east asia science and security experts working group meeting september 22, 2010 beijing, prc

EAST ASIA SCIENCE AND SECURITY EAST ASIA SCIENCE AND SECURITY

EXPERTS WORKING GROUP MEETINGEXPERTS WORKING GROUP MEETING September 22, 2010September 22, 2010

Beijing, PRCBeijing, PRC

Minerals, Development and Local Minerals, Development and Local Communities: Approaches and Case Studies Communities: Approaches and Case Studies

from Asiafrom Asia

ByBy

Allen L. ClarkAllen L. Clark

East-West CenterEast-West Center

Asia mineral developmentAsia mineral development– Focused on the “New Frontier Nations”Focused on the “New Frontier Nations”

• High impact on remote areas/communitiesHigh impact on remote areas/communities– Evolving/incomplete mineral policy and Evolving/incomplete mineral policy and legislationlegislation

• Twelve nations with new legislation in last 8 yearsTwelve nations with new legislation in last 8 years• Most use some form of a negotiated mineral Most use some form of a negotiated mineral agreementagreement• No linkages across sectors No linkages across sectors

– Lack of environment and social/cultural Lack of environment and social/cultural policy,policy, legislation and administrative guidelines.legislation and administrative guidelines.

• Community based mineral development is largely Community based mineral development is largely ad hoc, guided by industry and impacted by ad hoc, guided by industry and impacted by multiple external stakeholders multiple external stakeholders (NGO’s/IDB’s/UN/NGO’s/AID)(NGO’s/IDB’s/UN/NGO’s/AID)

– Increasingly important role of the private Increasingly important role of the private sectorsector

• Role and “modus operandi” of mineral industry is Role and “modus operandi” of mineral industry is poorly poorly understoodunderstood• High levels of mistrust, confusion, uncertainity.High levels of mistrust, confusion, uncertainity.

ENERGY AND MINERALS EXPERTS WORKING GROUP MEETING

Asia Mineral Development (Cont)Asia Mineral Development (Cont)– Inadequate institutional capacity to Inadequate institutional capacity to effectivelyeffectively

administrate and/or manage mineral administrate and/or manage mineral developmentdevelopment

• Virtually no social scientists on staffVirtually no social scientists on staff– Competition between national to local Competition between national to local

levels oflevels of

government and associated governmentgovernment and associated government

agenciesagencies

• Lack of inter-ministerial cooperationLack of inter-ministerial cooperation

• “ “Alternative” permissionsAlternative” permissions

• Abdication or responsibilityAbdication or responsibility



Legal Components and Community Agreements

• International Treaties and Accords• Universal Declaration of Human Rights; International Dispute Resolution Conventions; Other relevant Treaties/Conventions

• National law:• Constitution; National mining regime (Laws; Implementing Rules and Regulations; Decrees; Orders; Guidelines)

• Other National Laws/Regulations •Revenue sharing; Foreign Investment; Dispute Resolution; Cultural Protection; Environment: (land, water, forest) Contingent liability.

• Corporate Headquarters Country Legal Requirements• Vicarious Liability/Respondeat Superior (Employer/employee responsibility); Alien Tort Claims Act; Unfair Practices Acts; Anti-corruption/ Foreign Corrupt Practices laws.


Legal Components and Community Agreements (Cont)

• Governing legal instruments• Community Impact and Benefit Agreements; Industrial and Employment Agreements; Joint venture, financing, contract and leasing agreements; Investment guarantee policies; Internal corporate policies of all other companies and contractors.

• Non-binding Advisory Panel Bylaws • Community development association or other advisory association or board; Environmental advisory committees; any other relevant advisory committee rules especially those created by contract.

• Extra-jurisdictional requirement• Equator Principles (now subscribed to by over 60 major companies); Voluntary Principles on Security and Human Rights; United Nations Global Compact; and corporations individual internal standards and guidelines.

A comprehensive legal structure and an agreed upon set of practices and standards for socially responsible mineral development, meeting national, investor and community needs, is the primary challenge facing mineral development in Asia today.

Mining and Communities – Asia’s Mining and Communities – Asia’s ChallengeChallenge


Case HistoriesCase Histories Bougainville, Papua New Guinea – An old mineBougainville, Papua New Guinea – An old mine

in a newly independent developing nation. in a newly independent developing nation. Kumtor, Kyrgyrz Republic – A large depositKumtor, Kyrgyrz Republic – A large deposit

being mined in a newly emerging CAR nation.being mined in a newly emerging CAR nation. Sepong, Lao PDR – A new mine in a smallSepong, Lao PDR – A new mine in a small

transitional nation of ASEANtransitional nation of ASEAN Voisey Bay, Canada – From exploration toVoisey Bay, Canada – From exploration to

mining in a developed mining countrymining in a developed mining country Tampakan, Philippines A prospective mine in aTampakan, Philippines A prospective mine in a

developed ASEAN nation. developed ASEAN nation.


