Tag Archives: extractive industry

Latest Developments, February 8

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In the latest news and analysis…

Fortress Europe
Agence France-Presse reports the European Commission has rejected a Greek request for funds to help build a fence along the Turkish border in order to stem illegal immigration. “ ‘The commission has decided not to follow up the Greek request because it considers it pointless,’ Michele Cercone, a European Commission spokesman, told a news briefing. ‘Fences and walls are short term measures that do not solve migration management issues in a structural way.’ It is up to EU states to decide how to secure their borders, but they have to take into account ‘international obligations including the respect of migrants, human rights,’ Cercone said.”

Give me your tired, your poor…
Yahoo! News reports that increasingly harsh American immigration laws, such as Alabama’s controversial HB 56 which prohibits “business transactions” between undocumented migrants and the state, are impacting people’s ability to obtain food.
“Last month, Kansas kicked more than 1,000 mixed-status families off its food stamp program when it joined three other states in adopting a stricter food stamp eligibility policy. A low-income family of five made up of two undocumented parents and three citizen children now has to show that its income is close to the poverty level for a family of three–not a family of five–in order to access food stamps. This is intended to prevent illegal immigrants from benefiting from food stamps, but immigration advocates say it will leave citizen kids hungry.”

Mining audit
Reuters reports that Zambia plans to audit all the country’s mining projects in search of back taxes it estimates at between $500 million and $1 billion.
“According to UK charity Christian Aid, more than half of the copper Zambia exported in 2008 was destined for Switzerland, but according to Swiss import data almost none of this arrived and [mines minister Wylbur] Simuusa said this trend continued.
This raises a number of transparency issues and activists say copper exported to Switzerland on paper often fetches a lower price than it would if it was exported elsewhere.
‘Once it leaves, where does it go? We don’t have a clue,’ he said.”

World Bank and tax havens
The Task Force on Financial Integrity and Economic Development’s María José Romero writes about revelations that the majority of clients of the World Bank’s private sector arm, the International Finance Corporation (IFC), are using tax havens.
“According to a recent report by Danish NGOs DanWatch and IBIS, ‘57 per cent of the companies analysed in the IFC’s extrac­tives portfolio from 2010 have channelled their investment in developing countries through an intermediate hold­ing company in a tax haven.’ Additionally, ‘more than a third of the countries hosting [the] IFC’s extractive projects have no specific policies on thin capitalisation,’ which means that IFC’s extractive-industry clients can minimise tax payments in developing countries by injecting as much debt and as little equity as possible into their operating subsidiaries.
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Civil society organisations have demanded changes in the IFC policy in order to ensure that investing in private sector companies has a positive impact on development.  According to Alvin Mosioma from Tax Justice Network, ‘the IFC should stop channelling public funds to companies using secrecy jurisdictions.’ To make effective and measurable progress towards financial transparency, the DanWatch report also recommends that ‘companies supported by IFC should present their annual accounts on a country-by-country and project-by-project basis, which would en­able host governments and civil society to iden­tify tax avoidance and evasion.’ ”

Resource scramble
A new Global Witness report suggests corruption and instability could worsen in Africa unless there is more transparency in the oil, gas and mining industries.
“Firstly, all companies involved in bidding rounds for oil licences, or that hold oil licences should fully disclose their ultimate beneficial owners. This level of transparency provides government and the public with the opportunity to begin to dispel suspicions that government officials may be benefitting illicitly from the allocation of oil licences. Additionally, the terms of all licences and contracts should be published to make it easier for the appropriate authorities and the public to determine that the terms of a contract are not unduly favourable to a company.”

Cynical aid
MiningWatch’s Catherine Coumans argues the Canadian International Development Agency’s decision to fund corporate social responsibility projects near mine sites is “intended to help Canadian mining companies compete for access to lucrative ore bodies in developing countries” where local opposition to mining is growing.
“Subsidizing the CSR projects of well-endowed multinationals is an irresponsible use of public funds by CIDA, particularly as these CSR projects mask rather than address the serious local- and national-level development deficits caused by mining.
If the Canadian government were interested in addressing the negative impacts of mining on development it would have implemented the recommendations of the parliamentary report of 2005 and the CSR Roundtables of 2007.”

