Manual de minería MPD Toolkit

8/6/2019 Manual de minera MPD Toolkit

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MINING: PARTNERSHIPS FOR DEVELOPMENT

TOOLKIT


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This toolkit has been developed

by the International Council onMining and Metals (ICMM). It is

the third version of a toolkit

originally published as the

Resource Endowment Toolkit

in April 2006 in partnership with

the World Bank and UNCTAD.

TOOLKIT GUIDE

Introduction 07Using the toolkit 13

MODULE ONE

Mining and the host country 19

Annex 1: Example of a country profile (Guinea) 21

MODULE TWO

The participating mining operation and its economic andsocial initiatives and partners 27Annex 2: Six priority partnership themes for socio-economic programs 33

MODULE THREE

Measuring the mining industrys contribution to the host country 47

MODULE FOURThe proximate aspects of governance that help or hinder miningseconomic and social performance 57Annex 3: Calculating and reporting tax payments 69

MODULE FIVE

Measuring the participating mines positive and negativecontributions to local communities 75Annex 4: Guidelines for field interviews 99Annex 5: Notes on calculating employment impacts 103

MODULE SIX

Analyzing the life cycle impact of the participating mine on thehost countrys macroeconomic aggregates 111Annex 6: Template for collecting life cycle data 121

MODULE SEVEN

Impact of mining on governance 125Annex 7: Detailed questions to help assess the impactof mining on governance 135

MODULE EIGHT

Communicating your findings 143Annex 8: Workshop design tool to present the country case study ormining-issues paper 149

TOOLKIT ADDENDUM

Guiding principles regarding minerals taxation 157

TOOLKIT REFERENCES

Acronyms and glossary 167Referenced sources 173How was the toolkit developed? 177The steering group 178


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CD versions of the toolkit are available on request

email us at [email protected].

There are a number of worksheet and database

templates to help you complete each of the modules

in the toolkit. Wherever you see this symbol there is

a template available to help you complete the activity

described. All the templates are available on theICMM website at www.icmm.com/mpdtoolkit.

Toolkit CD

MINING: PARTNERSHIPS FOR DEVELOPMENT

TOOLKIT


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Imagecourtesyof

AngloAmerican

THE TOOLKIT FOCUSES ON SIXTHEMATIC AREAS WHEREPREVIOUS WORK HAS INDICATEDTHE POTENTIAL FOR PARTNERSHIPSBETWEEN COMPANIES AND OTHER

STAKEHOLDERS TO ENHANCE THEPOSITIVE CONTRIBUTION ANDMINIMIZE NEGATIVE IMPACTS:

1. MINING AND POVERTYREDUCTION

2. MINING AND ECONOMIC

DEVELOPMENT: REVENUEMANAGEMENT

3. MINING AND ECONOMICDEVELOPMENT: REGIONALDEVELOPMENT PLANNING

4. MINING AND ECONOMIC

DEVELOPMENT: LOCAL CONTENT5. MINING AND SOCIAL INVESTMENT

6. MINING AND DISPUTESRESOLUTION.


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Introduction

Using the toolkit

TOOLKIT

GUIDE


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Introduction

The Mining: Partnerships for DevelopmentToolkit provides useful methodology forevaluating the positive and negativeeconomic and social effects of mining atthe local, regional and national levels inmining countries. These methods will beof relevance in particular to the increasing

numbers of lower and middle incomeeconomies that have high levels of mineraldependence.

It can be used by mining companies, minemanagers and any other organizations andagencies that have an interest in therelationship between mining and socialand economic development outcomes.These will include host-country governments,development agencies and development-oriented non-governmental organizations(NGOs). Experience has shown thatapplications of the toolkit are more effectiveif organized in partnership with both miningcompanies and other stakeholders.

The application of the toolkit allows usersto develop an improved understanding ofwhat issues, policies and practices may behelping or preventing host communities,

regions or the country from benefiting morefully from mining. However, its use doesrepresent a significant commitment of timeand resources, and users are advised totailor their expectations of the likely benefitsto the level of resources that they are ableto commit.

The toolkit provides a common analyticalframework that helps to ensure thatcomparisons can be made of miningscontributions and impacts across differentcountries. It has been tested in five countriessince 2005 Chile, Ghana, Lao PDR, Peruand Tanzania. ICMM is actively seeking more

countries to participate in future applicationsof the toolkit so that the evidence base canbe further extended.

07Mining: Partnerships for Development TOOLKIT

TOOLKIT

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Introductioncontinued

1 For further guidance, see a Guide to Cost-BenefitAnalysis of Major Projects, available athttp://ec.europa.eu, and the DAC Guidelines andReference Series on Applying Strategic EnvironmentalAssessment, available at www.oecd.org.

Guidelines for toolkit users

The toolkit is designed to be used on acollaborative basis with a range of keystakeholders. Experience has shown that theinsights gained and the potential subsequentdevelopment of new partnership ideas are

enhanced by a broad engagement with thework by other parties and especiallygovernments, local communities, developmentagencies and some specialized NGOs.

The early applications of the toolkit havebeen led by mining companies. However, thelead can be taken by a party other than amining company. In such cases, activeengagement with some of the mine operations

in the country will be needed in order to gainaccess to the mine-specific data that is notin the public domain.

The outcomes from implementing the toolkitwill typically be a country case study andone or more workshops to communicatethe findings of the country case study.Depending on your needs, you may not findit necessary to develop an entire countrycase study.

The toolkit comprises a series of eightmodules and an addendum on taxation.It has been designed to be simple withoutplacing an excessive demand on time orcost, and, as far as possible, to beimplemented with in-country resources.Some of the more technically complex

methods of identifying impact (such aslocal-level cost-benefit analysis) aretherefore not included.1

You will need to decide which modules toimplement as part of the design process foryour project (see Figure 1 ). The modulescan be implemented individually or incombination but there are advantages inattempting as full an implementation asyour available resources allow.

Each of the eight modules includes workedexamples or explanations of how to gatherthe necessary data and analyze and presentthe findings. Most modules also includeannexes that provide specific details orfurther elaboration on some part of theprocess (e.g. guidelines for field interviews,how to measure employment impacts orhow to organize a workshop).

TOOLKITGUIDE



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10 Mining: Partnerships for Development TOOLKIT

Figure 1: The eight modules of the toolkit

TOOLKITGUIDE

MODULE ONE:Mining and the host country

Preparing an overview of the countrys geography, population, settlement, land use,economy and recent history with an emphasis on characteristics that influence or areinfluenced by the economic and social impact of mining: economic performance, political

stability, quality of governance, dependence on mining, and poverty and human development.MODULE TWO:The participating mining operation and its economic and social initiatives and partners

Developing a profile of the participating mining operation(s) and the local communities inwhich they operate. This should include a profiling of any partnerships already set up by themining operation(s) for economic and social development across the six partnership themes.

MODULE THREE:Measuring the mining industrys contribution to the host country

Understanding how the host countrys broad-based economic growth (of incomes, GDP,exports etc) and social development have changed in the period during which mining hasassumed a significant relative importance.

MODULE FOUR:The proximate aspects of governance that help or hinder minings economic andsocial performance

Identifying elements of the host countrys quality of governance and macroeconomicmanagement that could affect the economic and social benefits of mining. The termproximate is used to distinguish this from the more detailed probing on political economyprocesses in module seven.

MODULE FIVE:

Measuring the participating mines positive and negative contributions to local communitiesMeasuring in detail the participating mines economic and social impacts (employment,procurement of locally supplied goods and services, training, social and infrastructureprovision, net impact) at the local level.

