Challenges & Opportunities
Contents
- I. Introduction
- 1. Why a Source Book?
- 2. Opportunities and Challenges
- 3. The Extractive Industries
- II. Cross-Cutting Topics
- 4. Transparency and Accountability
- III. The Extractive Industries Value Chain
- 5. Policy, Legal and Contractual Framework
- 6. Sector Organization and Institutions
- 7. Fiscal Design and Administration
- 8. Revenue Management and Distribution
- 9. Sustainable Development
Directory
Downloads:
- Extractive Industries Source Book narrative text:
- Chapter 2. Opportunities and Challenges – pdf (to follow);
- Chapter 2.1 The Opportunities from Resource Wealth – pdf (to follow); and
- Chapter 2.2 The Challenges - pdf (to follow).
- There are 64 different resources (downloads and external links to downloads) within Chapter 2, Opportunities and Challenges and as of the end of February 2016. Further downloads relevant to the concept of Opportunities and Challenges may be found throughout the website.
Fundamental issues of consent and accountability:
- Mining Specifics, Chapter 1: Free and Prior Informed Consent; and
- Mining Specifics, Chapter 4: Argentine accountability and transparency case study.
Links:
- Mining Specifics, Chapter 2:
- ASM Cost Benefit Analysis;
- Challenge of negative ASM perceptions - and reality, to some extent; and
- Challenge of ASM formalization.
- Mining Specifics, Chapter 3: Documenting the ASM sector, meeting the Challenge of providing a library of resources for this under-recorded sector, that is replete with both opportunities and challenges; Library of 61 ASM resources.
Focus on Petroleum:
- Oil and Gas Specifics, Chapter 1: Mozambican user perspective;
- Oil and Gas Specifics, Chapter 2: International Tax and Investment Center (ITIC) six Principles for Developing Country Hydrocarbon Investment Policies:
- Oil and Gas Specifics, Chapter 3: World Bank video - the Challenges & Opportunities of Ending Gas Flaring; and
- Oil and Gas Specifics, Chapter 4: Burmese accountability and transparency case study.
In more detail; focus on Artisanal & Small-scale Mining (ASM):
Box 1: Re-framing the ASM debate: its integration into the EI Value Chain
Policy comprehensions of artisanal and small-scale mining (ASM) have undergone several articulations over the last fifty years. In particular understandings of what constitutes ASM, how it is organized, and what type of activity it constitutes. These understandings have had significant impacts thus on approaches towards resolving challenges facing this mineral sub-sector. These shifts in policy articulations of ASM have generally corresponded to specific political and economic global periods.
Pelon and Martel-Jantin (2007) propose that since the post-colonial period, the position of ASM within mineral policy has transitioned from one of “isolation” to that of “integration”. Such a transition was evidenced firstly by a firmer inclusion of ASM in national mineral legislation and policy starting in the late 1980s and into the mid- 1990s. This legislative reform focus was accompanied in several circumstances with technical assistance, such as small grant programs or credit and loan schemes to establish more viable small-scale mining operations. Furthermore, specific ASM government departments or agencies typically under the umbrella of the Ministry concerned with mining were established or further support to provide advisory and technical services to artisanal and small-scale operators.
Such a mineral development-centered approach towards ASM further evolved in the late 1990s to one of poverty-alleviation and development (Pelon and Martel-Jantin, 2007). This approach took advantage of the Millennium Development Goal (MDG) framework. By aligning ASM more closely to the poverty-alleviation agenda, ASM support strategies changed significantly. Non-governmental organisations and even large-scale mining companies became more critical agents of intervention with reduced visibility of government institutions. Issues such as ‘fair trade minerals’ and conflict management between ASM and large scale mining operations were critically raised alongside concerns over child labour reduction and women’s socio economic disenfranchisement (Pelon and Martel-Jantin, 2007). Earlier concerns from the 1970s and 1980s such as improving environmental standards, appropriate technology, security of tenure, and access to finance remained highlighted agenda items. It was also an era in which the World Bank hosted a multi-donor trust fund for ASM, called Communities and Small-Scale Mining (CASM). Author of this text box: Rachel Perks, World Bank).
Box 2: Opportunities generated by ASM
What might be some of the political economic opportunities at present that find alignment with ASM?
Job creation: the global employment gap has renewed discussions on how jobs are defined and created. Of note in these discussions is evidence of the predominance of the informal sector as a main arena for employment at present. ASM has grown from 10 million in 1999 (ILO, 1999) to potentially upwards of 20-30 million (IIED, 2013). This increase, largely still in informality, provides a rich policy ground for promoting a good job agenda. This agenda focuses on making available the necessary knowledge and technological resources to increase productivity coupled with provision of social protection and fair labour standards at the workplace.
