of comprehensive legal,regular and fiscal regimes aligned andembedded in a country’s overall publicadministrative system.87 The REi case study on Chile supports this point.Chile, in general, does not treat the mining sectordifferently, with the exception of its profit-basedroyalty.162 Mining: Partnerships for Development TOOLKIT

Guiding principlesregarding mineralstaxationcontinuedImproving the benefits to localcommunitiesAlthough mining’s contribution to the totalnational tax-take is often the most importantdimension of a country’s benefits fromresource extraction, the allocation of revenuebetween different tiers of government isattracting increased attention. While centralisttendencies still seem to be very common inmany mining countries, there have beenvarious moves towards increasing thedegrees of fiscal decentralization. 88Evidence for whether or not fiscaldecentralization improves the benefits ofmining to local communities is inconclusive.Further, the literature on public administrationreforms suggests that the positive examplesof developed countries with a decentralizedset-up that have built state capacity “frombelow” are not really comparable withdeveloping countries that have generallybeen more centralist and are now seeking todecentralize “from above”. The literature onthe political economy of taxation points outthat countries that have traditionally beencentralist in approach and are rapidlymoving towards greater decentralizationare inclined to increase coercive taxation.This is particularly the case if fiscal andother administrative capacities have notbeen developed to a reasonable standardbefore new responsibilities and funds arereassigned to the local level.88 In some countries, the perceived benefits arisingfrom having jobs and economic opportunitiesprovided by a mine are given as sufficient reasonnot to provide any special revenues for the region.Other countries, however, chose to return someproportion of mining revenues to the region toaccount for burdens imposed by the mine activityon the region.In some country-specific cases that werereviewed for the 2008 Mineral Taxationstudy, regional, district and municipalauthorities were seen to have certaindesignated responsibilities that were notmatched, by either the funds or the humanand technical capacity to carry out theseresponsibilities properly. This creates majorpractical problems for mining companiesin such countries.When mining companies are assessing theirsituation in relation to the broad nexus ofnational and local fiscal relationships, theymay often find themselves playing the role ofan extra layer of quasi local government –e.g. being expected to discharge localexpenditure assignments that properlybelong to the national or (possibly underfunded)local governments. In such cases,the impact on the long-term sustainability ofthe social sectors that the mining companyexpenditures support, as well as localdevelopment more generally, may remaininadequately assessed and under-funded ingovernment plans. Furthermore, once thecompanies demonstrate their willingnessto help with local social and economicdevelopment agendas, they risk the dangerof becoming a de facto parallel localgovernment. This is uncomfortable for thecompanies concerned and is often deeplyresented by the local governments, who seetheir positions partly or wholly usurped.Where fiscal decentralization is introducedas a political strategy to address theseunderlying problems prospectively, there isstill some danger the bigger picture may getlost, irrespective of the generosity of theresources provided by mining companiesacross various tiers of government.TOOLKIT ADDENDUMMining: Partnerships for Development TOOLKIT163

Guiding principlesregarding mineralstaxationcontinuedTOOLKIT ADDENDUMThe tools described in Stage Five fordetailing the social and infrastructureprovision bestowed by a mine can be apowerful tool for demonstrating how rolesand responsibilities of the mine vis-à-vislocal governments may have becomeskewed.The 2008 Mineral Taxation report concludedthat the solutions to such problems must becountry-specific but, even then, the practicalexperiences to date, as well as theoreticalarguments, remain somewhat inconclusive.The only robust advice to the companies isnot to overemphasize relations with eithernational government or subnationalgovernment entities. Improvements inadministrative capacity at one level areunlikely to render long-term benefits to localcommunities if they are not complementedby equal improvements at the other level.For example, improved revenue managementat the central level does not automaticallyimprove the efficiency of public spending andpublic service provision at the local level.Judgments on these matters invariablyrequire familiarity and understanding of theoverall institutional structure and itspotential bottlenecks.The companies are encouraged to engage asfully as possible in the national debates onsuch matters. They may thereby be able touse the influence of their own expendituresto help achieve sustainable and soundsystems of social and communitydevelopment that clearly assign roles andresponsibilities to all key players, and avoidthe arbitrary allocation of such roles basedon inertia.164 Mining: Partnerships for Development TOOLKIT