MODULE SIX:Analyzing the life cycle impact of the participating mine on the host countrysmacroeconomic aggregates

Analyzing the participating mines contributions to GDP, government revenues, and balanceof payments over the life cycle of the mine, looking forward to include the likely impacts offuture expected operations and well as those of the present and recent past.

MODULE SEVEN:Impact of mining on governance

Examining the direct and indirect influence of mining on governance structures, institutionsand policy choices at different levels of government (national, regional and local).

MODULE EIGHT:Communicating your findings

Preparing the country case study (or mining sector issues paper) and encouragingdissemination of and debate about its findings via a workshop.

TOOLKIT ADDENDUM:

Guiding principles regarding minerals taxationUnderstanding the appropriate fiscal framework for mining including the importance of anequitable allocation of rents and transparent reporting according to EITI standards andengaging with governments to promote stable tax systems with minimal complexity.


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2 ICMMs Good Practice Guidance for Mining andBiodiversity(2006) provides tools and practicalconsiderations for assessing the environmental andsocial impacts of mining on biodiversity, availableat www.icmm.com.

Modules one to six can be implementedindividually, as a set of two or more modulesor in full and can be implemented in theorder you choose. Module seven whosevalue relies on an understanding of whathas happened in the country over the periodsince mining started will be much more

informative if you have at least done modulefour and, ideally, modules two, three, fiveand six as well.

Module eight Communicating your findings is the one module that should be appliedby all toolkit users. Implementing modulesone to seven will provide the evidenceneeded to prepare a comprehensive countrycase study. However, even if you only applya selection of modules, you should aim toproduce a shorter mining sector issuespaper.

The addendum to the toolkit looksspecifically at the issue of mineral taxationbecause the fiscal stance towards mining isso vital both to the sustainability of miningin any country and to its broader economicand social development. That fiscal stanceis often contentious and not well understood.

In some circumstances, you may decide tolaunch a specific study into the issue inparallel with your work on the toolkit.

TOOLKITGUIDE


Introductioncontinued

The toolkit is not a substitute for theenvironmental and social impact studiesthat most mining companies undertakebefore beginning a new miningdevelopment.2 Neither does it seek toreplace the often intensive consultationprocesses with stakeholders that are

involved in carrying out such studies.If, however, for your purposes theseadditional activities and methods arerequired, then the studies can becommissioned in parallel to implementingthe toolkit.


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STEP1

ASSESSMENT

STEP2

DESIGN

STEP3

PARTNERS

STEP4

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Illustrativeflowcharttosetoutkeystepsinusingthetoolkitwithexitcrite

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STEP 1: Assessment

Ask yourself the following questions beforeyou decide to use the toolkit:

1. Are there current issues in your countrythat the toolkit is suited to help you

understand?For example: Is there a preoccupation among

stakeholders about narrow definitions ofbenefit sharing ?

Does the discussion of tax revenuesdominate the agenda?

Is there a sense that not enough jobshave been created or that traditionallivelihoods have been damaged?

Are there any potential opportunities tobetter integrate the mine into thebroader economy that are being missed?

Are the needs of different stakeholdersreally understood and addressed?

If yes, then focus your scope on thecorresponding modules of the toolkit.

2. Will the toolkit results have broad, ratherthan narrow application?For example, the

toolkit is not equipped to quantify oranalyze problems of an environmentalnature; neither is it designed to add newlight on issues such as forced resettlementor displaced livelihoods. These arespecialized areas, and appropriatereference sources are provided. However,where these issues have already beensubject to an economic or social impactassessment, then the application of the

toolkit can certainly embrace the keyresults from these.

3. Is there sufficient commitment ingovernment, among companies and otherorganizations in your country?The effective implementation of the toolkitrequires commitment to data access andcollection, to the subsequent disseminationof the country case study or other findings,

and to frank discussions on conclusionsand priorities for action across the sixpartnership themes. If this commitment ismissing then you should probably focusefforts first on building the necessarycommitment.

4. Are there adequate financial andpersonnel resources to manage theprocess and undertake the analysisin-country?A competent team of local

economic and financial analysts andsurvey specialists will be needed,supplemented in all cases by assistancefrom designated points of contact in themining companies and other stakeholderorganizations. Additional externalassistance may be requested in somecases from ICMM and similar internationalsources to help guide the early stagedesign of the work and the presentation

of results. The services of a competentpolitical economist would also be of valuein most country cases.


Using the toolkit

TOOLKIT

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3. Prepare an initial action plan fordisseminating the findings. This shouldinclude some form of face-to-facemeetings with those other parties whowould ideally be involved in helping you toassemble the necessary information orwho would be likely to be interested in

the findings.

Using the toolkitcontinued

TOOLKITGUIDE


STEP 2: Design

Follow these steps to determine the scopeof work you want to accomplish via your useof the toolkit:

1. Determine what you want to accomplish

with the findings of the toolkit work andhow they will be used and select modulesaccordingly. If you are only looking for anarrow set of specific insights e.g. aboutthe use of mineral revenues or about localemployment - then you need work onlywith a selection of the eight modules.

2. Try to involve more than one mine in theprocess, as that will provide moreinformation sources for the required

mine-specific data and allow differencesbetween mines to be identified andassessed. While the toolkit can be appliedto just one mine, the value ofimplementing the toolkit increases withthe number of mines involved.

The involvement of multiple mines clearlymeans that the evidence base created willbe much more representative of theindustry as a whole and less likely to

suffer from any biases associated withusing just a single mine. The buy-in ofsenior management from participatingmining companies, and where possibleany chamber of mines (national and/orregional mining association), is thereforeessential to ensure co-operation both withother mines and with any independentresearch organization that is commissionedto implement the toolkit. Thus, in mostcases where the toolkit uses the term a

mine, a mining company, or a miningproject, the term is intended to encompassthe plural as well as the singular.


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Using the toolkitcontinued

TOOLKITGUIDE


STEP 4: Plan

Follow these steps to develop a project plan:

1. Appoint a project management team withrepresentatives from each partnerorganization. Agree on a governance system

for the partnership and how to allocateroles and responsibilities for the work.

2. Decide which modules will or can beimplemented in-house and which will ormay require a contract with an externalresearch organization. Different modulescan be delegated to different individualsin your team. Much of the toolkit researchis desk-based, but consultations withcommunities and meetings with providers

of data (particularly data from theparticipating mining operations) will alsobe required, particularly in carrying outmodules five and six. There is guidancewithin each module to help you decidethe best course of action.

3. Write a brief that covers the scope of workfor each module including reference tothe modules you wish to implement via acontract with third party organizations.

The brief should reference the completetoolkit.

4. For the sake of credibility and value, youshould adopt an objective and broadperspective on the scope of the investigation,the questions to be asked of intervieweesand the representation of their views.

5. Select a research organization(s) with theinterests, skills and capacity to implementthe required toolkit modules that cannot

be done in-house in a credible andunbiased manner. Seek advice from ICMMif you have questions on this matter.

STEP 3: Partners

Based on your goal(s), identify one or morepartners with whom you would like to work.If you represent a mining company, youmight choose to work closely with keydepartments of the government or with an

NGO or an international donor that is likelyto have a shared interest in your chosengoals. If you represent an NGO or governmentdepartment, you will need at least onemining company to work with you, becausemuch of the required data to fully implementthe toolkit is available only from thecorporate data files. Partners need to havesome shared common objectives but theyneed not be in full agreement about the key

hypotheses that they expect the toolkit toverify. To the extent possible all partnersshould engage in the work with open mindsand allow the evidence as it accumulates totell its own story.

Hold an early meeting (or meetings) orworkshop(s) with your chosen partner(s) toagree on the goals and the methods forconducting the work and to review the toolkitscope of work. This may require expanding

or contracting the original goal, but keep itfocused on the modules of the toolkit.


