Naito - Global Trends in Legal Frameworks, in Review of Legal Fiscal Frameworks

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Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Naito, K., Remy, F., and Williams, P., Global Trends in Legal Frameworks, in Review of Legal and Fiscal Frameworks for Exploration and Mining, (London, UK: World Bank Group Mining Department, Mining Journal Books Ltd, 2001)

The section takes stock of the global trends in legal frameworks and examines the evolution of the role of the state in mineral rights management post World War II.

Using key examples from Asia, Africa and Latin America, the authors provide a historical basis for the decline of the state as producer. Several of these countries distinguished themselves at the outset by taking approaches geared towards creating the necessary conditions to enable private sector participation in order to develop their mineral resources. Chile is touted as being such a pioneer in Latin America with the development of its Mining Code in 1983. In Asia (Indonesia and Papua New Guinea) and in Africa (Botswana in 1976 and Ghana in 1986), countries promoted new laws that paved way for increased private sector participating and provided the opportunity for private investors to play lead roles in mineral resource development in their various host countries. The role of the state was no longer sustainable in the development of the mineral sector; the authors attribute this to the inability of state owned companies to grow internally due to insufficient capital, low profitability, insufficient corporate status, lack of investment in exploration and modernized equipment and so on.

In facilitating change, therefore, the work urges countries to address those issues in their newly established mining laws and the focus is on such topics as non-discriminatory treatment of foreign investors (compared with national investors), free access to all sectors of the economy, and minimum intervention by government in investor activities. The Chilean law, for instance, is touted as being the most successful example; some distinguishing features of the Chilean framework include: the ability of concession holders to freely transfer their rights without prior government approval (this was as a result of the concessions being granted as real property rights); the awarding of concessions based on the “first come, first served” principle (enhancing transparency); most glaring is that restrictions on eligibility are minimal with no requirement to demonstrate technical or financial capability. The Chilean system, thus, was geared towards creating a complete liberalized market for mineral rights characterized by transparency. But this model was backed up by strong institutional structures such as a modernized mining cadastre which provides accurate information concerning mineral resources and concessionaires among other benefits.

Altogether, the various country examples presented all involve reforms that in some way or another provide for a thriving private sector. Some being for more expansive than others and all with varying degrees of success. The result has been that over time some countries have amended their mining laws and regulations in order to be more inclusive; for example, the trend in some African nations (particularly Tanzania, Burkina Faso and Mali) has been to reduce the discretion of the administrative authorities in order to create a more transparent granting process; this has had the effect of elevating these nations as new mining investment destinations.

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