Acronyms andglossaryReferenced sourcesHow was the toolkitdeveloped?The steering groupTOOLKITREFERENCES

Image courtesy of Freeport-McMoRan Copper & Gold

Acronyms and glossaryTOOLKITREFERENCESAfDB African Development Bank.CGE computable general equilibrium.EIA environmental impact assessment.EITI Extractive Industries TransparencyInitiative.ERM Environmental ResourcesManagement.ESIA environmental and social impactassessment.GDP gross domestic product.GNI gross national income.HDI human development index of the UNDP.HIV/AIDS human immunodeficiencyvirus/acquired immune deficiency syndrome.HRIA human rights impact assessment.ICMM International Council on Mining andMetals.IFC International Finance Corporation.IFS International Financial Statistics,a department of the InternationalMonetary Fund.MDG Millennium Development Goals.MPD Mining: Partnerships for Development.NGO non-governmental organization.OECD Organisation for EconomicCo-operation and Development.OPEX operating expenses (or costs).OPM Oxford Policy Management.REi Resource Endowment initiative.RER real exchange rate.SEAT Socio-Economic Assessment Toolkit.SIA social impact assessment.UNCTAD United Nations Conference onTrade and Development.UNDP United Nations DevelopmentProgramme.US$ United States dollar.WDI World Development Indicators of theWorld Bank.WGI Worldwide Governance Indicators ofthe World Bank.IMF International Monetary Fund.Mining: Partnerships for Development TOOLKIT167

Acronyms and glossarycontinuedTOOLKIT REFERENCESAaccountability obligation to demonstratethat work has been conducted in compliancewith agreed rules and standards or to reportfairly and accurately on performance resultsvis-à-vis mandated roles or plans.advocacy the act of arguing on behalf of aparticular issue, idea, or person. It is ameans to communicate one's views for thepurpose of policy and social change andcan be achieved by contacting politicalrepresentatives, organizing communitymeetings, distributing public educationmaterials, participating in a public protest,or informing the media.Bbalance of payments a statistical statementthat systematically summarizes, over a givenperiod of time, all the transactions of aneconomy with the rest of the world.baseline data information collected on keysocial, cultural, economic, environmental,or political conditions prior to a project beingdeveloped that can be used as a benchmarkfrom which deviations and comparisons ofexpected losses and gains, as well as futureactual losses and gains, can be measured.Ccapacity building actions taken to developthe ability of individuals, groups, institutions,or organizations to identify and solvedevelopment problems. A managed processof: (a) skill upgrading, both general andspecific; (b) procedural improvement; and(c) organizational strengthening.civil society the network of associations,social norms, and relationships that existsseparately from government or marketinstitutions. Civil society may include religiousorganizations, foundations, professionalassociations, labour unions, academicinstitutions, media, pressure groups, andenvironmental groups.community development the process ofincreasing the strength and effectiveness ofcommunities, improving people’s quality oflife, and enabling people to participate indecision-making and to achieve greaterlong-term control over their lives.community profile a picture of a communitythat reflects the demographic, economic,human, social, visual, and natural resources,as well as the needs and assets of thecommunity.community a social group possessing sharedbeliefs and values, stable membership, andthe expectation of continued interaction.It may be defined geographically (by politicalor resource boundaries) or socially (as acommunity of individuals with commoninterests).168 Mining: Partnerships for Development TOOLKIT