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Mining and thehost country

ANNEX 1

Example of a countryprofile (Guinea)

MODULE

ONE


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POLITICS, ECONOMICS, ANDGOVERNANCE ARE ALLLIKELY TO HAVE A BEARING

ON THE CONDUCT OF THEMINING PROJECT AND ITSECONOMIC AND SOCIALCONTRIBUTION.

ImagefromICMM


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You may also elect to pursue themesuncovered from these broad sources(e.g., gender politics and activism) throughother sources, such as the national pressof the host country.

How to present your findings

Module one should present a discursivecountry description of two to three pages.Differences between countries precludethe definition of any standard pro-formastructure, so you should exercise yourcountry knowledge and judgment.

Annex 1 provides an example. The fourcountry case studies prepared under theICMMs Resource Endowment initiativeprovide further, more complete examplesof module one content and structure.4

Data sources might include:

BBC News country profiles(http://news.bbc.co.uk/2/hi/country_profiles/

default.stm);

US Central Intelligence Agency WorldFactbook

(www.cia.gov/library/publications/the-world-factbook);

IMF Staff Reports under Article IV(www.imf.org);

World Banks Country Briefs availableunder Highlights on each countrys page(www.worldbank.org/countries);

World Banks aggregate and individualgovernance indicators for six dimensions

of governance(http://info.worldbank.org/governance/wgi/index.asp);

United Nations Development ProgrammesHuman Development Report statistics,including the human development index(http://hdr.undp.org/en/statistics);

Bertelmann Foundations Country Reports(www.bertelsmann-transformation-index.de/en/bti/country-reports);

World Health Organizations countryprofiles for countries that are members ofthe United Nations(www.who.int/countries/en);

United Nations Statistics Division of theDepartment of Economic and Social Affairscountry profiles(http://data.un.org/CountryProfile.aspx ); and

Organisation for Economic Co-operationand Development information by countryor topic under Browse (www.oecd.org).

MODULEONE

Mining and thehost countrycontinued


4 www.icmm.com/page/1409/resource-endowment-initiative.
http://www.icmm.com/page/1409/resource-endowment-initiativehttp://www.icmm.com/page/1409/resource-endowment-initiativehttp://www.icmm.com/page/1409/resource-endowment-initiative


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Example of a countryprofile (Guinea)

ANNEX

1


Example description of country context (Guinea)

Environment, resources, land use and settlement

At 245,800 km2, Guinea is roughly the size of the United Kingdom and slightly smallerthan the U.S. state of Oregon. There are 300 km of coastline and a total land border of3,400 km. Its neighbours are Cte dIvoire (Ivory Coast), Guinea-Bissau, Liberia, Mali,

Senegal and Sierra Leone. The country is divided into four main regions: the Basse-Cotlowlands, populated mainly by the Susu ethnic group; the cooler, mountainous FoutaDjallon that runs roughly northsouth through the middle of the country, populated byPeuls; the Sahelian Haute-Guinea to the northeast, populated by Malink; and theforested jungle regions in the southeast, with several ethnic groups.

Upper Guinea and Middle Guinea remain the countrys poorest regions. This situation isthe direct result of the influx of refugees received since the outbreak of hostilities inLiberia and in Sierra Leone, as well as the rebel attacks in 2001. This has damaged theenvironment, destroyed considerable socio-economic infrastructure and caused enormous

losses in household assets (livestock and plantations). In addition, industrial and toxicsolid waste (biologically contaminated waste from hospitals, laboratories, slaughterhousesand mining enclaves) is generally thrown into the natural environment, watercourses orthe sea, receiving the same treatment as other waste.5

Guinea has abundant natural resources, including 25% or more of the worlds knownbauxite reserves. Guinea also has diamonds, gold, and other metals. Bauxite and aluminaare currently the only major exports. Other industries include processing plants for beer,

juices, soft drinks and tobacco. Agriculture employs 80% of the nations labour force.

continued

5 International Monetary Fund, January 2008,IMF Country Report No. 08/7.


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ANNEX1

Example of a countryprofile (Guinea)continued


Economic performance (past and present)

Guinea is a low-income country of huge mineral wealth. However, the per-capita GDPin 2010 of US$395 (current prices) compares poorly even with the sub-Saharan Africanaverage. In 2007 Guinea ranked 170 out of 182 countries on the UNDP 2007/08 humandevelopment index (HDI).6 Growth rose slightly in 2006-08, primarily due to increases inglobal demand and commodity prices on world markets, but the standard of living fell.The Guinea franc depreciated sharply as the prices for basic necessities like food andfuel rose beyond the reach of many Guineans.7

Quality of governance

From 1996 to 2007, Guinea scored low on all six measurable dimensions of governancein both absolute terms and relative to the averages set by sub-Saharan Africa.8 Poorgovernance provides one explanation for poor growth, and the 2008 Country Report ofthe Bertelsmann Foundation found a number of specific factors to support this view. 9

Political stability

The Guinea economy has performed poorly after independence from France in 1954.The macroeconomic problems following the early Sekou-Toure years lingereduncorrected by only lacklustre structural adjustment in the mid-1980s and early 1990s;and civil unrest was quite common, even at that stage. By 2006, worsening economicperformance and stalled reforms led to more general strikes; and these, in turn, ledeventually to the new Government of Consensus in March 2007 headed by Prime MinisterLansana Kouyat. This promised much; but in May 2008, the new Prime Minister wasdismissed by the President, Lansana Cont. Further military and civil unrest has sinceensued around various issues, including a large hike in petroleum prices.10

continued

6 UNDP Human Development Report (2009).

7 The CIA World Factbook, Guinea, retrieved28 October 2010.

8 Worldwide Governance Indicators project(http://info.worldbank.org/governance/wgi/index.asp).

9 Bertelsmann Stiftung, BTI 2010 Guinea Country

Report. Gtersloh: Bertelsmann Stiftung, 2009.10 International Monetary Fund, January 2008,

IMF Country Report No. 08/7.


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ANNEX1



Mining past and present

Mineral production, particularly of bauxite and alumina, has been central to Guineaseconomic development since independence. The UNCTAD 2007 World Investment Reportshows Guineas economy to be the most mining dependent in the world, with an averageratio of mineral to total exports of 89.8% over the period 2000 to 2004.11 This dependenceis the more remarkable because the growth of the mining sector in the overall economyhas in fact been slower than the growth of overall GDP: the IMF Selected Issues Paper(January 2008) estimates that the GDP share of minerals fell from 85% of the total in theearly 1990s to less than 70% by the period 2002 to 2005.12

The mining industry is playing an important role in the socio-economic development ofthe country. Mining is the most important export commodity and source of revenues forthe Government, and agreements signed recently are likely to involve billions of dollarsand consolidate the sectors position as the main source of foreign direct investment.13

Relative to the countrys very low base, the regions least affected by poverty in Guinea

are those where new mines and mineral transport and processing infrastructure areproposed or are being built. This may reflect the positive effects of earlier phases ofmineral production in these locations. These regions have at least relatively bettereconomic infrastructure and basic social service facilities and are relatively well endowedwith natural resources. They are also quite close to the capital with its comparativelybetter educated and trained population.

continued

13 Community Development Framework Study for theMining Sector in the Republic of Guinea, (2007).

11 World Investment Report 2007(www.unctad.org/en/docs/wir2007_en.pdf).

12 Guinea: Selected Issues and Statistical Appendix,IMF Country Report No. 08/20(www.imf.org/external/pubs/ft/scr/2008/cr0820.pdf).


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ANNEX1


Poverty and human development

According to the UN Human Development Report (2006), 40% of the population livebelow the income poverty line. In 2008 the population was estimated at 10.28 millionand expected to increase to more than 11 million during 2011.

