Responsible mineral development: a multidimensional view on value creation in mining
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Responsible mineral development: a multidimensional view on value creation in mining

on

  • 690 views

Mining On Top: Stockholm 2013 ...

Mining On Top: Stockholm 2013
26-27 Nov 2013

Responsible mineral development: a multidimensional view on value creation in mining – José García, World Economic Forum; Associate Director, Mining & Metals

Statistics

Views

Total Views
690
Views on SlideShare
286
Embed Views
404

Actions

Likes
0
Downloads
9
Comments
0

2 Embeds 404

http://www.miningontop.com 288
http://miningontop.com 116

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Responsible mineral development: a multidimensional view on value creation in mining Presentation Transcript

  • 1. Responsible Mineral Development Initiative (RMDI) Maximizing the Value of Extractives José M García Stockholm, 26 November 2013
  • 2. Mission The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Incorporated as a not-for-profit foundation in 1971, and headquartered in Geneva, Switzerland, the Forum is tied to no political, partisan or national interests. Vision To catalyze and integrate global, regional and industry transformation processes as the trusted partner of our members and constituents
  • 3. Responsible Mineral Development overview 2
  • 4. Increasing recognition of mining's potential role in development "This year, the obligations of the industry as a development partner were front and centre... the debate was as much about people and politics as it was about mining. The agenda has clearly changed" -Ed O'Keefe, Director, Synergy Global Consulting, on INDABA 2013 "I’m not sure that we want companies that are just going to dig holes. We want companies that are going to make those linkages and build our economy for the future, post-mining" -Paul Jourdan, South African government advisor "We can change the lives of communities forever. We can go from being an extractive industry to a development industry." - Mark Cutifani, Anglo American CEO 3
  • 5. What is RMDI? - Neutral platform for multi stakeholder engagement - Identifies number of possible actions, initiatives and case studies that address the predominant challenges. Practical examples that have helped to advance responsible mineral development in specific circumstances - RMDI is actively working to establish collaborative multi-stakeholder dialogue platforms in a number of countries e.g. Peru, Chile, Mongolia, Guinea, Mozambique - At either national or local level, a dialogue platform can explore the perceptions and attitudes of participants regarding the “value” to be derived from mineral development activities 4
  • 6. RMDI was established to provide guidance around key challenges Phase I (2010) Identified key challenges Phase II (2011) 6 building blocks for practical action 1 Progressive capacity building and knowledge sharing Stakeholder perceptions and suggestions on challenges  Views, priorities and concerns about mineral development  What works and what does not Common challenges:  Limited capacity  Insufficient stakeholder inclusion  Opaque negotiation and decision process  Incomplete compliance & monitoring 250 interviews in 13 countries and 4 continents 6 2 Early and comprehensive dispute management Towards responsible mineral development 5 Thorough compliance monitoring and enforcement of commitments A shared understanding of the costs and benefits 3 Collaborative processes for stakeholder engagement 4 Transparent processes and arrangements 10 workshops on 6 continents with more than 300 participants 5
  • 7. RMDI country roundtables: A Global Initiative Phase I 2010 Phase II 2011 Phase III 2012-13 6
  • 8. Context: Responsible Mineral Development Initiative phase III: Development of Mineral Value Management concept and tool Phase III (2012):Creating a better understanding of value between stakeholders • Development of Mineral Value Management (MVM) tool based on RMDI building blocks 2 and 3 and four main barriers to understanding: 1. 2. 3. 4. • Focus on specific & easily quantifiable value dimensions Mismatch between expectations and reality Failure to involve the right stakeholders and /or misunderstood objectives Assumption that value is a zero sum game Mineral Value Management survey tool tests perceptions and expectations of stakeholders across 7 key dimensions of value for the mining sector (fiscal, employment & skills, environment & biodiversity, social cohesion/cultural & socio-economic, procurement & supply chain, beneficiation & downstream, infrastructure) 2012 Global survey of over 300 stakeholders, testing perceptions and expectations 7