Bougainville – Papua New Bougainville – Papua New GuineaGuinea

(Before)(Before)


Bougainville – Papua New GuineaBougainville – Papua New GuineaTime frameTime frame

– 1963 CRA granted prospecting Authority1963 CRA granted prospecting Authority

– 1969 Bougainville Copper granted Special Mining 1969 Bougainville Copper granted Special Mining LeaseLease– 1972 Mine starts production1972 Mine starts production– 1974 1974 Renegotiation of Bougainville Copper Renegotiation of Bougainville Copper AgreementAgreement– 1979 -19811979 -1981 Landowners riot/villager unrestLandowners riot/villager unrest– 1988 - New compensation demands – Autonomy1988 - New compensation demands – Autonomy– 1989 Mine closes1989 Mine closes– 1990-1996 Civil War between PNG and BgnVl Res 1990-1996 Civil War between PNG and BgnVl Res ArmyArmy– 1997 Executive Outcomes1997 Executive Outcomes– 2000 Peace Accord – formation of BAR2000 Peace Accord – formation of BAR– 2005 First elections held for Gov. of BAR2005 First elections held for Gov. of BAR– 2010 2010 – – New elected Government – reopen New elected Government – reopen Bougainville Bougainville

Mine (?)Mine (?)


Kumtor – Kyrgyz RepublicKumtor – Kyrgyz Republic


Kumtor Mine

Kumtor – Kyrgyz RepublicKumtor – Kyrgyz RepublicTime frameTime frame

– 1978 – Deposit discovered by Russian Geophysical 1978 – Deposit discovered by Russian Geophysical expeditionexpedition– 1988 - Soviet specialists view mine as non-commercial1988 - Soviet specialists view mine as non-commercial– 1992 Negotiations begin with Cameco 1992 Negotiations begin with Cameco – 1993-1994 Feasibility study1993-1994 Feasibility study– 1994 Agreement signed (41994 Agreement signed (4% of profits to the local % of profits to the local Government)Government)

– 1998 1998 Cyanide spill – local unrestCyanide spill – local unrest– 2002 Kyrgyz worker killed in mine wall collapse – local 2002 Kyrgyz worker killed in mine wall collapse – local unrestunrest– 2004 IFC sells holdings in Kumtor2004 IFC sells holdings in Kumtor– 2007 2007 Government considers nationalization of Kumtor –Government considers nationalization of Kumtor –

protests by Kumtor mining communityprotests by Kumtor mining community– 2007 Villagers blockade road over environment/work 2007 Villagers blockade road over environment/work issuesissues– 2008 Kyrgyz Financial police raid Kumtor offices2008 Kyrgyz Financial police raid Kumtor offices– 2009 New Terms Agreement signed for future mining2009 New Terms Agreement signed for future mining– 2009 Cameco transfers all rights to Kyrgyzaltyn JSC2009 Cameco transfers all rights to Kyrgyzaltyn JSC


Sepong - Lao PDRSepong - Lao PDR


Sepong - Lao PDRSepong - Lao PDR

Time frameTime frame

– September 2001 Gold Feasibility StudySeptember 2001 Gold Feasibility Study– October 2001October 2001 Gold Environmental and SocialGold Environmental and Social

Impact Assessment (ESIA)Impact Assessment (ESIA)– October 2002 Copper Feasibility StudyOctober 2002 Copper Feasibility Study– November 2002 Copper ESIA AddendumNovember 2002 Copper ESIA Addendum– December 2002 First gold pouredDecember 2002 First gold poured– December 2003December 2003 Gold expansion Feasibility Gold expansion Feasibility Study Study

and ESIA Addendumand ESIA Addendum– December 2004 Gold production expansionDecember 2004 Gold production expansion

- March 2005 Copper Project to be in - March 2005 Copper Project to be in productionproduction– April 2010 –April 2010 – Mine sold to MinMetals of ChinaMine sold to MinMetals of China


Sepong - The role of the IFCSepong - The role of the IFCOriginal ESIA (2001) prepared by Oxiana, with IFC Original ESIA (2001) prepared by Oxiana, with IFC guidelines and reviewed independently by State guidelines and reviewed independently by State Technology and Environment Agency (STEA) Technology and Environment Agency (STEA) resulting in following changes: resulting in following changes:

• Early preparation of a Resettlement Action PlanEarly preparation of a Resettlement Action Plan

• Formalization of the Public Consultation and Formalization of the Public Consultation and

Disclosure Plan (PCDP)Disclosure Plan (PCDP)

• Establishment of a Trust Fund for CommunityEstablishment of a Trust Fund for Community

DevelopmentDevelopment

• Development of a Community/Indigenous PeoplesDevelopment of a Community/Indigenous Peoples

Development Plan (C/IPDP).Development Plan (C/IPDP).– Establishment of a trust fund – A means to keep social Establishment of a trust fund – A means to keep social services within the purview of local government, rather services within the purview of local government, rather than the mine, while implementing the programs within the than the mine, while implementing the programs within the C/IPDP. C/IPDP.


