Rights and Resources in Global Mining – Andy White
This is the transcript of an interview between Future Challenges Regional Editor Lourdes Gomez and Andy White, the Director of Washington-based Rights and Resources Initiative. It’s part of our Lead Article “A Zero-Sum Game?” The article deals with the following question: Rapid globalisation makes competition for land, raw materials and other resources intense. When the stakes are so high, can rural, indigenous peoples and urban, industrialised communities both benefit from resource extraction? Or is this situation a zero-sum game?
Rapid globalisation makes competition for land, raw materials and other resources intense. When the stakes are so high, can rural, indigenous peoples and urban, industrialised communities both benefit from resource extraction? Or is this situation a zero sum game?
I think they can definitely benefit, both directly and indirectly. Directly they can benefit from either revenues and incomes or the social and political development that can come with sound development. But of course that’s not always what happens, or frequently that does not happen. I don’t see it as a zero sum game, I think it’s a challenge that can be managed for the betterment of both local and global citizens as well as the company.
With more discussion, this issue emerges as a much more complex and multi-layered one. It has many levels; national and international, it has many players and it has many influences both internal and external, as Andy White discusses with me further…
Well, there’s a third major player in this match, and that is the government itself. Frequently, the government inappropriately sides with the investor without adequately protecting the rights of its citizens, so ensuring that governments play the right role is important as well and critical. Let me put it this way: It’s difficult for the investor alone to do the right thing, or do enough of the right things, and do all that is required.
Of course protecting the rights of citizens, ensuring national and international standards are followed, that there’s independent monitoring; all of that is not the role or job or expertise of the firm itself. They need to implement these, but it’s not their primary responsibility to understand the rules and obey them – well, certainly it is their responsibility to obey them, but not to proactively seek out and independently verify (that these standards are being met). I think it’s critical that the governments play their role, and frequently that is the weakest link. When the governments aren’t there to play their role, then there are plenty of private sector investors that are happy to abuse the relatively lawless situation. And of course there are many good actors, but there are a lot of actors that are eager to take advantage of the poor governance. What can be done by the private sector is to adhere to the high standards of free, prior informed consent. They can respect property rights, ensure sincere consultation and participation in the advisory (work) and the governance of the business in the local area.
I think there’s emerging best practice. There are some people over at the IFC (International Finance Corporation) that run a program that identifies and tries to encourage best practice investors in the mining sector, and they regularly do conferences etc.
Greater governance and sincere consultation with local communities are key steps towards reducing risk and avoiding escalation of conflict in communities impacted by infrastructure/mining projects – but what does this look like in real terms?
So there’s an emerging body of knowledge, it’s just frequently not implemented because governments don’t play their role, indigenous people aren’t really fully aware of their rights and what tools they have access to, and companies are either ignorant or unwilling to apply these models.
You would recommend that government play a stronger role in bringing these two parties “to the table”, as it were?
Absolutely. And also, first, make sure that everyone understands what the standards and the legal obligations are. Secondly, ensure that there is some independent verification of performance and compliance that is both independent and balanced. Of course governments are very eager for the revenues. We understand that, and they have to put their national good in mind – or perhaps I’m being too generous; they often do. There’s also local corruption, which is frequently the case in these mining operations. All these natural resource investments take place in rural areas where governance is weak and in countries where governance is weak, so corruption is frequently a problem. The governments can require transparency, adopt the EITI (extractive industries transparency initiative), they can require that all investors do so, they can ensure that there’s independent monitoring of compliance; there’s lots that governments can do. I think there’s a valid argument now that the demand is so great, and supply is so relatively limited, that investors will invest even with higher standards. There has been a fear in the past, of the race to the bottom – the fear that if one country adopted standards then the investor would run off to another country. I think, and I’ve seen evidence in the market research recently, that that’s no longer happening. I just read an article yesterday in a mining magazine that was saying that Newmont that was going into Haiti. Apparently they’d said “look, you know, the governance here is lousy, but look, the geology is great, so we’re still gonna go in.” It’s hard to find a more messed up place than Haiti.
So in these kinds of situations, what can the global community do to ensure best practice? Are there any frameworks that you would recommend or any actions that you would recommend to ensure that best practice can be implemented?
I think initiatives like EITI and Publish What You Pay are critical, and I think increasingly governments can use their purchasing power and their own rules to ensure that they don’t import illegal minerals, just like they don’t import illegal wood or other products and use them in their public purchasing. So there are two steps there: one, ensuring legal minerals and that mining adheres to highest standards; and secondly, use purchasing power of governments so that governments don’t buy illegal or unsustainable – or socially unsustainable – minerals. Those are two major levers that have not really been applied yet in the mining sector, and I think it should be considered.