  • 9. 'Mineral Value Management' tool tests expectations across 7 dimensions of value 1 Fiscal (tax, royalties etc.) & legal / regulatory environment 7 Infrastructure Diversification & Multiplier Impacts 6 Beneficiation & downstream industry 5 Procurement & supply chain 2 Employment & skills Direct Mining 3 Environment & bio-diversity 4 Social cohesion, cultural and socioeconomic Used to conduct global survey of ~300 stakeholders, generating 4 key insights 8
  • 10. Differences in the levels of expectations between stakeholders Survey results: Insight i Example: Global survey results – African region Governments Commodity producers Fiscal, leg. & reg Fiscal, leg. & reg Employment & skills Infrastructure 0 Downstream Environ. & biodiversity +4 Fiscal, leg. & reg Employment & skills Infrastructure 0 Downstream +2 Procurement & supply Others (NGO's, academics...) Environ. & biodiversity 0 Downstream +2 Socio-econ. & culture Perceived value today Procurement & supply +4 Employment & skills Infrastructure Environ. & biodiversity +2 Socio-econ. & culture Procurement & supply +4 Socio-econ. & culture Expected future value (10 years) Key : 0 – country rates lowest in the world for value creation in this dimension 2 – average value creation in this dimension 4 – country rates amongst the highest in the world for value creation in this dimension 9
  • 11. Stakeholders are starting with different perceptions and aspirations Insight i Peru survey results Governments (n=5) Commodity producers (n=27) Civil society (n=26) (NGO's, communities,...) Nations (Governments) Commodity producers NGO's & Communities I) Fiscal, legal & regulatory environment 4 I) Fiscal, legal & regulatory environment 4 I) Fiscal, legal & regulatory environment 4 VII) Infrastructure 3 II) Employment & skills VII) Infrastructure 3 II) Employment & skills VII) Infrastructure 3 2 2 1 1 1 0 0 II) Employment & skills 2 III) Environmental and bio- VI) Beneficiation and downstream industry diversity VI) Beneficiation and downstream industry V) Procurement and supply industries IV) Socio-economic, cultural and social cohesion Current Future Perceived value today V) Procurement and supply industries 0 III) Environmental and bio- VI) Beneficiation and downstream industry diversity IV) Socio-economic, cultural and social cohesion III) Environmental and biodiversity V) Procurement and supply industries Current Future Expected future value (10 years) IV) Socio-economic, cultural and social cohesion Current Future NGO's & Communities Key : 0 – country rates lowest in the world for value creation in this dimension 2 – average value creation in this dimension 4 – country rates amongst the highest in the world for value creation in this dimension 10
  • 12. Value driven by 2 types of factors Inherent nature of a country & its resource base and the extractives industry Structural Country's current stage of economic development and maturity of minerals industry Structure & capacity of government and institutional environment Enabling Capacity & willingness of private sector Levels of trust & collaboration and influence of stakeholders 11
  • 13. Fiscal, employment and social dimensions are priorities ... Survey results: Insight ii Ranking of priority dimensions (based on % of times ranked 1st or 2nd ): 1. 2. 3. 7. 1. 2. 3. 7. Fiscal: 54% Employment: 37% Social: 34% Procurement: 6% Fiscal: 53% Social: 43% Employment: 32% Procurement: 8% 1. 2. 3. 7. 1. 2. 3. 7. Fiscal: 62% Social: 32% Infrastructure: 29% Downstream: 8% Fiscal: 55% Employment: 40% Infrastructure: 32% Environment: 9% 12
  • 14. ... but drivers per dimensions may differ by stakeholder Survey results: Insight ii Example survey results: "Enabling factors" which drive value: Employment & skills Fiscal, legal & regulatory Social cohesion, cultural & socio-economic % times factor ranked in top 3 % times factor ranked in top 3 % times factor ranked in top 3 60 60 60 55 53 51 40 40 35 40 30 20 20 15 22 20 20 11 0 0 Gov’t Mining co.s Others (NGO’s, others..) Effectiveness of compliance & monitoring 0 Gov’t Mining co.s Others (NGO’s, others..) Flexibility of labour market Gov’t Mining co.s Others (NGO’s, others..) Ability to implement & monitor legislation 13
  • 15. African stakeholders aligned on the priorities, but what about the solutions? Nations (Governments) Others (NGO's, academics...) Commodity producers % of times ranked 1 or 2 % of times ranked 1 or 2 60 % of times ranked 1 or 2 60 61 60 56 51 48 44 40 39 40 31 26 26 27 20 20 19 20 15 13 6 4 4 Dimensions ranked most as top 2 priority Procurement Social Environ. Employment Fiscal Infrastructure Downstream Procurement Social Environ. Employment 0 Fiscal Infrastructure Downstream Procurement Social Environ. Employment 0 Fiscal 0 4 Infrastructure 23 33 30 Downstream 31 40 Ranked least time in top 2 14