After the implementation of the economic and structural reforms of 200306 veered offcourse, with a resultant drop in income of 0.6% per head, the economic slump wasaggravated by the global financial crisis in 2007. Inflation rose to more than 22%, alongwith a depreciation of the currency of 18%. This was followed by deterioration in livingstandards, reflected in a rise in the poverty rate from 49% in 2002/03 to 53% in 2007/08.

In the face of these difficulties, Guinea launched reforms in 2007 under its secondPoverty Reduction Strategy Paper (PRSP 2), supported by the Poverty Reduction andGrowth Facility (PRGF) of the International Monetary Fund (IMF) and the intervention ofother technical and financial partners. The reforms bore fruit in 2008, despite a difficultinternational context; and public and private investment rose by 14%. As a result,

economic growth accelerated from 1.8% in 2007 to 4.9% in 2008, driven by theimprovement in the terms of trade resulting from the surge in mineral raw materialprices and the fall in the price of oil.14 However, a reduction in the proportion of peopleliving below the income poverty line has yet to be seen.

14 African Economic Outlook: seewww.africaneconomicoutlook.org/en/countries/west-africa/guinea/.


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The participatingmining operationand its economic

and social initiativesand partners

ANNEX 2Six priority partnershipthemes for socio-economicprograms

MODULE

TWO


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THE SIX THEMES CONSTITUTEA BROADLY APPLICABLECATEGORIZATION OF MININGSECONOMIC AND SOCIAL

CONTRIBUTION.

Imagecourtesyof

Newmont


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MODULE

TWO

Purpose

Module two provides a profile of theparticipating mining operation,15 of themain partnerships set up by the miningoperation to bring economic and socialdevelopment, and of the main initiatives

undertaken to date.

Gathering the data

Module two requires two separate data-gathering steps:

Step 1: profile of the participating miningoperation and local communities; and

Step 2: overview of the economic andsocial performance of the participatingmining operation and its partnershiparrangements and initiatives across thesix priority partnership themes.

STEP 1: Profile of the participating miningoperation and local communitiesFirst, gather sufficient data to provide abrief, non-technical description of ownership,

financing, investments, production levels,and environmental footprint of the miningoperation. This is essentially the informationon which the mining company has relied inits internal management decisions aboutproject strategy, scope, design and operations.Much of this information will also haveinformed the decisions of regulators andfinanciers; and their respective roles in, andinfluence on the scope of, the project wouldbe informative if available. The relevant

documents will normally be available froma companys finance and environmentaldepartments, annual report or website.

Aim to describe each mining operation andset its scale and scope in the host-countrycontext. Issues to cover will typically include:

ownership structure, including minoritypartners;

physical location, including the areaoccupied by the mine and relatedinfrastructure (such as a railroad or port)and its previous use;

15 As discussed in Using the toolkit, participation

by more than one mining operation in theimplementation of the toolkit is strongly encouraged.However, for simplicity in presentation, the toolkitassumes just one mine, mining operation, or miningcompany is involved.

The participating miningoperation and itseconomic and socialinitiatives and partners



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development milestones, ore reserves,identified resources and projected minelife, regional mineralization, explorationpotential and programs, and furtherdevelopment potential and factors;

production, markets and customers;

mining and waste management: open pitor underground, environmental propertiesof mine materials, water balance and wastemanagement strategy, specific mine wasteand tailing management arrangements,and zone of direct environmental impact;

actual capital investments to date orplanned and the likely level of thestaying-in-business investments,including local and regional exploration to

extend existing deposits or find new ones;

similar information for other local mines(i.e., in the broad region of the mine understudy); and

recent or planned mine closures in thatsame area or nationally.

Second, gather information on thecommunities directly (and indirectly) affected

by the operations of the mine. These will beeither villages or towns near the mine orthose along the main supply routes as theseare most likely to be positively or negativelyaffected by the mines activities. The aim isto get an idea of the number, size andproximity of villages in the area, as well asthe key characteristics of those living inthese communities.16 If possible, information

on changes in the communities since miningstarted in the area would be helpful, althoughthis information may be difficult to find.

National census statistics may be able toprovide some basic information, such aspopulation size in the communities or the

main economic activities in the region.Any previous fieldwork and qualitative orquantitative research work conducted inthe area will also be helpful. If no otherinformation is available, the communitysection will need to rely on information fromreports produced by the mining company.For example, social impact assessments,participation agreements, communitydevelopment plans or communityengagement plans.

Information on the affected communitiesshould typically include:

the number of villages or towns in thearea, their proximity to the mine and thesize of their populations;

the languages spoken by communities,the main ethnic groups present (includingwhether there are any tensions between

groups), major cultural characteristicsthat may impact upon the way thecommunities interact with the minesactivities (e.g., nomadic lifestyles maymean that there are more disputes overthe use of land in the area);

the level and quality of infrastructureand services in the area (is the arearelatively more or less well-serviced thanother areas in the country?);

poverty, unemployment levels and literacylevels of communities (if significantlydifferent from the rest of the country); and

16 You may want to draw comparisons with the

situation in the rest of the country; i.e., is there anevidence base for saying whether the communitiesin the mining area are ethnographically different,relatively better off, or more economically orsocially deprived than the rest of the country?

MODULETWO

The participating miningoperation and itseconomic and socialinitiatives and partnerscontinued



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the main economic activities of those livingin the communities (including an outline ofany artisanal mining activities in the area),information on how many people in thelocal community are dependent on miningactivities for their livelihoods (and, if thedata already exists, an outline of any

changes in economic activity since thecommencement of mining in the area).

STEP 2: Overview of economic and socialperformance of the participating miningoperation across the six prioritypartnership themesStep 2 describes the current activities andassesses the performance of theparticipating mining operation across thesix priority partnership themes that thepilot applications of the toolkit have shownto cover the principal parameters ofeconomic and social development:17

1. mining and poverty reduction;

2. mining and economic development:revenue management;

3. mining and economic development:regional development planning;

4. mining and economic development: localcontent;

5. mining and social investment; and

6. mining and disputes resolution.

These six themes are described in Annex 2.

A mining operations net positivecontribution to the six themes will, for the

most part, require multiple partnershipsbetween different mining companies andbetween mining companies and otherorganizations. Thus, Step 2 also develops

information about the economic and socialpartnerships the mining operation hasestablished with government (local, regionalor national), other mining operations orcompanies, donor organizations, non-government organizations, communityorganizations, and local communities.

Gather information to describe the policies,programs, and management and monitoringarrangements established by the miningoperation to enhance the positive andmitigate the negative economic and socialimpacts of its project.18 Source documentswill include project social impactassessment reports, communitydevelopment agreements, and social andenvironmental monitoring reports. Thesewill be available from the mining operationsexternal relations or community relationsteam. Wherever possible, you shouldreference relevant pre-project baselinedata and any targets that have been setunilaterally or in agreement with theauthorities. Other data sources includelocal-level social reports and other publicreports on the initiatives of the miningoperation and its partners. A starting point

17 The ICMMs Resource Endowment initiative identifiedsix priority partnership themes (based on experiencein Chile, Ghana, Peru and Tanzania), wherepartnerships between companies and others mayhelp to enhance positive socio-economic outcomesand minimize adverse outcomes from mining.Experience has demonstrated that the six themesconstitute a broadly applicable categorization ofminings economic and social contribution; and,where possible, you are encouraged to organizefindings using these themes.

18 For further information on how resolving local-levelconcerns and grievances can mitigate negative

socio-economic impacts, see ICMMs publicationHuman Rights in the Mining & Metals Industry:Handling and Resolving Local Level Concerns andGrievances, October 2009, available atwww.icmm.com.