Acronyms and glossarycontinuedconsultation a tool for managing two-waycommunication between project developersand stakeholders. The goal is to improvedecision-making, reduce risk, and buildunderstanding by actively involvingindividuals, groups, and organizations witha stake in the project. Their involvement canincrease the project’s long-term viabilityand enhance its benefits to locally affectedpeople and other stakeholders.cost-benefit analysis a process that weighsthe total expected costs against the totalexpected benefits of one or more actions inorder to choose the best or most profitableoption. Benefits and costs are oftenexpressed in money terms and are adjustedfor the time value of money, so that all flowsof benefits and flows of project costs overtime (which tend to occur at different pointsin time) are expressed on a common basis interms of their “present value”.Eeconomic displacement loss of incomestreams or means of livelihood resultingfrom land acquisition or obstructed accessto resources (land, water, or forest) thatresult from the construction or operationof a project or its associated facilities.empowerment increasing people’s abilityto participate in decision-making, i.e., theirability to negotiate with, influence, control,and hold accountable the institutions thataffect their lives.evaluation systematic investigation of theworth, value, merit, or quality of an object.It is an assessment of the operation or theoutcomes of a program or policy comparedwith a set of explicit or implicit standards asa means of contributing to its improvement.Ffiscal deficits the difference between thegovernment's total expenditure and its totalreceipts (excluding borrowing). A fiscaldeficit can be financed by borrowing fromthe central bank (deficit financing or moneycreation) or borrowing from the moneymarket, which is mainly from banks.The elements of the fiscal deficit are:(a) the revenue deficit, which is the differencebetween the government’s currentexpenditure and total current receipts and(b) capital expenditure.fiscal policy a macroeconomic policy toolused by the government to regulate the totallevel of economic activity within a nation.Examples of fiscal policy include setting thelevel of government expenditures and thelevel of taxation.fundamental influence (on a country’sgovernance) an event that is directlyresponsible for causing some observedresult.TOOLKIT REFERENCESMining: Partnerships for Development TOOLKIT169

Acronyms and glossarycontinuedTOOLKIT REFERENCESGgender the socially constructed rolesascribed to males and females and theresulting socially determined relations.Gender roles are learned, change over time,and vary widely within and across cultures.Gender is a key variable in social analysis.It is important to understand the social,economic, political, and cultural forces thatdetermine how men and women participatein, benefit from, and control projectresources and activities.governance the traditions and institutionsby which authority in a country is exercised,including the process by which governmentsare selected, monitored and replaced; thecapacity of the government to effectivelyformulate and implement sound policies;and the respect of citizens and the state forthe institutions that govern economic andsocial interactions among them.gross domestic product (GDP) the totalmarket value of all final goods and servicesproduced in a country in a given year,equal to total consumer, investment, andgovernment spending plus the value ofexports minus the value of imports.gross national income (GNI) the total valueof goods and services produced within acountry (i.e., its gross domestic product) plusthe income received from other countries(notably interest and dividends) minus thesimilar payments made to other countries.Iimpact any effect, whether anticipated orunanticipated, positive or negative, broughtabout by a development intervention.indicator quantitative or qualitative factor orvariable that provides a simple and reliablemeans to measure achievement, to reflectthe changes connected to an intervention,or to help assess the performance of adevelopment actor.involuntary resettlement the act or instanceof settling or being settled in another placewithout the informed consent of thedisplaced persons or, if they give theirconsent, without having the power to refuseresettlement.Mmacroeconomic instability typically, a situationof high inflation, an overvalued currency,unemployment, unstable real exchange rate,balance of payment deficit, or fiscal deficit.macroeconomics the field of economics thatstudies the behaviour of the aggregateeconomy and emphasizes the interactionsin the economy as a whole. It deliberatelysimplifies the individual building blocks (ofan economy) in order to retain a manageableanalysis of the complete interaction of theeconomy. Macroeconomics examineseconomy-wide phenomena, such as changesin unemployment, national income, rates ofgrowth, GDP, inflation, and price levels.170 Mining: Partnerships for Development TOOLKIT

