Improving Mining Benefits for Communities

June 15, 2010

When well-managed, solid mineral and hydrocarbon resources offer a real opportunity for countries to achieve sustainable economic growth and reduce poverty.

However, all too often, weak governance and institutions, poor legal frameworks, and insufficient local capacity result in extractive industries not being managed for long-term sustainable development.

In this context communities are arguing for enhanced transparency, accountability, participation, and benefits from mining projects. Likewise, governments are also more interested in seeing how they can further local and sustainable development.

Mining companies are also concerned about the need and means by which to obtain and maintain  their “social license to operate”, including local community support. Various industry-wide initiatives have examined ways by which such support can be proactively obtained and retained, including approaches to help define a company’s role in community development.

These initiatives have resulted in a variety of ad-hoc and voluntary approaches in different countries, but with limited success. Further, while some mining companies make community development a strong priority, others do not.

Given these challenges, the World Bank’s Oil, Gas, and Mining Policy Division (COCPO) is sponsoring the drafting of a Model Community Development Framework for the mining sector to provide stakeholders with key building blocks for a more effective management of mining communities’ development.

As part of a first phase of work, over the past year the World Bank has conducted multi-stakeholder consultations and meetings on the approach and content of such a framework with representatives from governments, private sector, and civil society organizations.

Two open-forum sessions, for instance, were organized this year at the INDABA (Cape Town, South Africa) and PDAC (Toronto, Canada) mining conferences, where attendees offered useful suggestions to improve the Community Development Agreement (CDA) building blocks approach.

A recent consultation in Washington DC on June 2 provided another opportunity to learn about the building blocks of Community Development Agreements.

We anticipate that community development agreements will assist mining stakeholders in clarifying expectations, and in setting a participative and transparent framework with measurable impacts,” said Paulo de Sa, manager of the World Bank’s Oil, Gas and Mining Policy Division, in his introductory remarks at the workshop in Washington, DC. "Communities are arguing
for enhanced transparency, accountability, participation, and benefits from mining projects. So there is demand for better and more effective community agreements.”

Participants from Nigeria, Ghana, Peru, Papua New Guinea, Lao and Canada, as well as representatives of civil society organizations and mining companies, gathered at the World Bank’s headquarters to provide input on several topics, including a possible governance framework for community development impacted by mining, trends around voluntary and mandatory approaches to community development, and content and rationale behind selected building blocks of a community development framework.

First Nations Experience

Canadian First Nations, for instance, have negotiated some 200 “impact and benefits” agreements (a form of CDA) over the last several decades. Relevant lessons were learned by First Nations in the implementation of their respective agreements. Key issues included: the need for integrated land use planning, the training of community persons in specialized skills (capacity building), the importance of recognizing community cultural values and their integration into the community/company relationship, free prior informed consent, generating future sustained income, local procurement and enforceability of the agreements.

Sunrita Sarkar, a senior consultant with Environmental Resource Management, also presented field research on community development practice from Argentina, Ghana, and Papua New Guinea. A common finding, she stressed, is that regardless of whether stakeholders favor a regulated model or not, a Community Development Agreement is crucial in promoting dialogue and building relationships among all stakeholders, which ultimately helps in managing expectations.

Client countries are asking for more assistance in addressing the development of communities impacted by mining, and the World Bank Group has been developing practical voluntary approaches that can be adopted by industry, government and other stakeholders. Examples of this involvement include, but are not limited to, the Equator Principles (lending principles) and the “Community Development Toolkit”, jointly developed and published by the World Bank Group and the International Council on Mining and Metals (ICMM).

Community development agreements (CDAs) are increasingly being used by mining companies as a way to better define their relationships and obligations with impacted communities. And although legislative requirements for CDAs are still relatively rare governments increasingly are considering legislation that would define when such an agreement is required and what subject matter should it cover.

“The ongoing research is not suggesting the existence of a single best practice that can address every issue arising from the complex relationship between communities, mining companies and governments,” explained Boubacar Boccoum, senior mining specialist with the World Bank’s Oil, Gas and Mining Policy Division. “It is neither suggesting to countries to adopt one or another approach to community development impacted by mining. It really aims at providing useful knowledge to optimize the potential for mines to effectively operate in harmony with, and to the benefit of, communities affected by their operations.”