Peace Through Commerce

Partnerships As a New Paradigm

Reflections From Pact Congo and USAID Working With the Mining Sector in the

DRC

Christian Roy, Pact Congo

Robert La Vallière, Anvil Mining Ltd.

Delivered at University of Notre Dame13 November 2006

Huge country, vast resources, history, image

Governance• Peace process• Election, rule of law, decentralization

Social issues• Limited social development, infrastructure,

livelihoods • Corruption and transparency• Conflict, human rights and security

Business and investment framework

Country ContextChallenges Loom Large

For civil society (Pact)• Community and civil society capacity• Limited social investment and policy• Extent of social development needs• Local, provincial, national, global players

For mining companies (Anvil and others)• Commercial framework

o History, structure of concessions, competitiono Mining codeo Global demand

• Artisan (informal) mining• Security

For donors (USAID)• Limited leverage for good governance

Operational ContextPractical Realities

For Social Development (Pact, civil society, international donors such as USAID)• Mining investment catalyzes socio-economic

development—reduces dependence, increases independence

• Strengthen community capacity and economic opportunity

• Encourage responsible business behavior• Improve transparency, rule of law, royalty

retrocession

For Business (Anvil, other mining companies)• “Social” license to operate—manage “above

ground non-technical risk”• Adhere to international mining code• Address issues that affect operations• Sustain profitable business operations

Engaging With Mining SectorMotivations and Objectives

Good governance• Responsible resource exploitation key to DRC’s

economy and future• Control of DRC minerals linked to conflict• Significant new international investment• Entry points: companies, artisan miners, donors,

communities

Companies face significant risks• Limited capability managing complex social risks• Risk of exacerbating conflict if poorly managed• Pressures against transparency and industry

reform (i.e., entrenched interests)• Unpredictable business environment

Why Engage?Partnership Imperative

Engaging companies and communities• Manage Anvil’s social investment program• Create Trust Fund and help develop foundations with

other firms to support development

Engaging bilateral and multilateral agencies• Global Development Alliance with USAID• DFID support to improve governance• UN support of peace process

Engaging government• Transparency and development issues• Livelihoods

Engaging global standards/practices• Voluntary Principles on Security and Human Rights• Extractive Industries Transparency Initiative• Equator Principles• OECD Guidelines• UN Global Compact

What Are We Doing?Extractive Industries Alliance—Examples

Sustainable development (3 regions, 57 villages)• Community mobilization and governance through

infrastructure• Agricultural livelihoods and productivity• Micro-enterprise and micro-finance with primary focus

on women• Artisan mining

Governance• Mechanism to ensure royalties fund development• Third party assessments• Protocols to follow Voluntary Principles

Capacity Building• Companies: training, recruiting needed expertise,

strengthening procedures• Civil society: community engagement in decisions and

implementation, more options

What Are We Doing?At Ground Level

Reach• Limited reach of improved governance• Scale of intervention vs. scale of sector

Reputation • What is a “responsible” mining company?• Who do we not work with?

Results• Expectations and needs of Congolese• Does business-NGO partnership add value?• No excuses

Security• Security issues loom larger in fragile states• Legacy conflicts, regional context

Spoilers• Not everyone wants to see this succeed

What Is At Stake?“Eyes Wide Open” About Risks

Commitment to practical implementation• OECD• Global Compact• Equator Principles• Voluntary Principles on Security and Human Rights• Extractive Industries Transparency Initiative

“Desk-top” due diligence to assess reputational risk

Field-based due diligence—on the ground

Ongoing performance reviews• Validation of sincerity of purpose• Validation of implementation performance

Due DiligenceAn Ongoing Process

Community improvements• Direct benefits from mining in communities• Expanded livelihoods and SME development

Sustained investments• Mechanism to ensure transparent, collaborative,

sustained community investments• Royalty revenues support public services and

administration (e.g., school, hospitals)

Capability• Pact roles sustained over time in community

organizations, foundations, and business approaches

• Practices influence sector more broadly• Reduced influence of entrenched interests

What Does Success Look Like?Indicators We’re on the Right Path

Resource context• Resources found in difficult places• Global demand growing (incentives to find and

produce)• Gloomy peace prospects if we can’t get this right

Limited government capacity• Civil society and business bring relevant

capabilities and presence to help• No single sector can address range of issues

Significance of business activity• Scale and scope of reach and influence• Skills

Why Does This Matter?Local and Global Implications