Sharing Mining Benefits in Developing Countries - World Bank

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Figure 4.3: Papua New Guinea Sustainable Development ProgramProgramming ApproachFinancing StructureGeographic FocusCommunity Participation inGovernanceInfluence of Mining CompanyInfluence of GovernmentGrant makingAnnual BudgetTargeted communityNo participationNo InfluenceNo InfluenceOperationalEndowedMine Area of Influence Broader communityBoard MembershipMining Company OwnershipLegal Requirementcloses. The Development Fund is used to support sustainable developmentprograms across the country while the mine is operating. One thirdof the Development Fund is to be spent in Western Province, where themining activity is located, with the remainder spent in the rest of thecountry (figure 4.3). The PNGSDP is both a grant maker and an implementationpartner and has a staff of 70. It undertakes projects as diverse assupporting the development of sustainable forestry to planning for the futureeconomic activity of the mining town of Tabubil once the mine closes.Between 2002 and 2008, the PNGSDP spent more than US$140 millionon development projects. Governing the development enterprise is ahigh-powered, seven-member board that includes representatives of thegovernment of Papua New Guinea. The PNGSDP’s structure is undeniablycomplex, but it is in line with the scale of the financing and visionfor the company.Knowledge of the ContextThe FTF’s vision, beneficiaries, and projects need to be identified on thebasis of extensive social assessment.Mining projects are undertaken in a wide variety of settings, andFTFs are increasingly used to share the benefits from these projects in anequally diverse context. Before designing an FTF, the context in which itis being established must be understood.In developing an FTF, there are some basic contextual questions thatneed to be addressed:• Why is the FTF being established?• Who does it seek to benefit?• What does it aim to achieve?While the broad direction for some of the questions may be establishedthrough government regulation or other requirements, the mission, vision,36 Sharing Mining Benefits in Developing Countries
objectives, and intended beneficiaries of an FTF should be grounded in adeep understanding of stakeholders’ needs, owner priorities, and gaps inexisting development activities (box 4.1). Companies, in particular, canbe faced with the temptation to implement an FTF model that has beensuccessful for them elsewhere, potentially failing to recognize the uniquefeatures of the new context.The process of environmental and social impact assessment can provideextremely valuable information to guide the design of an FTF. However,that knowledge needs to be grounded through discussions with theintended beneficiaries. The context will also change over time, and FTFBox 4.1: Approaches to Identifying NeedCompany staff knowledge of beneficiaries. The AngloGold Ashanti Fund(South Africa) uses local area committees of company staff to identify communityneeds and projects to receive funding from the centrally managedcorporate trust.Partner knowledge of beneficiaries. Grant-making foundations in particularrely on the applicant’s knowledge of benefi ciaries’ needs. The AsociaciónAncash (Peru) funds initiatives generated by local organizations, workinggroups, or other associations. Escondida (Chile) adopted national governmenttargets for child education as a shared priority and works closely withthe regional government of Antofagasta and the Junta Nacional de JardinesInfantiles (National Kindergarten Board) to meet this previously defi nedneed.Formal consultation with intended beneficiaries, either as part ofexisting company consultation processes or separately. The GoldfieldsGhana Foundation works with standing community committees created bythe company to facilitate communication between the company and communitiesto generate development project ideas. The Inti Raymi Foundation(Bolivia) carried out a two-stage process involving: (1) diagnosis and characterizationof its area of action; and (2) a series of community workshopsdesigned to identify and prioritize infrastructure needs.Baseline or needs assessment at the regional or local level sponsoredby the company, foundation, or government. All of the VALE Foundation’s“territorial development” initiatives in Brazil are based on a thoroughbaseline assessment.Extractive Industries for Development Series37
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 and 42: externally, or by a combined approa
Page 43 and 44: Chapter 4Drawing Lessons fromExperi
Page 45: development projects. It was subseq
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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