Rural development: linked to the job agenda is ASM’s added value as part of rural livelihood diversification strategies (Hilson and Banchirigah, 2010; Maconachie and Hilson, 2011; Hilson 2011), meaning the manner in which ASM is pursued alongside other income opportunities by individuals and families. Development research has demonstrated how ASM assists rural households in building more dynamic and resilient livelihood strategies portfolios by, for instance, ‘dovetailing’ ASM and farming economies. It furthermore more is a stimulus for trade and subsidiary business development around mine sites just as evidence in industrial or larger-scale mining operations. The question of linkages—how mining interplays with other aspects of local economies—and how to promote better integrated rural development strategies to capture mineral benefit distribution is equally an important question when concerned with ASM.
Renewed bi-lateral partnerships to assist national governments in ASM formalization: the work of CASM and its partners over the last decade helped in generating a perceptible increase in national governments country demands for ASM technical assistance programs (Source: CASM Evaluation). This entails further capacity building programs by international financial institutions and bilateral partners to address outstanding constraints facing ASM in mineral development. For instance, seven countries have specific ASM pillars in active World Bank projects. The Africa Governance Initiative provides national government with mining experts to build internal ministry capacity, including issues to do with ASM in such countries as Rwanda. The International Finance Corporation is extending its business advisory service tools to include an ASM checklist for baseline studies for its investment partners. The Kimberley Process adopted in 2012 an “ASM for Development” framework, to be implemented by its member states. The African Union recognized ASM formalization as one of its six areas of engagement under its 2011 Africa Mining Vision. Other bilateral partners include GIZ, AusAid and CIDA, who work not only with national governments but equally with NGOs in addition to regional governmental institutions.
Market linkages: the International Institute for Environment and Development (IIED) estimates that 15-20 per cent of global minerals and metals derive from ASM (IIED, 2013). Though globalization of mining processes is not new, it has led to new sourcing of raw materials in resource-rich but also more isolated areas of sub-Saharan Africa, Latin and South America, and South East Asia. This more pronounced penetration of mineral buyers and small investors into isolated regions of the world gives rise to further concerns over how ASM is both impacted by these markets demands, and accordingly responds. Piloted efforts to model clean supply chains, or fair trade minerals, are re-emerging as a means to diffuse the principle of responsibility across the supply chain—whether companies, manufacturers, smelters, buyers and traders, and national governments. It is yet however to be seen whether such initiatives will be capable of driving deep structural change needed to the sector, as noted in the formalization framework.
Natural resource management and biodiversity: The global rise in specific mineral prices, such as gold, has precipitated recent pockets of mining rushes worldwide. Some of these environments include previously untouched places that are ecologically-sensitive, including protected areas and critical ecosystems such as artic landscapes (Greenland), tropical rainforests (Brazil and Gabon), and coral reefs (Philippines). Environmental impacts of mining methods—such as clear-cutting forests, river dredging, or use of toxic chemicals—are compounded by livelihood practices that support mining populations—gathering firewood, hunting for food or trade of goods. Furthermore on a global scale, artisanal and small-scale forms of gold production remain the biggest environmental challenge due to mercury use. The recent UN Treaty to further limit and in some cases ban mercury use in-countries presents a renewed opportunity to tackle its use in ASM. However the environmental agenda surrounding ASM must be integrated into broader governance discussions as often environmental degradation caused by ASM occurs within a vacuum of government regulation and presence.
The Source Book has a hyperlinked list of its ASM downloads; there are currently (as of 12.12.14) 50 documents in this listing, located at the Mining Specifics section of Chapter 3. The final document on this list, uploaded in September 2013, is the knowledge product on ASM issues commissioned by the Source Book: ASM Price Volatility & Price Risk.
Box: 3 Transfers, Subsidies and Marginalization
To the extent that governments derive large mineral rents or control the production directly, they may be in a position to avoid the politically sensitive task of taxing their population (Dunning 2008) and be able to make transfers to large segments of the population to secure the legitimacy of the regime (Anderson 1987; Crystal 1995). Furthermore, transfers and subsidies are often used to depolitize groups, erode social capital, and neutralize demands for accountability (de Soares 2007).
The reliance of rents is associated with weak agencies of restraint such as the Parliament, judiciary, anti-corruption and ombudsmen institutions (Eifert et al. 2002), which are frequently marginalized from decisions concerning the sector (Ross 2008).