Measuring the contribution ofmining to theLao People’s Democratic RepublicTroy HeyAsian Mining IndabaNovember 2012        ...
Overview    • ICMM - The Resource Endowment Initiative and Mining:      Partnerships for Development    • Measuring the co...
MMG: At a glance                                                                                                          ...
ICMM at a glance            CEO led                          34              22      Association            Company    mem...
ICMM member companies                        www.icmm.com
Overview of ICMM’s work programs and REi                 2. Socio-              3. Environment     4. Health &1. Reporting...
From “resource curse” to resource endowmentOn one hand, mining has failed to bring            However, evidence also shows...
To realize mining’s potential developmentbenefits, good governance is key – bothnationally and locally• Many of the positi...
BB     www.icmm.com
BB   Broadening the benefits from mining                                           www.icmm.com
Where governance is weak, multi-stakeholderpartnerships can help enhance developmentoutcomes• Companies alone cannot unloc...
Key lessons learnt from ICMM’s ResourceEndowment initiative (REi)• Mining can be a powerful driver of development• Good go...
Overview• The ICMM: The Resource Endowment Initiative and  Mining: Partnerships for Development• Measuring the contributio...
Mining Partnerships for Development ToolkitApproachGovernment and ICMM appliedMining Partnerships forDevelopment Toolkit, ...
Lao PDR: Overview of assets and challenges• Land-locked nation - 70% of 5.7m people  live on < $2 per day• Lao PDR well en...
Overview of findings – the benefits Consistently high rates of GDP growth and falling poverty (with  decreasing income in...
Overview of findings – the concerns Some macroeconomic anxieties over evidence that economy at  risk of exceeding macroec...
Mining has leveraged development potential        Lao PDR: GDP growth per capita, 1951-2008Source: Maddison, Angus (2010) ...
Need to ensure positive contribution continuesover long-termSource: MMG Sepon and PBM                                     ...
Lessons learnt• Companies cannot deliver development outcomes alone• As in Chile and Ghana (but unlike Peru and Tanzania),...
Toolkit applied in Lao PDR Enthusiastic  workshop  participation Minister for Mining NERI (Ministry of  Planning and  I...
Outcomes of the Mining: Partnerships forDevelopment process Improved industry  collaboration in country Government bette...
BB    Lao in Context – Mining Contribution Index 13                                        www.icmm.com
For further informationplease contact:Troy Hey, MMG Limited   Kathryn McPhail, DirectorTroy.hey@mmg.com        kathryn.mcp...
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Troy Hey - Keynote Address - Measuring the Contribution of Mining to Lao PDR - Presented in Partnership with the ICMM

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Troy Hey - Keynote Address - Measuring the Contribution of Mining to Lao PDR - Presented in Partnership with the ICMM

