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