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20 Mapping in-country partnerships, ICMM, February2010, available at www.icmm.com.

21 See Strategic Community Investments: A Quick Guide(2010) produced by the International FinanceCorporation and available on the CommDev website(http://commdev.org).

22 Infrastructure (such as roads, water supplies orpower supplies) that has been developed by largemines can be important economic and socialcontributions, depending on the degree to which theinfrastructure also meets the needs of and is madeavailable to communities.

23 ICMMs Good Practice Guidance on Health Impact

Assessment(2010), which sets out an overview ofhow mining and metals operations can affect thehealth and wellbeing of local communities anddescribes typical health impact assessmentprocesses, is available at www.icmm.com.

should be the projects communitydevelopment agreement (if one exists).19

An initial list of partnerships can be derivedfrom the participating mine and its partnerswebsites and social reports. These sourcesmay list but not explain partnerships that

have since failed; however, it is important todetermine why the failure has occurred andto include the reason in the description ofthe failed partnership. Published sourcesmay not have the answers, and the questionmay need to be pursued in interviews withstakeholders in module five, Step 1 (or nowduring module two if you feel that the issuewarrants immediate attention).

As well, the views, and especially the criticalviews, of both partners and communitiesshould be sought and included. Anyindependent evaluations of any programswould provide particularly relevant evidence.If documentary evidence is not available,then, as above, you will need to decidewhether to leave interviews to module fiveor to undertake sufficient interviews nowto flesh out your module two data.

The information should be broadly pursuedand organized under the six partnershipthemes. Mining companies and partnershiporganizations will typically define, manageand communicate their economic and socialimpacts in their own terms. Therefore, youwill need to translate their programs andpolicies into a common understanding ofthese six themes. For further guidance, see

ICMMs Mapping in-country partnerships,which describes a range of past and currentpartnership initiatives and organizes themunder the six themes.20

When identifying and describing partnerships,it will be the specific social or community

development initiatives that first come tomind, such as malaria eradication, HIV/AIDSprograms or support for local schools.Important as they are, however, theyconstitute just one element of a muchbroader contribution, which many people,including those within the mining company,often do not appreciate fully.21

In other words, it will always be the casethat the main economic and socialcontributions of mining companies willemerge from their core business processes.These processes should not be difficult todescribe: paying taxes; employing people;procuring goods and services; skillsdevelopment; contributing to infrastructuredevelopment;22 and implementingenvironment, health and safety programs.23

MODULETWO



19 To understand the issues, challenges andapproaches to community development in themining sector, see Community DevelopmentFramework Study for the Mining Sector in theRepublic of Guinea, available at http://commdev.org.


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24 Mapping in-country partnerships, ICMM, February2010, available at www.icmm.com.

For module two, therefore, be mindful of theparticipating mines incidental, but often verysubstantial, positive influence via the implicitpartnerships that are to be found in day-to-day commercial arrangements between themine and local organizations.

This module of the toolkit does not requireyou to make value judgments about acompanys future priorities: focus instead onan analysis of the success of current effortsin terms of the six themes.

Box 2.1, The Role (and Challenges) ofPartnerships in the Economic and SocialContribution of Mining, is based on recentICMM research24 and discusses the potentialvalue of partnerships in the mining sector.


For Step 1 (the description of the miningoperation and local communities), the aim isto describe the mine and local communitiesfor a broad, non-technical audience. Numericalinformation for example, ore reserves,

production and mine life or statistics aboutthe communities can be inserted selectivelyinto an otherwise generally discursive narrativeabout the mine and the affected communities.

For Step 2 (overview of economic and socialperformance), provide the mining operationsown view of its overall contribution toeconomic and social development and howthis fits with the work of other organizations

within and beyond government.

The economic and social contributions ofmining operations arising from core businessprocesses (such as paying tax and employingpeople) should be described in broad terms;they will be quantified in module five.

Provide narrative descriptions of any existingpartnerships across the six priority partnershipthemes. Your resources may limit you to a

simple listing and brief profiles of initiativesand partnerships. However, the applicationof the toolkit in Ghana has shown it to beworthwhile, if time and resources permit, togo a step further and develop a partnershipdatabase, which can be maintained andgradually updated over time. The databasecould be structured as indicated by the examplepartnership database in Annex 2, aninteractive form of which is provided on the

CD included with the toolkit. These samedata whether organized into a formaldatabase or not can be referred to in latermodules, especially in module five.


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Summary

The Resource Endowment initiative (REi)studies of Chile, Ghana, Peru and Tanzaniahave provided the Mining: Partnerships forDevelopment program with six prioritythemes around which partnerships between

companies and others have demonstrablepotential to improve the economic and socialdevelopment status of communities. The sixpriority partnership themes are:

1. mining and poverty reduction;

2. mining and economic development:revenue management;

3. mining and economic development:regional development planning;

4. mining and economic development: localcontent;

5. mining and social investment; and

6. mining and disputes resolution.

The six themes will not only provide acoherent structure for a country case study,but also enable comparisons betweendifferent country case studies. You are

therefore encouraged to organize findingsaround these six themes.

There are, however, no universally agreeddefinitions for these themes. In fact, differentinterpretations may have, in part, led todifferences of opinion about minings actualand potential economic and social effects.

What follows, therefore, is general guidance

on the issues that each theme covers. It hasbeen based on interpretations by suchorganizations as the International MonetaryFund (IMF), the Organisation for Economic

Co-operation and Development (OECD) andthe World Bank. You are encouraged todiscuss the six themes during interviewswith stakeholders in module five (or duringinterviews to supplement the module twoinformation if necessary) and to develop anddocument operational definitions that suit

the location and make sense to the peoplewho live and work there.

The next section captures the relationshipsbetween the six partnership themes andthe respective roles of potential partners.These relationships and the implicit interestsand responsibilities of the partners lie at thecore of the framework of Mining: Partnershipsfor Development.

For clarity, the six themes are discussedbelow one by one (even though they overlapand most partnerships will explicitly addresstwo or more themes in the one program).

The annex concludes with an examplepartnership database organized around thesix themes.

This annex should be read in conjunction

with modules two and five of the toolkit.


ANNEX

2

Six priority partnershipthemes for socio-economicprograms


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Six priority partnershipthemes for socio-economicprogramscontinued

unemployed youth, indigenous communities,or small-scale miners. As well, povertyreduction will usually be a consequence ofstrategic social investments in other areas,such as health and education.

Large-scale mining often occurs in remote

regions of developing countries, wheresubsistence agriculture may be the onlyother form of economic activity. Partnershipsfor agricultural improvement are thereforean important element of the mining andpoverty reduction agenda.

Mining and poverty reduction

Poverty reduction refers to economic andsocial policies and programs that promotegrowth and reduce poverty in a community, agroup of people, or a country. Such initiativeswill be generally aligned where possible

(and where quantifiable) with the UNsMillennium Development Goals.25 They maycreate jobs and micro-enterprises. Or theymay increase access to basic goods andservices for vulnerable and economicallymarginalized groups, such as women,

ANNEX2

25 www.un.org/millenniumgoals.


Mining and poverty reduction partnership diagramThis diagram (a working version) comes from a mapping of partnerships in the Lao PDR

Mining andpoverty reduction

Government:

Implement national growth and povertyeradication strategy

Civil society:

Undertake business and biodiversityprograms with local communities

International organizations: Provide technical assistance and capacity

building to government

Establish guidelines and social safeguards

Undertake local projects e.g. supportingproducers of traditional goods

Companies: Implement community development

plans

Undertake biennial household surveysto understand minings impact onpoverty reduction


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ANNEX2


Mining and economic development:revenue management

Revenue management is defined for thepurposes of this toolkit as steps thatcompanies can take to ensure effective useof revenue received from mining, particularly

at a subnational level. This may involvesupport for government capacity building,technical assistance projects, or revenuetransparency projects. The ExtractiveIndustries Transparency Initiative (EITI)26 isyielding a growing body of data on revenue

flows. In principle, the case for action in thisarea seems to be self-evident. In practice,however, there are political sensitivities ofappearing to influence a host countrysdecisions on public expenditure.

