Sharing Mining Benefits in Developing Countries - World Bank

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Table 3.4: Highly Participative Governance StructuresStrengthsCreates benefi ciary ownership,enhancing relevance, effectiveness,and sustainability of foundationProvides a means of holdingbenefi ciaries accountable, particularlyif they participate in decision makingProvides local stakeholders witha voiceMay provide enhanced opportunitiesfor seeking external fi nancingWeaknessesCan result in conflicting agendas andpriorities on governing bodyOften requires more time to buildcapacity and ensure that communityparticipation is effectiveLink to company or governmentobjectives can be dilutedCan be more expensive in theshort termInfluence of the Mining CompanyMining companies have established the majority of the FTFs in existencein the mining industry (BSR 2010). The decision to establish anFTF often rests with the company, as does the level of influence that thecompany will exert over the day-to-day operation and direction of theFTF. That level of involvement can vary significantly and is moderatedthrough the following broadly defined avenues for participation in theFTF’s structure:• FTF design. Deciding on the structure and design of an FTF througha collaborative process that engages a wide range of stakeholders canprovide a solid basis for an FTF. Depending on the size of the stakeholdergroup and the group’s experience with FTF structures in thepast, participation of this form can be time-intensive, thus limiting theapplication of this approach in situations where a company or governmentneeds to deliver development benefits speedily.• Governance. FTF governance, at its simplest, can be described by themembership of the board of directors or trustees. The level of participationin the governance structure can be adjusted through the inclusionof stakeholder representatives from groups other than the owningentity. It should be noted that there is a difference between participationand representation. Expanding the representativeness of a governingbody is also likely to have an impact on the level of control exertedover the FTF by the owner.• Project generation. Regardless of whether the FTF employs a grantmakingor operational approach, projects can be generated internally,30 Sharing Mining Benefits in Developing Countries
externally, or by a combined approach. Beneficiary participation inthe identification and development of projects can improve the communityownership of the outcomes of the project. Beneficiaries canalso participate in the evaluation and review process for proposedprojects.• Cofinancing. The trend toward cofinancing projects with beneficiariesis evident across the development sector and typically occurs at a projectlevel. Beneficiary contributions tend to be in the form of in-kindsupport rather than purely financial contributions.• Public reporting. Community development projects are increasinglybeing evaluated through the assessments expressed by interestedstakeholders in public reports.• Monitoring and Evaluation. Beneficiary participation in monitoring andevaluation programs is fast becoming standard operating practice andcan help to ensure community perceptions are being addressed effectivelyas company or government requirements.Influence of GovernmentAround the world, the number of countries with legislation that mandatesmining FTFs remains relatively low. However, where FTFs exist,governments exert influence on them in a variety of ways (box 3.5):• Legal requirement. In a small number of cases, governments have prescribedthe creation of an FTF as part of the permitting, development,or closure process for a mining operation.• Legal definition. As discussed at the beginning of this section, thedefinitions of foundations, trusts, and funds vary across countries.Governments control the legal structure in which these vehicles can beestablished.• Tax incentives. In many jurisdictions, governments have incentivizedthe selection of FTFs by applying tax-efficiency measures to theseorganizations.• Local and regional development plans. Governments can exert influenceover programming decisions by requiring that the development activitiesof an FTF be integrated with local or regional development plans.• Benefit-sharing agreements. Where FTFs are used as the implementinginstrument for benefit-sharing agreements, the location and scale ofthe development activity supported by the FTF is often dictated bygovernment requirement.Extractive Industries for Development Series31
Page 2: World Bank Group’s Oil, Gas, and
Page 6 and 7: Box 3.3: Government Funding Mechani
Page 8 and 9: AcronymsAACFAHRCALACAMPAASRPCMCACOD
Page 11 and 12: Executive SummaryMining projects in
Page 13 and 14: Chapter 1IntroductionMessageFoundat
Page 15 and 16: that process. Chapter 3 reveals bot
Page 17 and 18: Figure 2.1: Benefit-Sharing Channel
Page 19 and 20: Table 2.1: Examples of Royalty/Tax
Page 21 and 22: to be shared among project benefici
Page 23 and 24: FTFs and other dedicated instrument
Page 25 and 26: money payable to communities over a
Page 27 and 28: The agreements often use FTF struct
Page 29 and 30: Chapter 3Key Attributes ofFoundatio
Page 31 and 32: • Provisions for supervision and
Page 33 and 34: Figure 3.1: Sliding Scales of Attri
Page 35 and 36: Box 3.1: The Starting Points of FTF
Page 37 and 38: Communities or local nongovernmenta
Page 39: support charitable organizations in
Page 43 and 44: Chapter 4Drawing Lessons fromExperi
Page 45 and 46: development projects. It was subseq
Page 47 and 48: objectives, and intended beneficiar
Page 49 and 50: Buying in expertise: The Anglo Amer
Page 51 and 52: Figure 4.6: Rio Tinto Palabora Mini
Page 53 and 54: Figure 4.7: Fondo Solidaridad Cajam
Page 55 and 56: and the level of financing they wil
Page 57 and 58: Figure 4.9: Ok Tedi Mining, Ltd.Pro
Page 59 and 60: ConclusionFoundations, trusts, and
Page 61 and 62: Appendix 1: MiningFoundations, Trus
Page 63 and 64: Name Associated Company Country46.
Page 65 and 66: March 2002, accessed April 2, 2010,
Page 67 and 68: Ok Tedi Fly River Development Progr
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