  • 16. In other dimensions, we see differences by stakeholders ... Survey results: Insight iii % of times downstream rated in top 2 (by stakeholder) 85% 30 27 63% 19 20 15 10 7 4 3 0 Government Commodity producer Africa Other (NGO, others..) Government Commodity producer Other (NGO, others..) Latin America 15
  • 17. Why does this matter? Insights Implications i — Differences in levels of expectations between stakeholder groups and regions — Stakeholders need to understand the perceptions and expectations of others ii — Areas of focus may be the same but what creates value for stakeholders within these may differ — Stakeholders need to understand how value is created for them and each other and under what time frame iii In other areas there is differing levels — — Explore ways to mutually maximise value and find acceptable tradeoffs of alignment Having a process which creates transparency around expectations is a critical first step for constructive dialogue 16
  • 18. What is RMDI? A solid initiative 1. A series of reports describing an underlying governance framework to support responsible mineral development as well as best practise examples, 17
  • 19. What is RMDI? A solid initiative 1. A series of reports describing an underlying governance framework to support responsible mineral development as well as best practise examples, 2. The web-based MVM tool, and 18
  • 20. What is RMDI? A solid initiative 1. A series of reports describing an underlying governance framework to support responsible mineral development as well as best practise examples, 2. The web-based MVM tool, and 3. In-country multi-interest mining dialogues that use the results of the countrywide application of the MVM tool, as well as data collected from other initiatives (I.e. ICMM). Peru, Chile, Mongolia, Mozambique 19
  • 21. World Economic Forum – Mining & Metals José M García Associate Director, Mining and Metals Global Leadership Fellow jose.garcia@weforum.org 20
  • 22. Responsible Mineral Development – Stockholm, 26 November 2013 21
  • 23. Background Slides 22
  • 24. Our Value Creation Process Committed to Improving the State of the World HOW WHO World Economic Forum Community of Leaders: The Forum serves as a neutral, impartial and trusted Partner of the global governance system WHAT UNDERSTANDING Community of INTEREST Multistakeholder Core … strategic dialogues to enhance greater understanding of the relevant issues • Government • Business • Civil Society New Champions • Global Growth Companies • Technology Pioneers • Young Global Leaders • Global Shapers • Social Entrepreneurs informal INTERACTION Community of PURPOSE physical, virtual & sustained Strategic Insights • Global Agenda Councils • Global University Leaders • Global Risk Response Network • Global Benchmarking Network • Strategic Foresight SHAPING ACTING catalyzing and integrating Transformation Processes Global  Industry  Regional Community of ACTION … shaping agendas through taskforces and collaborative processes, finding solutions to key issues … catalyzing action to advance global, regional and industry agendas through specific initiatives
  • 25. But stakeholders not necessarily in agreement on best way to do this Selected recent examples: Peru Local stakeholder protests in relation to planned Conga mine Guinea Ongoing review of mining contracts and recent strikes at mining operations Namibia transferring new mining and exploration to a state-owned company Mongolia Ongoing discussions in relation to issues with Oyu Tolgoi project Indonesia Introduction of mineral ore export restrictions from May 6 2012 Chile Increasing discontent from local communities including legal action Argentina Provincial governors demand larger share of mines Zimbabwe "indigenization" policy will force foreign firms to "cede" a 51% stake to locals. South Africa Ongoing civil unrest in relation to mining labor and resource nationalization debate Australia High profile public debate in relation to Mineral Resource Rent Tax 24
  • 26. Phase III (2012): Creating a better understanding of value between stakeholders 4 main barriers to understanding — Focus on specific & easily quantifiable value dimensions Used building blocks 2 & 3 to create 'Mineral Value Management' 2 A shared understanding of costs and benefits — Mismatch between expectations and reality — Failure to involve the right stakeholders and /or misunderstood objectives — Assumption that value is a zero sum game Creating a better understanding of expectations and how value is created for all stakeholders..... 3 Collaborative processes for stakeholder engagement .....in a multistakeholder process designed to increased transparency 25