Nevertheless, it is useful to explore the

issue during interviews with miningcompanies and other stakeholders because,either way, it is a widely held view that theissue of revenue management holds one ofthe keys to leveraging economic and socialdevelopment from mineral wealth.

26 http://eiti.org. 27 ICMM Spotlight series 03: Ways Forward(2006).


Mining and economic development: revenue management partnership diagramThis diagram is taken from a summary of findings from Chile, Ghana, Peru and Tanzania27

Partnership for

enhanced revenuemanagement

Host governments:

Adopt EITI

Sound macro management

Sequenced, decentralization of fiscalauthority to subnational level + public

administration reform

NGOs, civil society, communities:

Hold governments to account formineral revenues

Develop local capacity

Donor agencies: Capacity building and transparent

revenue management to subnationallevels

Sound investment climate

Reform mineral legislation

Companies: Support Extractive Industries

Transparency Initiative (EITI)

Risk analysis extended to national andsubnational governance risk

Support capacity building


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ANNEX2

Mining and economic development:regional development planning

Regional development planning can bedefined as public planning that supportslonger-term economic diversification at asubnational level. It is relevant to mining

companies for three reasons. First, mininginfrastructure investments can, in somecircumstances, bring regional benefits ifthey can be planned and designedaccordingly. Second, large mines can createcultures of dependency, leading to a post-closure economic void, unless efforts aremade to diversify the local and regionaleconomy. And third, the extension of miningbased on exploration success will benefit

from established infrastructure andappropriate planning provisions over areasknown to be prospective for minerals.

Mining companies may engage in regionaldevelopment planning either as participantsin a government- or donor-led process or asinitiators of a collaborative, participatory andcommunity-owned process.

The following diagram is taken from asummary of findings from Chile, Ghana,Peru and Tanzania. Each of the five boxescan be further elaborated. The pull-out boxin the diagram on the following page showsan elaboration of the central box, drawingon input from a global workshop on

partnerships for regional developmentplanning, hosted by ICMM in October 2010.



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ANNEX2



Mining and economic development: regional development planning diagram

Partnership forregional development

planning

Host governments:

Invite corporate participation in regionalplanning

Opportunities for economic diversification

Consider regional/local developmentagency


Participate in regional developmentplanning

Deliver development/diversificationprojects

Donor agencies:

Provide resources to support regionaldevelopment planning

Companies:

Link mine infastructure to regionalplanning

Participate in subnational development

planning

Sponsor economic diversification initiatives

1. Leverage resources (funds, skills, networks)

2. A clear split of roles e.g MoU is essential (but not enough)

3. Good communications with communities are essential

4. Evidence based business case focus government priorities

5. Engage as part of an industry body (or avoid duplication)

6. Cross sector partnerships may be vital for long termsustainability e.g. Tourism

7. Understand what government needs align, dont fightagainst it

8. Think strategically, but be pragmatic; quick wins build trust


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Mining and economic development:local content

Local content can be defined as thesourcing of labour, materials, goods andservices from small businesses andcommunities close to a mine site. The exact

geographical area constituting local willdepend in large measure on what is availableand on cost, but the meaning of localshould in principle be discussed and agreedon a site-by-site basis with communities.From a mining companys viewpoint, the costor inconvenience of a broader definition oflocal content (rather than looking only atlocal employment or local procurement)needs to be balanced against the broader

benefits that it will bring.

Partnerships to promote local content willoften need to ensure that local labour,materials, goods and services meet thequality standards for companies. The theoryand organizing principles for partnerships ofthis sort are not well defined and would be auseful focus of your research addressing thistheme.28

It is also possible to go into more detail on aspecific subject area. For example localcontent covers a range of topics, including:

1. Forming clusters and establishingsupplier development programs

2. Strengthening enabling environment for

small business/micro-enterprisedevelopment

3. Providing access to finance for smallbusinesses/micro-enterprises

4. Providing local employment and trainingopportunities

The following diagram looks at one of theseaspects in detail, providing some examplesunderneath.

28 See Developing SMEs through Business Linkages:A manual for practitioners based on the MozLinkmentorship experience in Mozambique, available athttp://commdev.org.


ANNEX2



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ANNEX2



Examples

Antofagasta mining cluster

IFC/Newmont/technoserve linkages program in Peru

ODI/EAP guidance notes on working with lead contractors

Enhancing local contentin the mining sector

Forming clusters andestablishing supplier

development programs

Donors:

Facilitate public/private dialogue toidentify opportunities for clusterformation

Provide technical assistancee.g. supplier development training

Co-fund establishment of supplierdevelopment program


(Development NGOs)Encourage minority- or female- ownedsuppliers to participate

(Technical institutions and universities)Provide training for small businesses

Governments:

Incentivize and enable groups oflocally-based companies and suppliersto form clusters

Encourage public agencies to participatein clusters

Facilitate the development of localindustrial/supplier parks

Companies:

Collaborate with peers and lead contractorsto transfer skills and knowledge to localbusinesses, e.g. ISO certification

Encourage participation of Artisanal andSmall-scale Miners (ASM) in clusters,where good relationship exists

Expand scope of clusters to includeregional development planning

Mining and economic development: local content partnership diagram


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Mining and social investment

Social investment can be defined as theprovision and use of finance to generateeconomic and social returns in the localcommunity, typically in health, education orhousing.29 Social investment by mining

companies has traditionally been undertakenad hoc or on a philanthropic basis. However,many mining companies now see that socialinvestment is in their strategic interest.They are therefore starting to align theirinvestments, where possible, with community

needs, with the long-term objectives ofstrengthening community self-reliance,building the capacity of local authorities tomeet local needs, and reducing dependenceon the company.

A narrow, philanthropic view persists in many

countries of social investment as short-term,discretionary spending, rather than as the sumtotal of a mining companys contribution toeconomic and social development. You shouldbe sure to be clear on what your documentarysources and interviewees mean by the term.

29 See Strategic Community Investments: A Quick Guide(2010) produced by the International FinanceCorporation and available at http://commdev.org.

Mining and social investment partnership diagramThis diagram (a working version) comes from a mapping of partnerships in the Lao PDR

Mining and socialinvestment

Government:

Delivery of projects funded by SeponDevelopment Trust Fund

Government staff secondments tocompanies, partly to build capacity onsocial issues management


Project on forestry and naturalresources management (with Phu Biaand communities)

Projects in collaboration with mineslinking conservation and livelihoods

International organizations: Facilitation of social development

projects at provincial level

Companies: Wide-ranging community development

commitments at local and regional levels

Encouraging community self-governancevia participatory planning


ANNEX2



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ANNEX2



Mining and disputes resolution

Mining will inevitably bring some negativeimpacts. Disputes resolution is a processto investigate complaints, resolve disputes,and settle grievances between communitiesand companies. It requires a reciprocal

accountability for allegations, statements,and commitments and a process in whichaffected communities have confidence.

