Sharing Mining Benefits in Developing Countries - World Bank

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Box 3.5: Government Actions Supporting the Use ofFoundations, Trusts, and FundsGhana. Ghana has created a Mineral Development Fund (MDF) to returna portion of royalty income to communities directly affected by mineral development.Twenty percent of the collected royalties are paid into the MDF,with the proceeds then being shared among local government authorities,landowners, and communities adversely affected by mining.Namibia. Namibia has also created a Namibian Mineral Development Fund.However, its focus is on broadening the contribution of the mining industryto the national economy through diversifi cation and by stimulating economiclinkages.Peru. The Aporte Voluntario is an agreement the Peruvian governmentsigned with 40 companies in 2007 to make a voluntary contribution to localand regional funds for the poorest provinces and regions of Peru. The paymentaddressed perceived inequities between project revenues and anticipatedroyalty and tax payments as commodity prices rose. The agreementalso included company commitments to good management of these fundsto help circumvent bureaucratic difficulties in management and disbursementof royalties to provinces and municipalities. Xstrata, Rio Tinto, and Valehave also established social trusts as part of their payments to secure theLas Bambas, La Granja, and Bayovar development projects in Peru.South Africa. In South Africa, the Broad-Based Socio-Economic EmpowermentCharter has been a key driver of company social investment initiatives.A considerable number of trust funds have been established to fulfill socialobligations as part of the conversion of ‘old order’ mining rights.Philippines. The Philippines Mineral Law of 1995 requires that companiesobtain consent from indigenous cultural communities for use of their ancestrallands and that royalties be paid into a trust fund “for the socioeconomicwell-being of the indigenous cultural community.”Laos. The new Laotian Minerals Law will make community-developmentfunds a standard requirement for investors.32 Sharing Mining Benefits in Developing Countries
Chapter 4Drawing Lessons fromExperience: Case StudiesTo illustrate and confirm the experience presented in this publicationa series of case studies was conducted on mining foundations, trusts,and funds (FTFs) in three mining regions of the world: Southern Africa,Peru, and Papua New Guinea. Each has a long history of mining FTFsdriven by a mix of company policy, government regulation, and communityexpectations. Fourteen case studies were completed. Full details ofeach can be found in the World Bank Mining Foundations, Trusts, and FundsSourcebook. The case studies presented here demonstrate the variety ofapproaches adopted by FTFs under very different conditions.Conditions for SuccessThe experience with mining FTFs around the developing world is vast,varied, and difficult to compare. However, a number of broad conditionsfor success and leading practices have been identified. The success conditionsare grouped under three headings: complexity, context, and integration,each of which is addressed below.Appropriate ComplexityThe complexity of the FTF model should be proportional to the level offinancing and capacity available locally.As was evident earlier in this publication, there are many different optionsavailable to companies and governments when structuring FTFs toshare benefits derived from mining. FTF models can range from locallyfocused,small-scale, grant-making activities to large financial structuresthat deliver government-collected payments to entire provinces. There isno predetermined level of complexity suitable for an FTF.Starting simply: The Mozal Community Development Trust (MCDT),MozambiqueThe MCDT is the community development arm of the Mozal aluminumsmelter in Mozambique. Located 17 kilometers from the capital, Maputo,Extractive Industries for Development Series33
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 and 40: support charitable organizations in
Page 41: externally, or by a combined approa
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
Page 69: Extractive Industries for Developme
Page 72: The World Bank1818 H Street, N.W.Wa

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