  1. 1. Measuring the contribution ofmining to theLao People’s Democratic RepublicTroy HeyAsian Mining IndabaNovember 2012 www.icmm.com
  2. 2. Overview • ICMM - The Resource Endowment Initiative and Mining: Partnerships for Development • Measuring the contribution – the experience of the Lao PDR2 www.icmm.com
  3. 3. MMG: At a glance Izok Corridor copper / lead / silver / zinc Sepon gold / copper Dugald RiverMutoshi Kinsevere lead / silver / zinccopper copper Century Golden Grove lead / silver / zinc copper / gold / lead / silver / zinc Legend: Rosebery Operating assets copper / gold / lead / silver / zinc Development assets2 Exploration areas www.icmm.com 3 Note: the Avebury operation is currently on care and maintenance.
  4. 4. ICMM at a glance CEO led 34 22 Association Company members members Over 800 sites in 62 countries www.icmm.com
  5. 5. ICMM member companies www.icmm.com
  6. 6. Overview of ICMM’s work programs and REi 2. Socio- 3. Environment 4. Health &1. Reporting & economic • Climate Change Safety 5. Materials Assurance Contribution • Water and • Worker Stewardship biodiversity • Resource Endowment • Community • Community Resource Endowment Initiative (REi) www.icmm.com
  7. 7. From “resource curse” to resource endowmentOn one hand, mining has failed to bring However, evidence also shows miningdevelopment in some countries can bring great development benefits• Mining wealth has been mismanaged • In past centuries, the U.S., Australia and plundered, fuelling social conflict, and Britain became rich nations political problems and economic partly by exploiting their mineral stagnation wealth• ICMM analysis of 33 countries found • Various countries show the potential that half performed poorly, for this continues today: experiencing difficulties associated - Chile has in recent years with the “resource curse” become one of South America’s most successful economy while • Examples include relying significantly on mining Angola, DRC, Sierra Leone - Botswana was one of world’s (though the 20 poorest countries 20 years situation is often ago and now, partly due to changing in such diamonds, is one of Africa’s countries) richest www.icmm.com
  8. 8. To realize mining’s potential developmentbenefits, good governance is key – bothnationally and locally• Many of the positive macro contributions of mining will arise naturally provided that the regulatory and taxation conditions are reasonably attractive• But mining’s full potential contribution to development requires a strong governance framework – not just at the national level, but regionally and locally Efficient Natural Mining Governance Positive Resource Activities and Outcomes Endowment Institutions www.icmm.com
  9. 9. BB www.icmm.com
  10. 10. BB Broadening the benefits from mining www.icmm.com
  11. 11. Where governance is weak, multi-stakeholderpartnerships can help enhance developmentoutcomes• Companies alone cannot unlock the full development benefits of mining• Development-focused, multi-stakeholder partnerships are needed• Research under the REi has identified six priority areas for partnership Example Six priority areas for multi-stakeholder Companies: Donor agencies: partnerships identified by REi Example of role: Example of role: • Participate in • Engage with local national NGO and faith  Poverty reduction development groups dialogues  Revenue management  Regional development planning Partnership for  Local content Poverty Reduction  Social investment  Dispute resolution Host Governments: NGOs, Civil Society, Communities: Example of role: • Integrate mining Example of role: into poverty • Recognize role of reduction mining in poverty strategies alleviation www.icmm.com
  12. 12. Key lessons learnt from ICMM’s ResourceEndowment initiative (REi)• Mining can be a powerful driver of development• Good governance is key to unlocking mining’s benefits• Where governance is weak, multi-stakeholder partnerships in six priority areas can help enhance developmental outcomes www.icmm.com
  13. 13. Overview• The ICMM: The Resource Endowment Initiative and Mining: Partnerships for Development• Measuring the contribution – the experience of the Lao PDR www.icmm.com
  14. 14. Mining Partnerships for Development ToolkitApproachGovernment and ICMM appliedMining Partnerships forDevelopment Toolkit, a systematicapproach to: 1. Measure mining’s economic and social contribution 2. Provide practical partnership tools 3. Workshops to build action plans and relationships www.icmm.com
  15. 15. Lao PDR: Overview of assets and challenges• Land-locked nation - 70% of 5.7m people live on < $2 per day• Lao PDR well endowed with forests, renewable water assets and mineral resources• Hydropower, agriculture and mining major industries• Ask what constitutes responsible mining?• Does government receive adequate returns from mining?• What is mining’s net contribution? www.icmm.com
  16. 16. Overview of findings – the benefits Consistently high rates of GDP growth and falling poverty (with decreasing income inequality) Increase in local community average incomes of 5-7 times Major employment, training and development outcomes - two mines now support livelihood of >30,000 people Major role in supporting new businesses and local production Economic contribution:  80% of foreign direct investment;  45% of exports;  12% of government revenues (over $1billion since 2003); and  10% of GDP for next 14 years www.icmm.com
  17. 17. Overview of findings – the concerns Some macroeconomic anxieties over evidence that economy at risk of exceeding macroeconomic “speed limits” (IMF) Government’s mining revenues volatile because of commodity prices As mines mature and pay more revenues to government macroeconomic challenges intensify Additional wealth going to consumables rather than capital investment – govt. and individuals Need to improve surrounding business environment and skills so local firms are built to supply beyond mining. www.icmm.com
  18. 18. Mining has leveraged development potential Lao PDR: GDP growth per capita, 1951-2008Source: Maddison, Angus (2010) “Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD”University of Groningen: http://www.ggdc.net/maddison/ www.icmm.com
  19. 19. Need to ensure positive contribution continuesover long-termSource: MMG Sepon and PBM www.icmm.com
  20. 20. Lessons learnt• Companies cannot deliver development outcomes alone• As in Chile and Ghana (but unlike Peru and Tanzania), mining has contributed to increased local incomes and living standards• How? Large-scale mining companies made significant effort to integrate into host economy through partnerships• As in Chile, government provided stable investment climate, good macroeconomic management.• Unique to Lao PDR: government responded to additional needs of mining-affected areas to strengthen local government capacity. www.icmm.com
  21. 21. Toolkit applied in Lao PDR Enthusiastic workshop participation Minister for Mining NERI (Ministry of Planning and Investment) World Bank and IMF NGOs www.icmm.com
  22. 22. Outcomes of the Mining: Partnerships forDevelopment process Improved industry collaboration in country Government better informed and vigilant in allocation of new exploration and mining licenses ….Government presented report findings at China Mining Congress, Tianjin, November 2011 www.icmm.com
  23. 23. BB Lao in Context – Mining Contribution Index 13 www.icmm.com
  24. 24. For further informationplease contact:Troy Hey, MMG Limited Kathryn McPhail, DirectorTroy.hey@mmg.com kathryn.mcphail@ICMM.com www.icmm.com

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