Sharing Mining Benefits in Developing Countries - World Bank

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• Community participation in governance—from no participationthrough to advisory committees and boards that include communityrepresentatives.• Influence of mining company—moving from full ownership and controlby the mining company through to complete independence from thecompany.• Influence of government—from minimal governmental influence overthe FTF’s activities through to a legal requirement to establish an FTFand control over the nature and location of development activities.There is no standard approach to mining FTFs—experience aroundthe world is varied and difficult to compare. Nevertheless, one criticalcondition for success is evident: adaptation to the local context. Adaptationis presented in three distinct components: complexity, context, andintegration. The complexity of the FTF should be proportionate with thefunding and capacity of the operating environment. The context needs tobe well understood through extensive social assessment in order to appropriatelydefine the vision, beneficiaries, and projects to be supportedby the FTF. Wrapping this together is the integration of the FTF with localand regional development plans. Brief case studies that illustrate the interplayof these components appear in Chapter 4 of this publication.In addition to presenting conditions for success, the case studies highlightthree principles of leading practice for mining FTFs. Those principlescan be expressed as follows:• Higher levels of stakeholder participation are likely to lead to moregrounded, sustainable development activities in a region, therebyjustifying the additional time and resources that greater participationrequires.• Attention to the detail of governance structures and appropriatemanagement of administrative responsibilities can greatly increase theperformance of an FTF and the likelihood that it will attract externalfinancing.• Planning for the sustainability of an FTF, whether by endowing fundsor expanding stakeholder participation in the governance structure,improves the likelihood of delivering long-term benefits from miningprojects in developing countries.2 Sharing Mining Benefits in Developing Countries
Chapter 1IntroductionMessageFoundations, trusts, and funds (FTFs) can be good instruments forcompanies and governments to use to share the benefits of mining operationswith communities. To succeed, however, FTFs must be properlyintegrated in their local context and must have a level of complexityproportionate to their vision, funding, and capacity. From the researchconducted, it is clear that highly participative, financially sustainable,and well-managed FTFs are defining leading practice in this field.ObjectiveFTFs first emerged in the mining industry in the 1930s. There are nowmore than 60 such institutions in the developing world alone (BSR2010). The Oil, Gas, and Mining Unit of the World Bank (SEGOM)undertook to capture this substantial experience through research and toinform a wide audience on how FTFs have been used to enhance positiveimpacts from mining operations on local development.AudienceThis publication is intended mainly for governments and companiesgrappling with the challenge of sharing mining benefits. For that reason,it alternates between the interests and perspectives of these two typesof stakeholders. This is not to neglect the perspective of communitiesand civil society organizations, which, as targeted beneficiaries, shouldparticipate in the decision-making process. As there is no single formulafor making decisions in this field, this publication presents diverseapproaches that address local, regional, and national contexts so thatinterested stakeholders can consider how best to use FTFs to promotedevelopment through mineral wealth.Definition and ScopeFor the purpose of this publication, FTFs represent a wide range offinancial and institutional instruments designed to channel revenuesExtractive Industries for Development Series3
Page 2: World Bank Group’s Oil, Gas, and
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Name Associated Company Country46.
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March 2002, accessed April 2, 2010,
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Ok Tedi Fly River Development Progr
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Extractive Industries for Developme
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The World Bank1818 H Street, N.W.Wa
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Sharing Mining Benefits in Developing Countries - World Bank

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