Acronyms and glossarycontinuedmonetary policy the regulation of the moneysupply and interest rates by a central bank,such as the Bank of England in the UK orthe Federal Reserve Board in the US, inorder to control inflation and stabilizecurrency. Monetary policy is one of the twoways government can impact the economy(the other is fiscal policy). By impacting theeffective cost of money, a central bank canaffect the amount of money that is spent byconsumers and businesses.monitoring and evaluation a managementtool that provides managers with feedback onproject effectiveness during implementation.This is important in enabling projectmanagers to move away from prescriptiveplanning toward a more flexible planningapproach that enables those in charge ofprojects to learn and adapt to changingconditions and experience on the ground.NOobjective an expression of an effect that aprogram is expected to achieve if completedsuccessfully and according to plan.Objectives are often viewed as a hierarchy,beginning with strategic goals, purposes,outputs, and activities.outcome an objective of a project or program,i.e., a longer term result aimed for at theend of a project or program.Pparticipation a process through whichstakeholders influence and share controlover development initiatives and the decisionsand resources that affect them. Participationcan improve the quality, effectiveness, andsustainability of projects and can strengthenownership and commitment of governmentand stakeholders.TOOLKIT REFERENCESnon-governmental organization (NGO)a private organization that pursues activitiesto relieve suffering, promote the interests ofthe poor, protect the environment, providebasic social services, or undertakecommunity development.non-mineral primary balance the differencebetween non-mineral revenue andexpenditure (excluding interest receipts andinterest payments) divided by non-mineralgross domestic product.partnership negotiated relationships thatexist between two or more entities thathave voluntarily entered into a legal ormoral contract.primary data qualitative or quantitativeinformation that is newly collected to addressa specific research objective. Primary datamay include original information gatheredfrom surveys, focus groups, independentobservations, or test results.proximate influence (on a country’sgovernance) an event that is closest to, orimmediately responsible for causing, someobserved result.Mining: Partnerships for Development TOOLKIT171

Acronyms and glossarycontinuedTOOLKIT REFERENCESQqualitative survey research that is moresubjective than quantitative research andthat uses very different methods of collectinginformation, mainly a relatively smallnumber of individual, in-depth interviews,and focus groups. Qualitative surveys areexploratory and open-ended and allowrespondents greater freedom to influencethe research scope and design. Qualitativeresearch is often less costly than quantitativesurveys and is extremely effective inunderstanding why people hold particularviews and how they make judgments.stakeholders persons or groups who areaffected by or can affect the outcome of aproject. Stakeholders may be individuals,interest groups, government agencies, orcorporate organizations. They may includepoliticians, commercial and industrialenterprises, labour unions, academics,religious groups, national social andenvironmental groups, public sectoragencies, and the media.sustainability the ability of an organizationto secure and manage sufficient resourcesto enable it to fulfill its mission effectivelyand consistently, over time, withoutexcessive dependence on a single source.quantitative survey research concernedwith measurement of objective, quantifiable,and statistically valid data. Simply put, it isabout numbers. In quantitative surveys, arelatively large and scientifically calculatedsample from a population is asked a set ofclosed questions to determine the frequencyand percentage of their responses.Ssecondary data qualitative or quantitativeinformation that has already beenassembled, having been collected for someother purpose. Sources may include censusreports, journal articles, technical oracademic studies, and other publications.stakeholder analysis a process that seeksto identify and describe the interests andrelationships of all the stakeholders in agiven project. It is a necessary preconditionto participatory planning and projectmanagement.sustainable development development thatmeets the needs of the present withoutcompromising the ability of future generationsto meet their needs. Progress measured insocial or economic terms is accomplishedwithout irreversible environmentaldegradation or social disruption.Ttaxonomy a way of presenting or classifyinginformation that provides a conceptualframework for discussion, analysis, orinformation retrieval.transparency openness of, communicationwith or from, and accountability of publicofficials. When government meetings andkey policy documents (such as budgets andfinancial statements) are readily available tothe press and the public and when laws,rules, and decisions are open to discussion,they are described as transparent and thereis less opportunity for public officials toabuse the system in their own interest.172 Mining: Partnerships for Development TOOLKIT