What do you think about the current system in terms of international frameworks on best practices, does it take enough into account the interests of indigenous or forest or tribal communities?
No. Absolutely not. And the key problem is that in many of these countries, the land rights and the resources rights of the indigenous tribal communities are not yet formally recognized. They’re not recognized by all governments and actually implemented. So as you know, in many of these countries most mining now takes places in rural or remote areas. Those are the same areas where many indigenous and other rural, usually politically-marginal people live and have lived for millennia. But in many of these countries, the governments still claim that land as government land and the resources as government-owned resources, even though they’ve signed international conventions that say that they need to respect the rights of indigenous communities. Many countries have not yet done even that, but it’s actually a mixed bag: in some countries there are parts of the government, like the ministry of cultural affairs or something, they might have a rule or a law that says there must be consultation, but the ministry of mining might not follow that rule. So there are a lot of internal inconsistencies within governments as well.
According to Andy White, there are definite benefits to be had by all parties but there must be proper and sincere consultation with local communities and particularly, the terms of how these projects are carried out may not be co-ordinated so freely by the firms as is currently conducted.
With greater government involvement, the industry itself can gain a greater sense of accountability and transparency and ultimately perform much more effectively and avoid significant risks associated with poor performance.
So lack of recognition of rights, lack of knowledge of recognition, and lack of implementation of enforcement and compliance with those rights is a huge, huge problem. And that is indeed the key cause of the conflicts that emerge. The Conga Mine consultation that is ongoing right now in Peru is a great case in point. I think what’s interesting now and why your article is timely, is that these conflicts are reaching a head. They are coming to a greater scale, and that’s both because of increased demand and because of the increased capacity of aboriginal people … (unclear) … they’re more knowledgeable, and they have more access to political opportunities.
I think this is just the tip of iceberg, because neither of the trends is about to slow down, they will only increase. So that’s what we’re witnessing right now. And this is not only bad for indigenous peoples – forced assimilation … (unclear) … (unclear)… it’s also bad for the company and bad for the governments. Companies risk losing lots of money, so there’s not only moral or ethical issues here but for companies there’s financial and reputational risk issues that I think are awfully underestimated.
Governments too face major political risks. Again, I don’t know if you’re following the cases ongoing now in Peru … (unclear) … the government and the newly elected president. In Bolivia last year when there was a road that was … (unclear) … It was a major political fiasco for the government of Evo Morales. So this is not only bad for local people – of course they’re the ones that suffer most personally – but this is a no-win situation, this current business-as-usual. This is a no-win situation for governments or global investors in mining and other infrastructure projects.
I guess a second important thing to keep in mind from my perspective is that the impacts on local people are not only in the direct footprint of the mine. They’re also directly impacted by the road or the rail that are on the way to the mine, or from the mine to the port. That’s often a whole other set of people that are frequently not considered. The roads and rail and infrastructure of the operations themselves often create tremendous damage, and not only indirect environmental damage but also social-political disruption that can transform those communities. In addition to those direct impacts beyond the footprint, for all of those people both in the direct site and on the road to the site, investment in mining has tremendous social, economic and political impacts. It’s really transformative on health, etc., etc. It’s really completely transformative and it’s not only in the direct site where the mine takes place.
Actually, that makes me question … you mentioned before there’s a kind of forced assimilation of indigenous tribal communities into what we would classify as a modern Western lifestyle, and one of my questions would be: How would you demonstrate, or how would you propose, that we can benefit from saving indigenous and tribal communities for the future of our planet?
From my perspective, there’s certain skills, knowledge and understanding of the environment and ecology and even social ordering that indigenous tribal communities have, and that we may not be recognizing because of this forced assimilation or this project of rapid urbanization. How would you promote that these skills and knowledge be adopted?
Two fronts. #1 – much more direct interaction and consultation between communities and the investors and company officials about the bigger and broader implications. Frequently, my read is that the company officials talk about the more direct impacts and are knowledgeable about the more direct impacts, but not the broader social/political effects of the new investment. What will it mean? Either they don’t know or perhaps are not honest about the transformation that is likely to take place. So #1 is much more consultation and consideration of the bigger, broader transformation and making adjustments – considering opinions about that and making adjustments.
According to Andy White, there are definite benefits to be had by all parties involved. It is not only necessary but also absolutely realistic to think critically about what “benefits” means in the broader objective of reaching “sustainable development.” Does this mean we abandon the “development project”?
