Sharing Mining Benefits in Developing Countries - World Bank

and the level of financing they will provide. The clearer the description ofhow those decisions are made and the greater the transparency that surroundsthem, the more likely it is that they will be accepted by interestedstakeholders. The principles guiding decision making are often capturedin the charter or trust deeds drawn up when the FTF is formed. Leadingpractice requires that these principles should be developed in greater detailto guide both management staff and the governing body when makingspecific decisions. Specific exclusions for funding are often includedin this guidance, such as the decision not to fund individuals, or not tosupport projects with a political or religious agenda.FTFs are often staffed by community development specialists whomay lack the accounting and financial skills needed to manage the fundsdedicated to the project. The responsibility for managing funds associatedwith the FTF rests not only with the management team but also withthe governing body, through its fiduciary duties. Those duties shouldalso require the members of the governing body to support only thoseprojects that meet the overall goals of the FTF and that benefit groupspreviously identified as the FTF’s beneficiaries.The evolution of a governance structure: Ok Tedi Mining, Ltd.,New GuineaThe Ok Tedi Mine, located in the Western Province of Papua NewGuinea, has had significant environmental effects on communities livingdownstream from its activities because of the practice of dumping tailingsand waste into the Fly River. As understanding of the environmentalimpacts of the riverine damage grew, in 2001 OTML entered into communitymine continuation agreements (CMCAs) that predicate continuedoperations on community consent. The CMCAs also commit Ok TediMining, Ltd. (OTML) to make investment and development paymentsthrough eight trusts and six “mine” villages. The payments are to benefitall of the 152 villages affected by the mine. Each of the eight trusts coversa different geographical area; to date each has managed its compensationpayments independently.In 2002 OTML registered the Ok Tedi Development Foundation(OTDF) as a not-for-profit company to support community developmentand future generations by administering the CMCA trust funds. The OkTedi Fly River Development Program (OTFRDP), established as a subsidiaryof the OTDF, is charged with managing the trust funds on behalf of thebeneficiary communities. The administrative functions needed to managethe trust funds had been supplied by the OTML for many years, butExtractive Industries for Development Series45