Mining and disputes resolution partnership diagramThis diagram is taken from a summary of findings from Chile, Ghana, Peru and Tanzania

Collaborative

approaches for disputesresolution

Host governments:

Adopt leadership role by establishingcredible disputes resolution mechanisms

Adopt international best practice oncontentious issues, e.g. resettlement


Support the creation of credible disputesresolution mechanisms

Donor agencies: Develop/spread best practice in disputes

resolution

Help strike balance between individualand national need

Engage as honest broker

Companies: Establish disputes resolution procedures

early on

Link to local trusted and legitimateinstitutions

Have open dialogue


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An example partnership database

Table A.2.1 is the Summary table from anexample partnership database built fromthe experience of a number of large miningprojects in Ghana using Microsoft Excel.Each cell of this particular Summary table

provides a hyperlink to a more detailed table(which you can view using the electronicversion of this database that is availableat www.icmm.com/mpdtoolkit; examples areprovided in Table A.2.2: Table ONE, ahyperlinked interview table from the

example partnership database andTable A.2.3: Table THREE, a hyperlinked

initiatives table from the examplepartnership database ), but a table of this

type would still be useful as a simple listingof the mining operations initiatives underthe same headings, with a brief explanationof each. Or it might be extended to capturethe parallel or complementary initiatives of,say, the government, of international donorsor, indeed, of any of the other stakeholdersthat are listed in the rows of the matrix.

A database similar to the example can begradually developed over time; it need not

be treated as a one-off exercise. It willhave value even if it can only be partlyfilled initially (as, indeed, is the case in theGhana example in Table A.2.1). Its merit isthat it shows that a mining operationssocio-economic initiatives are not stand-alone activities but take place in the contextof broader initiatives in which other partieswill have both a stake and responsibilities.

The same database can also holdstakeholder opinions as non-companyreference points by which to evaluate theprogress of an initiative. In Ghana, forexample, the hyperlinked Tables ONE to SIXinclusive were assembled from structuredfield interviews with each of the stakeholders

listed in the matrix. The results of theopinions could be presented as discursivetext in the corresponding sections of theinitiatives tables (Tables SEVEN to ELEVENin the example).

However, since the two sets of data can beaccessed by hyperlink from the singleSummary table (as illustrated), the readercan view both the descriptions of particularsocio-economic initiatives (see the exampletable in Table A.2.3) and the opinions aboutthe initiatives from a variety of stakeholders.The structure of the example database alsoallows the researchers themselves to addtheir own comments and assessments tothe opinion tables (see the final row ofTable A.2.1 and of Table A.2.2).


ANNEX

2

ANNEX

2

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TableA.2.1:Summarytableforanexamplepartnershipdatabase

Government

centralandlocal

Mining

companies

Donors

NGOs

Community

organizations

Local

communities

Researchers

comments

Opinionsfrom

interviews

Initiatives/actions

Opinionsfrom

interviews

Initiatives/actions

Opinionsfrom

interviews

Initiatives/actions

Opinionsfrom

interviews

Initiatives/actions

Opinionsfrom

interviews

Initiatives/actions

Opinionsfrom

interviews

Initiatives/actions

ISSUES

TableONE

TableSEVEN

TableSEVEN

TableONE

ONE

Poverty

reduction

TableTWO

TableEIGHT

TableTWO

TableEIGHT

TWO

Revenue

management

TableTHREE

TableNINE

TableTHREE

TableNINE

TableTHREE

THREE

R

egional

development

planning

TableFOUR

TableFOUR

TableTEN

TableFOUR

FOUR

Increasedloc

al

content

TableFIVE

TableFIVE

TableELEVEN

FIVE

Social

investment

TableS

IX

TableS

IX

TableS

IX

TableS

IX

SIX

Disputes

resolution

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HOW HAS ECONOMICGROWTH AND SOCIALDEVELOPMENT CHANGEDIN PERIODS OF MININGEXPANSION?

Imagecourtesyof

Xstrata


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31 Professor Maddisons two-volume work, The WorldEconomy, contains GDP-per-capita estimates foralmost all countries of the world for many decadesand, in some cases, centuries. It can be ordered inpaperback or as an E-book (PDF format) from theOECD bookshop, online at www.oecdbookshop.org.

32 Available via the UNDP Human Development Reportwebsite at http://hdr.undp.org/en/statistics.

MODULETHREE

Measuring the miningindustrys contribution tothe host countrycontinued

the main episodes of mining. Short dataperiods can be supplemented if country-level data are available (for example, fromthe national central bank or statistics office).

The longest sets of GDP-per-capita timeseries have been developed by the late

Professor Angus Maddison and colleaguesat the Growth and Development Centre ofthe University of Groningen.31 These datacover almost every country in the world andcan set recent growth in any economy in atime context of decades or even centuries.Be aware, however, the GDP indicator haspitfalls, as well as benefits (Box 3.1).

Box 3.1: Measuring development withgross domestic product a warning!

The development of a country is toocomplex and multi-dimensional a

process to be definitively tracked by asingle indicator. The standard metric,GDP, offers simplicity and a usefulstarting point but has basic weaknesses.You cannot, for example, measure theproduction of all activities with equalprecision, particularly in an economywhere outputs like subsistence foodproduction are never formally priced ina commercial market.

Similarly, GDP assumes that all outputshave a value equal to the price at whichthey are sold and so cannot, forexample, fully represent the overallvalue of hospitals, schools, or publicgoods and services. Services deliveredfree to a family member likewise havea nominal value of zero. Nor can GDPmeasure positive or negative non-quantifiable effects, such as leisure

time and environmental degradation.

You are therefore recommended tocombine GDP with other socialindicators into a composite measure ofdevelopment, or the quality of life.The UNDPs human development index(HDI) is the most well-known of suchcomposite measures32 and takes accountof more fundamental aspects of peoples

lives, such as life expectancy andliteracy, than the narrow, monetaryscope of GDP.



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STEP 2: Poverty alleviation and relatedsocial developmentYou will be able to measure povertyalleviation and related social developmentby the indicators established to monitorcountries progress towards the UnitedNations Development Programmes

(UNDPs) Millennium Development Goals.The Millennium Development Goals websitelists the eight goals broken down into 21quantifiable targets that are measured by60 indicators.33 The relevant indicators areavailable for most countries from the UNDPand can be individually selected from a longlist to create a customized set of data forone or more countries or regions that canthen be downloaded as a Microsoft Excel

file. (Go tohttp://hdr.undp.org/en/

, select thetab Countries, then the country of interestand then Build Your Own Tables.)

Millennium Development Goals monitoringis relatively recent, and earlier data maybe obtained from the World Banks WorldDevelopment Indicators.34 As well, manylower-income countries now monitor theirprogress in these areas, for example, inspecialized surveys, national census data,

poverty reduction studies and sector surveys;and these data may be available from acountrys national statistics office, fromother government departments or fromdonors. Alternatively, you may find somedata available on your country from theMultidimensional Poverty Index (MPI).35

Intra-country comparisons of local orregional versus national socio-economic

development trends is covered later in


MODULETHREE


module five, but you may find that modulethree is a convenient opportunity to tapnational and international sources for dataat the levels of local and regional government.UNDP, for example, produces regional-levelstatistics for some countries.

There are limits to how much a normalmining operation can reduce local povertydirectly: employment, for example, willtypically not be large; the most expensiveconsumables will be imported; and mostdirect payments will go to the nationalgovernment. However, the indirect potentialto improve human welfare in the vicinity of amine can be considerable, for example, ifrevenues from mining are put to good use atlocal (not just national) level. Module fiveaddresses mining impacts at the local scaledirectly, but you should be alert to anyevidence at the national level of localinitiatives of government, as this willinvariably be a focus of future criticalscrutiny of toolkit results.36

33 The full list of goals, including targets within eachgoal, is available at www.undp.org/mdg/basics.shtml.

34 http://data.worldbank.org/indicator.