In my experience, many local people want some kind of development, unless they are completely uncontacted. It’s not like they don’t want a microwave oven or electricity, but of course on their terms and their way and at their rate. So they are not opposed to a job for their kid, school for their little girl. Some are, but most are not. It’s not like they are anti-development, they just want consultation and more on their terms. This is my opinion; I don’t represent them. That’s my reading of how things are. So the question is not what to do, but at what pace, and their role in the design and decision-making of this social transformation that’s taking place.
I think one thing that’s critical and that can be done much, much better is that direct consultation – regular, sincere consultation about not only the direct “OK, here’s where we are going to put the road, what do you think?” but about the transformation that’s taking place. And advisory bodies can be established, for example.
The second thing that can be done is to be much more involved, and to provide opportunities for younger people of the local communities for education, for their own pursuits. And of course a third is that – and many operations are already doing this – building schools and clinics and investing sincerely in the social infrastructure that’s necessary. But involving and enabling local youth to develop is also often the critical concern of all families, and particularly important in these remote areas where people have fewer options.
That tended to go into my next question. I did go through the publication Turning Point that was released. In particular, it sparked my interest because it was so well-related to this topic in terms of the long-term future and sustainability of our energy demands and of these communities that are being so largely impacted by those energy demands. I was going to ask: What would be some of the key recommendations that we should all take action on now, every stakeholder involved in the process, to ensure a balanced future?
Much of the investment for mining in particular comes from sovereign wealth funds – the major development banks of China, for example. I think there’s a need for governments themselves – government leaders, the elected leaders – to ensure that their sovereign wealth funds adopt these high-level standards. They need to recognize that no longer are their development agencies their major source of influence in the word. It’s no longer AUSAID, USAID, DFID. It’s not the development agencies that are influencing the world in the greatest way, it’s their purchasing policies and it’s their direct investments with their national pension funds and things like this. So there needs to be a kind of reckoning of the role of that public finance on the lives and livelihoods and ecosystems of the world. And these governments should ensure that their own financial investments adhere to the highest standards. I think that’s the first step, there’s not that reckoning right now. There’s still this delusion that the relatively tiny budgets that we have in public development agencies is how we help the world or affect the world. That’s no longer true, and our sovereign wealth funds, our investments, are often causing damage beyond what is known by our own citizens. They often a bit run amok because there’s not the accountability and the knowledge of how they operate and what standards they use. So I think we need a major new reckoning of the force that we’ve unleashed on the world and how it is transforming the world, and we need to ensure that since they are public – by and large, public – funds, we need to ensure that they adhere to the highest standards and obey the law. I think that’s the first step and I think that’s fairly new. I don’t think that many people are aware of that, or are working on that on the advocacy side. For example, the World Bank is a much smaller player than it ever used to be. The sovereign wealth fund of Brazil is almost twice the size of the whole World Bank, and they’ve become the major investor in roads and mining across South America. I don’t know if the citizens of Brazil are aware of the effect that their own public fund is having on their neighbours.
There’s a major reckoning that needs to take place, and that’s the true force of change now. They need to be held to account. We need the mechanisms of independent monitoring and awareness so that we’re all aware of what they do, and so that they themselves are better aware of what they’re doing. That’s the first place to start, and then getting those investors to adopt higher standards for sure.
Getting governments…there’s not a whole lot of governments in the world that have major mining sectors, it’s not that big. (There should be) more action to get them together. To get the governments to obey and enforce the rules would be a very important second step. Some of them are organized under the EITI, but that’s pretty paltry – it’s never really risen to a very high political level. But again, I think there’s opportunity to do more with that. Some of the major countries like the US or Australia that have major mining sectors can take a stronger leadership role in this. They all have pretty high standards in their own countries, but frequently the companies that are housed in their countries aren’t demonstrating the same respect when they go overseas.
Governance isn’t strictly limited to governments, although they have a strong role to play to uphold regulation and laws and ensuring that investors in any region meet best practice but firms must adhere to laws, local communities must be consulted genuinely and sincerely and the advocacy world must also be smarter about its involvement in this space…
Stronger political commitments from governments themselves are, I think, very important. I think on the NGO advocacy side, maybe we just all need to get a lot smarter and invest more energy in understanding the infrastructure and extractive sectors. There’s a small amount of intelligence and capacity to understand and deal with these. There aren’t that many NGOs that are smart about this and active in this arena, and I think it’s just grown to a level at which we all need to get much more involved and smarter about it. I think this is an issue whose time has come. It’s overdue for us to get more involved and shine a much brighter light on what’s actually going on and what are the good cases, what are the bad cases, and what can be done.