Referenced sourcesTOOLKITREFERENCES“A” Frame for AdvocacyJohns Hopkins University’s Center forCommunication Programshttp://info.k4health.orgA Sourcebook for Poverty ReductionStrategiesThe World Bankwww.worldbank.orgAdvancing the EITI in the Mining Sector:A consultation with stakeholdersExtractive Industries Transparency Initiativewww.eiti.orgAdvocacy in Action: A toolkit to supportNGOs and CBOs responding to HIV/AIDSInternational HIV/AIDS Alliancewww.aidsalliance.orgAdvocacy in Action: A toolkit to supportNGOs and CBOs responding to HIV/AIDSInternational HIV/AIDS Alliancewww.aidsalliance.orgAnalytical FrameworkICMMwww.icmm.comAvoiding New Poverty: Mining-InducedDisplacement and ResettlementInternational Institute for Environment andDevelopmentwww.iied.org“Back to Basics”by Christine Ebrahim-zadehFinance & DevelopmentMarch 2003, 40(1)www.imf.orgBreaking New Ground: The Report of theMining, Minerals and SustainableDevelopment ProjectInternational Institute for Environment andDevelopmentwww.iied.orgChile Country Case StudyICMMwww.icmm.comCommunity Development Framework Studyfor the Mining Sector in the Republic ofGuineaThe Oil, Gas and Mining SustainableCommunity Development Fundhttp://commdev.orgCommunity Development ToolkitICMM/World Bankwww.icmm.comComputable General Equilibrium Models andTheir Use in Economy-Wide Policy Analysis:Everything You Ever Wanted to Know (ButWere Afraid to Ask)Regional Research Institute of West VirginiaUniversitywww.rri.wvu.eduCorporate Social Responsibility InitiativeHarvard Kennedy Schoolwww.hks.harvard.edu/m-rcbg/CSRIMining: Partnerships for Development TOOLKIT173

Referenced sourcescontinuedTOOLKIT REFERENCESCorruption Perceptions IndexTransparency Internationalwww.transparency.orgDAC Guidelines and Reference Series onApplying Strategic Environmental AssessmentOrganisation for Economic Co-operationand Developmentwww.oecd.orgGood Practice Guidance on HIV/AIDS,Tuberculosis and MalariaICMMwww.icmm.comGuide to Cost-Benefit Analysis of MajorProjectsEuropean Commissionhttp://ec.europa.euDeveloping SMEs through Business Linkages:A manual for practitioners based on theMozLink mentorship experience inMozambiqueThe Oil, Gas and Mining SustainableCommunity Development Fundhttp://commdev.orgDoing Business (various years)The World Bankwww.doingbusiness.orgExtractive Industries Transparency InitiativeSource bookExtractive Industries Transparency Initiativehttp://eiti.org/document/sourcebookGhana Country Case StudyICMMwww.icmm.comGood Practice Guidance for Mining andBiodiversityICMMwww.icmm.comGood Practice Guidance on Health ImpactAssessmentICMMwww.icmm.comGuidelines for the Implementation ofFinancial Surety for Mine Closureby Meredith Sassoon, a working paper bythe Oil, Gas, and Mining Policy Division ofThe World Bankwww.worldbank.orgHandbook for Preparing a ResettlementAction PlanInternational Finance Corporationwww.ifc.orgHuman Development Report (various years)United Nations Development Programmehttp://hdr.undp.org/en/statisticsHuman Rights in the Mining & MetalsIndustry: Handling and Resolving LocalLevel Concerns and GrievancesICMMwww.icmm.comHuman Rights in the Mining & MetalsIndustry: Overview, Management Approachand IssuesICMMwww.icmm.comLarge Mines and the CommunityThe World Bankwww.worldbank.org174 Mining: Partnerships for Development TOOLKIT

