Transparency in the Mining Sectr Taxes and Value Distributin A presentatin by Edward Bickham 17 April 2014 Senir Adviser, Gld fr Develpment, Wrld Gld Cuncil UKSIF and Sustainalytics Seminar Edinburgh
Transparency in the Mining Sectr EITI and Publish What Yu Pay Ddd-Frank and Hme Cuntry Mandatry Disclsure Vluntary disclsure initiatives Pressure fr disclsure has been driven by Resurce curse thery Cmbating crruptin and embezzlement Resurce natinalism Suggestins f pr deals and tax avidance/evasin Industry desire t explain its ecnmic cntributin Wrld Gld Cuncil Member Relatins Strategy & Implementatin Jan 2013 2
Extractive Industries Transparency Initiative Cncept launched by British Prime Minister in 2002 Gvernment-led; multi-stakehlder gvernance Initial fcus n natinal-level cmparisns between cmpany payment and gvernment receipts Meeting prcedural requirements leads t validatin/cmpliance Significant enhancement f infrmatin availability and trust Questins abut impact n gvernance and develpment utcmes Endrsed by UN, Wrld Bank, G8, G20 etc 44 implementing cuntries 26 cmpliant 40+ supprting mining cmpanies Over $1trillin in revenues cvered by reprts Wrld Gld Cuncil Member Relatins Strategy & Implementatin Jan 2013 3
Mandatry Hme Cuntry Reprting Fcus n crprate accuntability and internatinal tax cmparisns Ddd-Frank s.1504 prject-by-prject reprting awaiting implementing regulatins EU Transparency Directive Canadian legislatin in cnsultatin phase But EITI ffers mre Cuntry-wned prcesses and lcal accuntability In-cuntry cmprehensive cverage Fcus n what is dne with revenues Ability t fllw-up n discrepancies Empwerment f parliamentarians and natinal institutins Wrld Gld Cuncil Member Relatins Strategy & Implementatin Jan 2013 4
Challenges fr EITI New Standard has brader cverage f issues: SOE-Gvernment transactins Gives mre scpe t adapt t address natinal pririties Strnger fcus n sub-natinal transfers Disclsure f license wnership and pen cadastres Infrastructure fr minerals barter deals Encuragement f cntract transparency and disclsure f beneficial wnership Encuragement f greater scrutiny f budgeting and expenditures Flexibility v Inclusin Mre fcus n impact and utcmes Influx f OECD implementing cuntries Impact n relatinships frm falling metal prices Wrld Gld Cuncil Member Relatins Strategy & Implementatin Jan 2013 5
What is the respnsible gld mining value distributin reprt? An innvative reprt that quantifies the ecnmic cntributin made by respnsible gld mining cmpanies. It prvides an analysis f hw aggregated value is distributed as between stakehlder grups including emplyees, suppliers, gvernments and investrs Why was it develped? Mining can make a significant impact t ecnmic grwth and develpment. In many cuntries it is a key driver f GDP, tax revenues, freign exchange and emplyment. There is an intense debate abut whether the benefits f mining are fairly distributed. Fr cuntries t benefit frm their mineral reserves, a number f stakehlders need t be invlved, including gvernment, cmmunities, cmpanies and the investrs wh fund the cmpanies. There is ften the perceptin that ne set f stakehlders benefit t the disadvantage f thers. The reprt aims t infrm discussin f hw respnsible gld mining can supprt sci-ecnmic develpment. Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 6
Methdlgy Each participating Wrld Gld Cuncil member cmpany was asked t prvide infrmatin n payments by cuntry. Cmpanies prvided data frm bth prducing peratins and nn-gld prducing peratins The Wrld Gld Cuncil cnslidated the data n a cuntry-by-cuntry basis. Data was als cnslidated t prvide glbal infrmatin n the amunt f mney that stays in the cuntry where the peratin is lcated and the amunt f mney that is paid t businesses r prviders f capital utside the cuntry. What d we mean by Respnsible Gld Mining? Respnsible gld mining is mining which takes place in cmpliance with applicable laws which bserves high standards f safety and health prtectin and f envirnmental stewardship. Respnsible gld mining is respectful f lcal cmmunities and their cultures and f their human rights; manages its impacts respnsibly and which prvides acceptable and realistic benefits fr all its stakehlders. Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 7
Key facts and figures 15 220,000 96 804 469 $55bn $35bn $8.4bn $3.4bn 80% 7% 85% participating cmpanies number f emplyees and cntractrs Number f perating gld mines Gld tnnage prduced in 2012 Gld tnnage prduced in 2012 in nn-oecd cuntries (58% f ttal) Ttal disbursements in 2012 Ttal payments t businesses Ttal payments t gvernments Payments t prviders f capital % f expenditure incurred in-cuntry Increase in gld tnnage frm 2009 t 2012 Increase in ttal expenditure frm 2009 t 2012 Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 8
Glbal value creatin and distributin Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 9
Glbal Highlights Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 10
Cnsideratins Respnsible gld mining can cntribute t sustainable scial and ecnmic develpment but expectatins need t be reasnable. The appraches taken must reflect natinal cntexts. Cllabrative effrts with gvernments, cmmunities and develpment agencies are needed t prduce sustained imprvements in standards f living, reduce pverty and imprve access t services and pprtunities. Cllabrative effrts shuld be guided by fundamental principles, including treating all individuals with respect, cmmunicating transparently and wrking t create sustained value fr all stakehlders. Gld mining cntributes t grwth and develpment thrugh jbs, skills training and capacity building, supply chain pprtunities, scial investment and infrastructure Mining is a lng-term business, where mining cmpanies take n significant risk, thrugh the cycle, n behalf f their investrs. Typically frm initial explratin t the start f prductin will invlve 10-15 years f upfrnt investment. Of the $44.7bn paid ut in cuntry, $39.2bn (88%) was assciated with prducing peratins and $5.4bn (12%) was assciated with nnprducing peratins, which are incurring csts but n incme. We hpe that by prviding further insight f the ecnmic impact f gld mining and clarifying the realities f the mining life-cycle, we can advance the dialgue arund gld mining s rle in develpment. Wrld Gld Cuncil Respnsible gld mining and value distributin 3 February 2014 11
Cnclusins Simultaneus alienatin f hme cuntry gvernments and investrs Need t imprve understanding f distributin f benefits based n transparency Crrsive impact f brad-brush allegatin f massive illicit flws frm Africa Imprtance f building understanding f all facets f mining s ptential ecnmic cntributin Crucial imprtance f appreciatin f impact f cmmdity cycle and mine lifecycle Extractive sectr is leading the way in cming t terms with transparency Wrld Gld Cuncil Member Relatins Strategy & Implementatin Jan 2013 12
T view a cpy f the reprt, please visit: www.gld.rg/abut_gld/sustainability/sciecnmic/respnsible_mining_value_distributin/ Wrld Gld Cuncil 10 Old Bailey, Lndn EC4M 7NG United Kingdm T +44 20 7826 4700 F +44 20 7826 4799 W www.gld.rg