Tag Archives: Extractive Industries Transparency Initiative (EITI)

States Captured by Energy Companies: Canada

Diavik Diamond Mine, Canada

Few governments have aligned their interests so closely to those of their country’s energy and mining firms as Canada’s Conservative administration. The prime minister, Stephen Harper, has boasted of Canada as an “emerging energy superpower”. Under the banner of “responsible resource development”, his government has done its best to ease the way for minerals firms, at home and abroad, including directing some foreign aid to countries where Canadian firms wanted to drill. Ministers point with pride to the C$174 billion ($169 billion) in export revenues from sales of minerals, oil and gas in 2013 and to the fact that Canada is home to more than half of the world’s publicly listed exploration and mining companies.

But the downside of seeming so cosy with extractive firms is that whenever one of them gets in trouble—an inevitable occurrence with 1,500 firms active in more than 100 countries—the country’s image is tarnished too. So the government has recently begun to reduce that vulnerability by taking a stricter line on corporate social responsibility (CSR) and bribery by Canadian firms operating abroad. Protecting the national brand is “a huge part of it,” says Andrew Bauer of the Natural Resource Governance Institute, a group that monitors the industry and lobbies for openness.

Ed Fast, the international trade minister, admitted as much on November 14th, as he introduced new rules that require Canadian resources firms involved in disputes with local communities to take part in a resolution process. If any firms refuse, the government will withdraw its economic diplomacy on their behalf…[In the meantime there are ] protests against Canadian firms’ projects, from Romania where environmentalists are objecting to plans for an opencast gold mine, to Guatemala, where guards at a nickel mine have been accused of gang rape…

A new Canadian law  was introduced in October 2014 to curb bribery by mining and energy firms by demanding more transparency from them. The law, which still must be fleshed out in detailed regulations, requires them to disclose all payments made to domestic and foreign governments…It helped that the law was backed by an unusual coalition of non-government organisations and mining companies themselves. T  It seems that the miners’ experience in dealing with local communities is making them more sensitive to their concerns about corruption and other ills. In contrast, the oil and gas firms are lobbying for the transparency law to be weakened. They want to be given exemptions in countries whose local laws conveniently prohibit the disclosure of such payments. They also want to avoid having to give a project-by-project breakdown of their payments, without which the information would be of little use.

Excerpt Canada’s natural-resources companies: Reputation management, Economist, Nov. 22, 2014

Mining in Africa: fairness versus concession flipping

Iron ore pellets used in steel construction

The Nimba mountains, straddling the borders of Liberia, Guinea and Ivory Coast, hold one of the world’s richest deposits of iron ore…

Most west African governments have signed—or pledged to sign—the Extractive Industries Transparency Initiative (EITI). The EITI tries to ensure that contracts and accounts of taxes and revenue generated by concessions are open to public scrutiny. But that is easier said than done. Last year Liberia’s government asked a British accounting firm, Moore Stephens, to carry out an audit of Liberian mining contracts signed between the middle of 2009 and the end of 2011. The audit, published last May, found that 62 of the 68 concessions ratified by Liberia’s parliament had not complied with laws and regulations. The government has yet to take action after a string of recommendations emerged from an EITI retreat in July 2013.

Regional governments also fret over a practice known as “concession flipping”, whereby foreign mining companies that do not have the capacity to exploit sites sell their concessions to larger companies for windfall profits. “Every flip is essentially a heist on the government exchequer, with anonymous offshore firms as the getaway car,” says Leigh Baldwin of Global Witness, a London-based lobby that fights for fairer deals for local people and their governments from mining and other resources. Concession flipping, he adds, is widespread in Africa. The Africa Progress Panel, headed by Kofi Annan, a Ghanaian who once led the UN, has put out a report called “Equity in Extractives”. This, too, stresses a need for more openness in mining contracts. As people in the region demand more democracy, better deals from mining are a new priority.

Mining in west Africa: Where’s our cut?, Economist, Dec. 7, 2013, at 51