Mining - Governance, New Regulation and Development

Governance, New Regulation and Development

New regulation and process of legislative reforms aims to enrich the harmonization and stability of the mining sector in mineral-rich countries. The new legislation for mining industry in the African countries still appears as an emerging issue with a potential to be solved, until a consensus is reached on the best approach. By the beginning of 20th century the booming and more complex mining sector in mineral-rich countries provided only slight benefits to local communities in terms of sustainability. Increasing debates and influence by NGOs and communities appealed for a new program which would have had included also a disadvantaged communities, and would have had worked towards sustainable development even after mine closure (included transparency and revenue management). By the early 2000s, community development issues and resettlements became mainstreamed in Bank mining projects. Mining-industry expansion after an increase of mineral prices in 2003 and also potential fiscal revenues in those countries created an omission in the other economic sectors in terms of finances and development. Furthermore, it had highlighted regional and local demand of mining-revenues and lack of ability of sub-national governments to use the revenues.

In 2007 the Extractive Industries Transparency Initiative (EITI) was mainstreamed in all countries cooperating with the World Bank in mining industry reform. The EITI is operating and implementing with a support of EITI Multi-Donor Trust Fund, managed by The World Bank. The Extractive Industries Transparency Initiative (EITI) aims to increase transparency in transactions between governments and companies within extractive industries by monitoring the revenues and benefits between industries and recipient governments. The entrance process is voluntary for each country and is being monitored by multi-stakeholders involving government, private companies and civil society representatives, responsible for disclosure and dissemination of the reconciliation report; however, the competitive disadvantage of company-by company public report is for some of the businesses in Ghana, the main constraint. Therefore, the outcome assessment in terms of failure or success of the new EITI regulation does not only "rest on the government's shoulders" but also on civil society and companies.

On the other hand, criticism points out two main implementation issues; inclusion or exclusion of artisanal mining and small-scale mining (ASM) from the EITI and how to deal with “non-cash” payments made by companies to subnational governments. Furthermore, disproportion of the revenues mining industry creates to the comparatively small number of people that it employs, causes another controversy. The issue of artisanal mining is clearly an issue in EITI Countries such as the Central African Republic, D.R. Congo, Guinea, Liberia and Sierra Leone – i.e. almost half of the mining countries implementing the EITI. Among other things, limited scope of the EITI involving disparity in terms of knowledge of the industry and negotiation skills, thus far flexibility of the policy (e.g. liberty of the countries to expand beyond the minimum requirements and adapt it to their needs), creates another risk of unsuccessful implementation. Public awareness increase, where government should act as a bridge between public and initiative for a successful outcome of the policy is an important element to be considered.