Case History Lessons LearnedCase History Lessons Learned1.1. Existing national policy and legislation is inadequate to Existing national policy and legislation is inadequate to

guide social and community development.guide social and community development.2.2. In the absence of national policy and legislation commit to In the absence of national policy and legislation commit to

the development of environmental and social codes the development of environmental and social codes consistent with the best and most appropriate standardsconsistent with the best and most appropriate standards

3.3. Its never to early to start the process to acquire a “social Its never to early to start the process to acquire a “social license to Mine”license to Mine”

4.4. Government agencies, at all levels, are inadequately Government agencies, at all levels, are inadequately staffed to administrate social and community projects staffed to administrate social and community projects

5.5. There is no “one size fits all” for social and community There is no “one size fits all” for social and community development programs.development programs.

6.6. Social and community programs must be directed to Social and community programs must be directed to sustainability and not dependency.sustainability and not dependency.

7.7. Community perception of a mine and its role in community Community perception of a mine and its role in community development changes over time and generations.development changes over time and generations.

8.8. Environmental degradation is the most common “trigger” Environmental degradation is the most common “trigger” of social and community dissatisfaction.of social and community dissatisfaction.

9.9. Successful social and community development programs Successful social and community development programs are dependent on:are dependent on:1.1. maintaining an absolute commitment to public consultation maintaining an absolute commitment to public consultation

and involvement of the local community in the development and involvement of the local community in the development and implementation of social and community programs.and implementation of social and community programs.

2.2. an ability to listen, to be flexible, to have an absolute an ability to listen, to be flexible, to have an absolute commitment at the highest levels in the organization and hard commitment at the highest levels in the organization and hard work. work.


Generic History of Community DevelopmentGeneric History of Community Development• Years 1-3: Years 1-3: Pre-development phase:Pre-development phase: ESIA preformed to ESIA preformed to assess the impact of the mine on the environment and assess the impact of the mine on the environment and local communities and propose means of mitigation local communities and propose means of mitigation and/or remediation. – little or no concept of the “reality and/or remediation. – little or no concept of the “reality of the mine”.of the mine”.

• Years 4-8: Years 4-8: Development to productionDevelopment to production – Community – Community programs initiated creating “haves and have not’s” and programs initiated creating “haves and have not’s” and new demands arise. A partial concept of the “reality of new demands arise. A partial concept of the “reality of the mine” emerges”the mine” emerges”

• Years -9-13: Years -9-13: Operational MineOperational Mine – Community programs – Community programs modified and expanded with greater participation of the modified and expanded with greater participation of the community and external stakeholders; environmental community and external stakeholders; environmental impacts increase and resource rent distribution issues impacts increase and resource rent distribution issues become critical. The “reality of the mine” becomes clear. become critical. The “reality of the mine” becomes clear.

• Years 13-15 Years 13-15 Mine ExpansionMine Expansion – Community expectations – Community expectations change, increase and divisions within the community, change, increase and divisions within the community, with government and with industry emerge. Adequacy of with government and with industry emerge. Adequacy of community programs become and issue. The “reality of community programs become and issue. The “reality of the mine” becomes a negative.the mine” becomes a negative.


Generic History of Community Development Generic History of Community Development (Cont.)(Cont.)• Years 15-25 : Years 15-25 : Pre-closing phase:Pre-closing phase: The “inter- The “inter-generational” phase of community programs generational” phase of community programs characterized discontent past and present programs, characterized discontent past and present programs, increased demand for increased funding and concerns re increased demand for increased funding and concerns re mine closure and sustainability. Invariably the “reality of mine closure and sustainability. Invariably the “reality of the mine” is negative.the mine” is negative.

• Years 26-30: Years 26-30: Mine closureMine closure – With mine closure adverse – With mine closure adverse social impacts arise (unemployment, social unrest); social impacts arise (unemployment, social unrest); environmental issue become critical (and many unmet) environmental issue become critical (and many unmet) and issues of sustainability become paramount. and issues of sustainability become paramount. Contingent liabilities are left unmet. The “reality of the Contingent liabilities are left unmet. The “reality of the impact” becomes a legacy.impact” becomes a legacy.


Sepon – Basic PrinciplesSepon – Basic Principles– Communicate, spend time listening not Communicate, spend time listening not talking.talking.– Use appropriate communication media, Use appropriate communication media, includingincluding the best translators available.the best translators available.– Use local knowledge and resources if Use local knowledge and resources if possible possible – Break complex issues into simple steps.Break complex issues into simple steps.– Be prepared to explain time after time.Be prepared to explain time after time.– Be prepared to say no – with a reason.Be prepared to say no – with a reason.– Understand community structures and Understand community structures and culturalcultural expectations.expectations.– Understand social contexts (Gender, Understand social contexts (Gender, ethnicity)ethnicity)– Understand and respect all stakeholders.Understand and respect all stakeholders.– Address every issue.Address every issue.– Deliver on promises.Deliver on promises.– Be absolutely committed.Be absolutely committed.


east asia science and security experts working group meeting september 22, 2010 beijing, prc

Documents

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