  • 27. Differences in the levels of expectations between stakeholders Survey results: Insight i Example: Global survey results – African region Governments Commodity producers Fiscal, leg. & reg Fiscal, leg. & reg Employment & skills Infrastructure 0 Downstream Environ. & biodiversity +4 Fiscal, leg. & reg Employment & skills Infrastructure 0 Downstream +2 Procurement & supply Others (NGO's, academics...) Environ. & biodiversity 0 Downstream +2 Socio-econ. & culture Perceived value today Procurement & supply +4 Employment & skills Infrastructure Environ. & biodiversity +2 Socio-econ. & culture Procurement & supply +4 Socio-econ. & culture Expected future value (10 years) Key : 0 – country rates lowest in the world for value creation in this dimension 2 – average value creation in this dimension 4 – country rates amongst the highest in the world for value creation in this dimension 26
  • 28. Fiscal, employment and social dimensions are priorities ... Survey results: Insight ii Ranking of priority dimensions (based on % of times ranked 1st or 2nd ): 1. 2. 3. 7. 1. 2. 3. 7. Fiscal: 54% Employment: 37% Social: 34% Procurement: 6% Fiscal: 53% Social: 43% Employment: 32% Procurement: 8% 1. 2. 3. 7. 1. 2. 3. 7. Fiscal: 62% Social: 32% Infrastructure: 29% Downstream: 8% Fiscal: 55% Employment: 40% Infrastructure: 32% Environment: 9% 27
  • 29. ... but drivers per dimensions may differ by stakeholder Survey results: Insight ii Example survey results: "Enabling factors" which drive value: Employment & skills Fiscal, legal & regulatory Social cohesion, cultural & socio-economic % times factor ranked in top 3 % times factor ranked in top 3 % times factor ranked in top 3 60 60 60 55 53 51 40 40 35 40 30 20 20 15 22 20 20 11 0 0 Gov’t Mining co.s Others (NGO’s, others..) Effectiveness of compliance & monitoring 0 Gov’t Mining co.s Others (NGO’s, others..) Flexibility of labour market Gov’t Mining co.s Others (NGO’s, others..) Ability to implement & monitor legislation 28
  • 30. African stakeholders aligned on the priorities, but what about the solutions? Nations (Governments) Others (NGO's, academics...) Commodity producers % of times ranked 1 or 2 % of times ranked 1 or 2 60 % of times ranked 1 or 2 60 61 60 56 51 48 44 40 39 40 31 26 26 27 20 20 19 20 15 13 6 4 4 Dimensions ranked most as top 2 priority Procurement Social Environ. Employment Fiscal Infrastructure Downstream Procurement Social Environ. Employment 0 Fiscal Infrastructure Downstream Procurement Social Environ. Employment 0 Fiscal 0 4 Infrastructure 23 33 30 Downstream 31 40 Ranked least time in top 2 29
  • 31. In other dimensions, we see differences by stakeholders ... Survey results: Insight iii % of times downstream rated in top 2 (by stakeholder) 85% 30 27 63% 19 20 15 10 7 4 3 0 Government Commodity producer Africa Other (NGO, others..) Government Commodity producer Other (NGO, others..) Latin America 30
  • 32. .....but potential alignment on other opportunities Survey results: Insight iii Question: Is the largest area for improvement in the 'direct' or 'multiplier' effects? Infrastructure 100 80 60 57 59 Multiplier 40 43 41 Direct G’ments Comm. Prod. Others (NGO’s, others...) 60 40 20 0 Direct: Improving the direct mining infrastructure in the country to attract more investments and improve the profitability of the industry (e.g., leading to more taxes, etc...) Multiplier: Leveraging the infrastructure for broader use (e.g., other non-mining industries, public services, etc...) 31
  • 33. Why does this matter? Insights Implications i — Differences in levels of expectations between stakeholder groups and regions — Stakeholders need to understand the perceptions and expectations of others ii — Areas of focus may be the same but what creates value for stakeholders within these may differ — Stakeholders need to understand how value is created for them and each other and under what time frame iii In other areas there is differing levels — — Explore ways to mutually maximise value and find acceptable tradeoffs of alignment Having a process which creates transparency around expectations is a critical first step for constructive dialogue 32
  • 34. Suggested action Agree on actions for priority areas — Needs to address both data based findings and perceptions Continue to invest in capacity building to ensure dialogue is constructive — Use of globally accepted frameworks and case studies can create common understanding Increased focus on ways to collaborate within and between stakeholder groups — Requires ongoing country level interactions with a commitment to action Global community (international organizations, donors, industry platforms, etc) and the role they can play in providing a neutral platform — Creating trust is vital for establishing and maintaining partnerships 33