Referenced sourcescontinuedMapping in-country partnershipsICMMwww.icmm.comMillennium Development GoalsUnited Nations Development Programmewww.un.org/millenniumgoalsMineral Taxation Regimes: A review of issuesand challenges in their design and applicationICMMwww.icmm.comMining in Tanzania – What future can weexpect?ICMMwww.icmm.comMultidimensional Poverty IndexOxford Poverty and Human DevelopmentInitiativewww.ophi.org.uk/policy/multidimensionalpoverty-indexNatural Resource CharterNatural Resource Charter Oversight Boardwww.naturalresourcecharter.orgOECD Input–Output TablesOrganisation for Economic Co-operation andDevelopmentwww.oecd.orgPeru Country Case StudyICMMwww.icmm.comPlanning for Integrated Mine Closure: ToolkitICMMwww.icmm.comProtect, Respect and Remedy: the UnitedNations Framework for Business andHuman RightsThe United Nationswww.un.orgResource Endowment initiativeICMMwww.icmm.comThe role of world-class mines in wealthcreation by Richard C. Schodde and Jon M.A. Hronsky, in Special publication No. 12,Wealth Creation in the Minerals Industry:Integrating Science, Business, and EducationSociety of Economic Geologistswww.segweb.orgSocio-Economic Assessment Toolbox (SEAT)Anglo American plcwww.angloamerican.co.ukSpotlight series 02: The ChallengeICMMwww.icmm.comSpotlight series 03: Ways ForwardICMMwww.icmm.comStrategic Community Investments: A QuickGuideInternational Finance Corporationwww.ifc.orgSustainable Development in the Mining andMinerals Sector: The Case for Partnershipat Local, National and Global LevelICMMwww.icmm.comTOOLKIT REFERENCESMining: Partnerships for Development TOOLKIT175

Referenced sourcescontinuedTOOLKIT REFERENCESTanzania Country Case StudyICMMwww.icmm.comTarnished Legacy: A Social and EnvironmentalAnalysis of Mali’s Syama GoldmineOxfam Americawww.oxfamamerica.orgThe Analytical Framework: Main reportICMMwww.icmm.comThe State Fragility Index in Global Report(various years)Center for Systemic Peace (affiliated with theCenter for Global Policy at George MasonUniversity, USA)www.systemicpeace.orgThe World Economyby Prof. Angus MaddisonOrganisation for Economic Co-operation andDevelopmentwww.oecdbookshop.orgWorking Together: How large-scale mining canengage with artisanal and small-scale minersICMMwww.icmm.comWorld Development IndicatorsThe World Bankwww.worldbank.org/indicator176 Mining: Partnerships for Development TOOLKIT