35 In addition, it is worth checking whether yourcountry is one of 104 that have been the subject ofanalysis by the Oxford Poverty and HumanDevelopment Initiative and the UNDP HumanDevelopment Report ,which in November 2010launched the Multidimensional Poverty Index (MPI).This is an innovative new measure that gives a vividmultidimensional picture of people living inpoverty by assessing the nature and intensity ofpoverty at the individual level in education, healthoutcomes, and standard of living. If you do use theMPI data in your study, please cite it as: Alkire,Sabina and Maria Emma Santos. 2010.Multidimensional Poverty Index: 2010 Data. OxfordPoverty and Human Development Initiative.Available at:www.ophi.org.uk/policy/multidimensional-poverty-index/.

36 The World Bank website provides information on a

wide range of useful tools for conducting economicanalysis in poverty and social impact analysis and anumber of case studies (including information on theDemocratic Republic of the Congo Poverty and SocialImpact Analysis Mine Sector Reform).


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MODULETHREE




Generally, the data you gathered in Step 1should be presented as graphs or tableswith an accompanying narrative drawingattention to the main points illustrated bythe graphs or listed in the tables. Figure 3.1

provides an example of how you mightpresent the GDP information.

You should present information for Step 2as graphs or tables with a brief explanatorynarrative. (Box 3.2 illustrates the kind ofconclusions that these data might support.)If you can, benchmark the host countryagainst countries in the same geographicalregion or in the same World Bank income

group.

The benefits of benchmarking by the humandevelopment index are apparent in Figure3.2, which shows how GDP and the HDI cangive different results for different countries.Angola, for example, has a large petroleumindustry, investment in which will make alarge contribution to GDP per capita.

However, the Sao Tome and Principeexample shows that a low GDP may havelittle bearing on the more completeindicators of quality of life measured bythe HDI.

Azerbaijan (Table 3.1) provides anotherexample of how the Human DevelopmentReport data available on the UNDPs websitecan be used to illustrate the widely divergingHDI scores in countries with similar levelsof income measured by GDP.


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10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%

Fig

ure3.1:Graphicexamplepre

sentinggrowthratesofGDP

percapita,

19562012

19561957195819591960196119621963196419651966 1967

196819691970197119721973197419751976197719781979 1980

1981198219831984198519861987198819891990199119921993

1994199519961997199819992000200120022003200420052006

200720082009201020112012


NOTE:Datafrom

ProfessorAngusMaddison/UniversityofGroningen

andWorldBankfigures.

2002

Newmining

lawkick-starts

largescaleinvestments

1998

Currencycrisisfollowing

monetaryexpansion

1986

Reformprogramsta

rts
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MODULETHREE


Box 3.2: Findings on economic growth from four country case studies

The Chile, Ghana, Peru and Tanzania case studies all show a relationship betweenmining investment and sustained national economic improvement. In each case, thenational government had laid the policy foundation for growth by a combination ofmacroeconomic stabilization and mineral legislation reform.

The case studies also show the role of mining companies in local projects, such asschools and hospitals. The social investment budgets were modest (for example,US$5.6 million a year for Perus US$2.3 billion Antamina mine), but they werenonetheless locally significant. Meanwhile, the tax revenues from mining were potentiallybringing growth and socio-economic development locally, as well as nationally.

For all these positive indicators, however, the striking finding has been of persistentlocal dissatisfaction, even in these relatively successful countries. Obviously, levels ofpoverty could always have fallen faster; but the root cause seems to have been morecomplex and, hence, more difficult to address than mere improvement in performance.

Rather, companies were facing a vexing coincidence of local dissatisfaction and distrustduring (and indeed in spite of) a general economic boom. This paradox fits researchfindings in many (and indeed not only) mining countries: growing horizontal inequalitybetween rich and poor induces social tension and conflict even as general incomes rise.

The six most common specific problems found across the four case studies were:

the adequacy and fairness of the tax regime for mining in the host country;

the revenue allocation system, particularly when it constrains the efficient andeffective use of public resources, including those generated by mining taxes androyalties;

conflicts over land use and property rights;

environmental damage and concerns;

conflicts between large-scale and artisanal mining; and

the problems associated with mine closure.

Source: ICMM Spotlight Series 02: The Challenge(2006).



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Figure 3.2: Human development index provides a useful accompaniment to narrowdefinitions of income as measured by GDP per capita

Human development index

Sao Tome and Principe

Angola

0.70

0.68

0.66

0.64

0.62

0.60

0.58

0.56

0.54

0.52

0.50

6,000

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

GDP per capita PPP US$

NOTE: The maximum value for the human development index is 1.0.

Source: Indicator table H of the UNDP Human Development Report 2009.



MODULETHREE


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Table3.1:Example

presentationofhumandevel

opmentindexdataforAzerbaijan

HDIvalue-ranking

(andvalueofindex);

maximum

value=

1.0

1.

Norway(0.971)

84.

Armenia(0.798)

86.

Azerbaijan(0.787)

87.

Thailand(0.783)

182.

Niger(0.340)

GDPpercapita

(PPPUS$)

1.

Liechtenstein(85

,382)

82.

Thailand(8,135)

84.

Azerbaijan(7,851)

85.

Peru(7,836)

181.

Congo(Democratic

Republic)(298)

Combinedgross

enrolmentratio

(%)

1.

Australia(114.2)

118.

Albania(67.8)

120.

Azerbaijan(66.2)

121.

SyrianArabRepub

lic(65.7)

177.

Djibouti(25.5)

Lifeexpectancyat

birth;

ranking(andyears

)

1.

Japan(82.7)

99.

Indonesia(70.5)

101.

Azerbaijan(70.0)

102.

Egypt(69.9)

176.

Afghanistan(43.6)

Adultliteracyrate

(%ages15andabove)

1.

Georgia(100.0)

11.

RussianFederation

(99.5)

13.

Azerbaijan(99.5)

14.

Armenia(99.5)

151.

Mali(26.2)


Source:UNDP,HumanD

evelopmentReport.


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The proximateaspects ofgovernance that

help or hinderminings economicand socialperformance

ANNEX 3Calculating and reportingtax payments

MODULE

FOUR


56/180

Imagecourtesyof

NipponMining&Metals

IMPROVEMENTS INGOVERNANCE, ALONGWITH REFORMED (ANDMORE PREDICTABLE)

MINERAL LEGISLATIONAND SIGNIFICANTLYIMPROVED MACROECONOMICMANAGEMENT, ARETHE THREE FACTORSUNDERPINNING MININGSCONTRIBUTION TO

ECONOMIC GROWTH ANDPOVERTY REDUCTION.


57/180

MODULE

FOUR

39 The World Banks Worldwide Governance Indicators

reflect the grouping of several hundred individualvariables measuring perceptions of governancedrawn from 25 separate data sources andconstructed by 18 different organizations into thesix aggregate indicators of quality of governance.

Purpose

Governance consists of the traditions andinstitutions by which authority in a countryis exercised. This includes the process bywhich governments are selected, monitoredand replaced; the capacity of the government

to effectively formulate and implementsound policies; and the respect of citizensand the state for the institutions thatgovern economic and social interactionsamong them.37

The purpose of module four is to identifyand discuss proximateelements in the hostcountrys governance that could affect, orhave affected negatively or positively, the

economic and social benefits of mining.

38

Such elements include good governance,a sound exchange rate policy, and goodmacroeconomic management. In contrastto proximate influences, fundamentalinfluences include direct contributions togovernment revenues, gross domesticproduct (GDP), and the balance of payments.These are assessed in module six.

Understanding the main governance

indicators at this point will help youranalysis (for example, of national andregional differences) during subsequentmodules of the toolkit (and especiallymodule seven).

Gathering the data

Module four requires data about two of theproximate components of governance:

Step

Documents

Manual de minería MPD Toolkit