Sharing Mining Benefits in Developing Countries - World Bank

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structures must be adapted to accommodate and respond to these changingconditions.Finding a niche: The Asociación Ancash, PeruThe Asociación Ancash was established in 2002 to maximize the sustainabledevelopment contribution of the Antamina mine in Peru. Communityrelationships had been challenging during the early years of developmentand production at Antamina. For that reason, the Asociaciónwas intentionally separated from the company to provide a distinctionbetween compensation and community development activities.Between 2002 and 2007, the Asociación Ancash undertook a widevariety of development projects in line with needs identified throughcommunity engagement. Its role underwent a major change with theestablishment of the Fondo Minero Antamina (FMA) in 2007. The FMAwas established to meet the government’s Aporte Voluntario requirements,under which 3.75 percent of Antamina’s sales over a five-yearperiod were channeled through a new FTF. With an annual budget of justunder US$1 million, the Asociación was dwarfed by the establishmentof the FMA, which invested US$135.5 million in development projectsbetween 2007 and March 2010. The operational context changed sosignificantly with the introduction of the FMA that the Asociación undertookan extensive strategic visioning exercise and identified three linesof specialization: sustainable tourism, local culture, and conservation ofnatural resources of the Ancash region.By identifying niche activities that were important to local communitiesand were likely to be supported by external donors (more than12 percent of the Asociación’s funding is sourced externally), the AsociaciónAncash has secured an important role in the community andderives considerable reputational benefit from the activities it undertakes(figure 4.4).Figure 4.4: Asociación AncashProgramming ApproachFinancing StructureGeographic FocusCommunity Participation inGovernanceInfluence of Mining CompanyInfluence of GovernmentGrant makingAnnual BudgetTargeted communityNo participationNo InfluenceNo InfluenceOperationalEndowedMine Area of Influence Broader communityBoard MembershipMining Company OwnershipLegal Requirement38 Sharing Mining Benefits in Developing Countries
Buying in expertise: The Anglo American Chairman’s Fund (AACF),South AfricaThe AACF was established in South Africa in the 1950s. Since 1998,following restructuring of the company, it has been managed by aprofessional corporate social responsibility organization, TshikululuSocial Investment (TSI). The AACF is a national grant-making fund thatsupports development initiatives aimed at transforming lives in SouthAfrica’s disadvantaged communities. This national focus is important forAnglo American, both at present and historically, because of the company’sprominence in South Africa. Community development projects,needed by the company to gain and retain its social license to operate,are conducted by individual business units and are largely disconnectedfrom the activities of the AACF.The AACF seeks to “back champions” in social development across thecountry and typically supports NGOs that are doing innovative work infields of interest. TSI determines these fields of interest through extensiveresearch and networking across the country (figure 4.5). For its services,TSI receives a management fee valued at 10 percent of the developmentbudget. Founded by Anglo American, TSI recruits experts in social developmentin a number of fields to ensure that investment decisions aregrounded in local knowledge and understanding.Integration into Development PlansFTF activities must be integrated into local and regional developmentplans.Mechanisms for sharing benefits from mining activities do not operatein isolation. Regardless of the remoteness of a mining developmentand the seeming paucity of development activities in the region, theemergence of a new development actor, such as an FTF, will influenceFigure 4.5: Anglo American Chairman’s FundProgramming ApproachFinancing StructureGeographic FocusCommunity Participation inGovernanceInfluence of Mining CompanyInfluence of GovernmentGrant makingAnnual BudgetTargeted communityNo participationNo InfluenceNo InfluenceOperationalEndowedMine Area of Influence Broader communityBoard MembershipMining Company OwnershipLegal RequirementExtractive Industries for Development Series39
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 and 46: development projects. It was subseq
Page 47: objectives, and intended beneficiar
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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