How was the toolkitdeveloped?TOOLKITREFERENCESFrom the outset of the Resource Endowmentinitiative (REi), there has been independentoversight of the toolkit. The pilot version wasdeveloped in 2005 as a result of collaborationbetween ICMM, the United Nations Conferenceon Trade and Development (UNCTAD) andthe World Bank Group. Phase 1 of REi startedwith an extensive literature review, and a“coarse-sift” comparative analysis of therelative economic and social well-being of33 countries with a high dependence onminerals. Initial findings were critiqued in amulti-stakeholder workshop that helped toshape a revised approach. In Phase 2 thetoolkit was applied in Peru (with Chile as acomparator) and Ghana (with Tanzania asa comparator).In each case, the resulting report has formedthe basis of substantive and collaborativemulti-stakeholder workshops and follow-upactions to obtain priorities for partnershiparound the six themes. A priority countrybasedfocus was to have all governmentministries engaged. For example, in Ghanain 2008 a stakeholder workshop identified aset of priority actions that then generatedworking discussions on the integration ofmining districts explicitly into the proposedDistrict Development Fund arrangements –a new harmonized public funding mechanismdesigned to channel adequate resources toregional authorities. In Tanzania, the lifecycle analysis provided a useful addition tothe debate on minerals policy reform at acontentious time. Phase 3 saw the completionof a review that looked at issues andchallenges related to various mineralstaxation regimes, a gap identified at amulti-stakeholder forum in June 2006 inWashington DC.The trial period has provided strongconfirmation there is a need for this toolkit.The challenge is to ensure that it can beimplemented in the future with a reduceddegree of reliance on the originatingorganizations, such as ICMM, and with ahigh degree of in-country ownership. Thisapplies both to its implementation and inthe dissemination of findings, workshopsand other activities designed to developpartnerships around the evidence. The toolkithas therefore been revised to ensure that:1. it is sufficiently robust, objective andaccessible to be commissioned by anyorganization with an interest in mining’ssocial and economic contribution todevelopment; and,2. it can be implemented and disseminatedin-country using locally availableresources and at reasonable cost.This toolkit contains several changes as aresult of the experience to date. During 2008a supplement was added on mineralstaxation. This is now an Addendum to thetoolkit, since it provides parallel advice onthe thorny issue of taxation rather than anintegrated set of additional tools. Two othernew features are included in the currentversion: a database for analyzing informationrelating to the six areas of partnership (seeAnnex 2); and a tool to enable users to createforward-looking life cycle scenarios that canbe compiled with the companies’ assistance.There is, in general, a poor understanding ofthe considerable time horizons involved inexploring, developing and operating a typicalmine, and this forward-looking element hasalready proved to be a powerful medium forfocusing debate about the potentialcontribution mining can make.Mining: Partnerships for Development TOOLKIT177

The steering groupTOOLKIT REFERENCESThe steering groupThe toolkit revision was guided by a steeringgroup comprising external organizations andICMM member companies:Mr Clive ArmstrongLead Economist, Infrastructure and NaturalResources Department, InternationalFinance Corporation, Washington DCMr Rouben IndjikianChief, Minerals, Metals and Energy, SpecialUnit on Commodities Division, UNCTAD,GenevaProf. Dr Francis K. LeloPrincipal, Egerton University, Njoro, KenyaMs Anita MalhotraAdviser, Mining and Economic Development,Rio Tinto, LondonMr Shawn D. MillerDirector, Environmental and Social RiskManagement, Citigroup, New YorkChair, Equator Principles SteeringCommitteeMs Jane NelsonSenior Fellow and Director of CorporateSocial Responsibility Initiative, HarvardKennedy School, Cambridge MAMr Jonathan SamuelManager, Social and CommunityDevelopment, Anglo American, LondonComments were also received from:Mr Arjun BhallaAnalyst, CommDev,International Finance Corporation,Washington DC;Mr Matthew GenasciLegal Analyst, Revenue Watch Institute,New York;Mr Antoine HeutyDeputy Director, Revenue Watch Institute,New York;Mr Etienne LamySenior Advisor, Community Relations,Rio Tinto Alcan, Montreal;Ms R. Njeri MuhiaLecturer, Sociology, Anthropology andEconomics Department, Egerton University,Njoro, Kenya; andMs Dafna TapieroManager, CommDev, International FinanceCorporation, Washington DC.The group has provided extensive technicaland editorial comments. Concerns expressedby the group included: clarity for the targetaudience; balance between a country casestudy as a goal in itself or as a tool forstakeholders to explore partnerships;direction regarding the focus of measuringpositive or negative impacts of mining(such as social and economic impact ofenvironmental degradation and physical oreconomic resettlement/displacement);instances of too technical or academicmethodological explanations and instancesthat were not technical enough; explanationof why “governance” is important whenmeasuring mining’s contribution; the“tools” needed for stakeholders to buildpartnerships; and a robust approach toidentify “proximate” and “fundamental”influences from mining projects.178 Mining: Partnerships for Development TOOLKIT

