Prospects and Challenges for the International Mining Industry Craig Andrews, World Bank Lao PDR Stakeholder Workshop Vientiane, Lao PDR September 2006

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How Long Will the Party Last? Commodity prices at all time highs Commodity prices at all time highs Driven by demand in China, India and other rapidly developing countries Driven by demand in China, India and other rapidly developing countries Also, capacity constraints as result of lower prices in late 1990s and no exploration Also, capacity constraints as result of lower prices in late 1990s and no exploration But, exploration spending is up But, exploration spending is up New capacity is coming on-stream New capacity is coming on-stream

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Prospects and Challenges for the International Mining Industry Craig Andrews, World Bank Lao PDR Stakeholder Workshop Vientiane, Lao PDR September 2006 Summary of Prospects and Challenges Boom times, but how long will the party last? Boom times, but how long will the party last? New consumers, companies and producers New consumers, companies and producers Demands for better distribution of benefits Demands for better distribution of benefits Social and community aspects important Social and community aspects important Cannot forget about artisanal mining Cannot forget about artisanal mining Disclosure and transparency Disclosure and transparency How Long Will the Party Last? Commodity prices at all time highs Commodity prices at all time highs Driven by demand in China, India and other rapidly developing countries Driven by demand in China, India and other rapidly developing countries Also, capacity constraints as result of lower prices in late 1990s and no exploration Also, capacity constraints as result of lower prices in late 1990s and no exploration But, exploration spending is up But, exploration spending is up New capacity is coming on-stream New capacity is coming on-stream New Countries and Companies Destination for investment is towards Africa, Latin America, Asia Destination for investment is towards Africa, Latin America, Asia Large, medium and junior players from traditional sources Large, medium and junior players from traditional sources Increasingly, companies from China, Russia, India, SE Asia Increasingly, companies from China, Russia, India, SE Asia Need to harmonize rules and procedures Need to harmonize rules and procedures All players use the same rules All players use the same rules Better Distribution of Benefits Record profits for companies Record profits for companies Political pressures on governments to share in record profits Political pressures on governments to share in record profits Need to ensure sanctity of contract Need to ensure sanctity of contract But, at the same time, develop equitable and price sensitive taxation mechanisms But, at the same time, develop equitable and price sensitive taxation mechanisms Social and Community Aspects Distribution of taxes and royalties between provincial and central authorities Distribution of taxes and royalties between provincial and central authorities Investing in programs for communities Investing in programs for communities Adequate consultation and planning with communities Adequate consultation and planning with communities Respect for environment and management Respect for environment and management Managing expectations Managing expectations Artisanal and Small Scale Mining The many and the forgotten The many and the forgotten Perhaps 50 million persons engage in ASM, nobody knows the precise number Perhaps 50 million persons engage in ASM, nobody knows the precise number Important source of livelihood in rural communities Important source of livelihood in rural communities Grave environmental and safety conditions Grave environmental and safety conditions Human rights abuses, smuggling and illegal activities, support for warlords in some countries Human rights abuses, smuggling and illegal activities, support for warlords in some countries Disclosure and Transparency Extractive industries produce a lot of money very quickly Extractive industries produce a lot of money very quickly Governments have difficulty to manage Governments have difficulty to manage The Resource Curse: money is wasted The Resource Curse: money is wasted Developing international mandate for disclosure of payments and taxes: EITI Developing international mandate for disclosure of payments and taxes: EITI Striking the right balance between stakeholders Striking the right balance between stakeholders Disclosure is only one part of the balance Disclosure is only one part of the balance Public expenditure management is the other Public expenditure management is the other

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