DisclaimerThis publication contains general guidance only and shouldnot be relied upon as a substitute for appropriate technicalexpertise. Whilst reasonable precautions have been taken toverify the information contained in this publication as at thedate of publication, it is being distributed without warranty ofany kind, either express or implied.In no event shall the International Council on Mining and Metals(“ICMM”) be liable for damages or losses of any kind, howeverarising, from the use of, or reliance on this document. Theresponsibility for the interpretation and use of this publicationlies with the user (who should not assume that it is error-freeor that it will be suitable for the user’s purpose) and ICMMassumes no responsibility whatsoever for errors or omissionsin this publication or in other source materials which arereferenced by this publication.The views expressed do not necessarily represent the decisionsor the stated policy of ICMM. This publication has beendeveloped to support implementation of ICMM commitments,however the user should note that this publication does notconstitute a Position Statement or other mandatorycommitment which members of ICMM are obliged to adoptunder the ICMM Sustainable Development Framework.The designations employed and the presentation of thematerial in this publication do not imply the expression of anyopinion whatsoever on the part of ICMM concerning the legalstatus of any country, territory, city or area or of its authorities,or concerning delimitation of its frontiers or boundaries.In addition, the mention of specific entities, individuals, sourcematerials, trade names or commercial processes in thispublication does not constitute endorsement by ICMM.This disclaimer shall be construed in accordance with the lawsof England.Publication detailsPublished by International Council on Mining and Metals(ICMM), London, UK.© 2011 International Council on Mining and Metals. The ICMMlogo is a trade mark of the International Council on Mining andMetals. Registered in the United Kingdom, Australia and Japan.Reproduction of this publication for educational or othernon-commercial purposes is authorized without prior writtenpermission from the copyright holders provided the source isfully acknowledged. Reproduction of this publication for resaleor other commercial purposes is prohibited without priorwritten permission of the copyright holders.AcknowledgementsICMM teamKathryn McPhail (Director, ICMM) led thedevelopment of the Mining: Partnershipsfor Development Toolkit under thedirection of Paul Hollesen (Chair, ICMMMining: Partnerships for Developmentand Vice President, AngloGold Ashanti)and Dr. R. Anthony Hodge (President,ICMM), with support from Sara Ovuike,(Program Officer, ICMM) and advice fromFernanda Diez, Senior CommunicationsOfficer, ICMM.Consulting teamThe toolkit was updated and revised bya team from Oxford Policy Managementled by Mark Essex, Simone McCarthyand Alan Roe. Valuable input was alsoreceived from Dave Prescott (IndependentConsultant), Evelyn Dietsche (BG Group),Catherine Macdonald (Social SustainabilityServices). The toolkit benefitted fromcomments from a Steering group.Oxford Policy Management is a leadingconsulting practice in the field ofinternational development. Our consultantsare professionally respected in theirspecialist fields, with a reputation forcombining intellectual leadership andrigour with the practical know-howand ability to develop solutions thatwork. We provide high quality analysis,advice and support in the design andimplementation of economic and socialdevelopment policies, primarily in poorand middle-income countries.www.opml.co.ukEditorial teamThe toolkit was edited by AlastairSharp-Paul and Liz Jacobsen(Coffey Environments).ISBN: 978-0-9559983-4-8Available from: ICMM, www.icmm.com, info@icmm.comDesign: Duo Design LimitedThis toolkit is printed on Satimat Silk. The paper stock ismanufactured at a mill which is ISO 9001, ISO 14001 and isFSC certified. It contains 15% post-consumer recycled fibreand elemental chlorine free (ECF) fibre sourced from wellmanaged forests.

ICMMThe International Council on Mining andMetals (ICMM) was established in 2001to act as a catalyst for performanceimprovement in the mining and metalsindustry. Today, the organization bringstogether 20 mining and metalscompanies as well as 31 national andregional mining associations and globalcommodity associations to address thecore sustainable development challengesfaced by the industry. Our vision is oneof member companies working togetherand with others to strengthen thecontribution of mining, minerals andmetals to sustainable development.ICMM35/38 Portman SquareLondon W1H 6LRUnited KingdomPhone: +44 (0) 20 7467 5070Fax: +44 (0) 20 7467 5071Email: info@icmm.comwww.icmm.com