Planning ahead
The Inter Press Service reports the Sierra Leone Conference on Development and Transformation has drafted a 50-year plan for the West African nation and intends to submit it to the country’s parliament.
“Many of the communiqué’s recommendations for improving the economy differ from the growing push towards increased foreign investment in mining, instead focusing on the long-term benefits of health, education and infrastructure. In fact, it suggests that no new mineral extraction agreements should be made by the government without first conducting a public comprehensive analysis of the quantity and amount of the resources to be exploited.
‘We’ve had a system that was not set up for a rapidly growing economy that would be prosperous, it was a system set up to ensure we have a quite country where resources could be extracted with us saying very little,’ said [the conference’s national coordinator Herbert] McLeod. ‘The exploitation of these resources could continue to have dangerous consequences if they are not managed well. You could have an already unequal society become more unequal as the benefits accrue to only a small section of the population.’ ”

Pot and kettle
The Overseas Development Institute’s Jonathan Glennie argues that for all the Western criticism of China’s activities in Africa, Chinese behaviour is “more or less” the same as that of other major donors.
“All in all, Chinese aid to Africa is going to come with all sorts of strings attached, despite the ‘no-conditionality’ rhetoric, and it is a huge power play, despite the proclamations of ‘south-south co-operation’. There will be problems, but no more or less than with the more traditional donors; just different, on account of different attitudes and modalities.”

Latest Developments, November 22

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Mining tax precedent
Australia’s proposed 30 percent tax on the country’s mining industry, which is “being eyed by other resource nations in South America and Africa,” has passed the parliament’s lower house by 73 votes to 71.
“[Prime Minister Julia] Gillard wants the new tax on mining profits to pay for a company tax cut and boost pensions, helping to spread the benefits of Australia’s resources boom to other parts of the economy struggling with the global downturn.
‘This is a way in which all Australians share in the bounty of the mining boom,’ Treasurer Wayne Swan told parliament.”

Surging investor-state lawsuits
A new Institute for Policy Studies report indicates that the number of lawsuits brought before international tribunals by oil, gas and mining companies against “governments seeking to increase the benefits of those resources for their own people” has risen sharply along with commodity prices in recent years.
“Under free trade agreements and bilateral investment treaties, foreign investors have the right to file such “investor-state” lawsuits in international tribunals to demand compensation for government actions that reduce their profits.
This newly updated edition of “Mining for Profits” finds that at the most frequently used tribunal, the International Center for Settlement of Investment Disputes (ICSID), 43 of 137 pending “investor-state” cases are related to oil, mining, or gas. By contrast, one year ago there were only 32 such cases and 10 years ago there were only 3.”

Transparency not enough
A new report by the University of British Columbia’s Philippe Le Billon argues  initiatives to improve governance of the extractive industries tend not to go far enough.
“Among other priorities, transparency initiatives should demand higher disaggregation of information disclosed by extractive companies and host governments. Transparency requirements should extend beyond revenues to licensing, contracts, physical resource flows, and other production factors, as well as to public expenditure. Extractives transparency initiatives also need to integrate elements of the tax justice and tax evasion agendas in order to expand their relevance to the effort to reduce illicit financial flows.”

Accessible innovation
Intellectual Property Watch reports on a conference marking the 10th anniversary of the Doha Declaration on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Public Health, which addressed the question of how to encourage innovation while keeping medicines accessible to the world’s poor.
“‘The sustainability of access at the end of the day is going to come back to the issue how you finance R&D,’ [James Love, director of Knowledge Ecology International] said. Love argued that it is essential to de-link the prices of medicines and the development of new medicines in order to fulfil ‘the promise of Doha’ and access to medicines for all.”

Supply and demand
Agence France-Presse reports on a new World Wildlife Fund assessment of the palm oil market which suggests that, despite improvements, companies are not doing enough to ensure the oil they buy comes from sustainable sources.
“Palm plantations are considered one of the biggest threats to rainforests in countries like Malaysia and Indonesia — the source of 85 percent of world palm oil supply — as virgin forests are typically cleared to make way for them.
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The scorecard focuses on major companies in Europe, Australia and Japan, the world’s biggest palm oil markets.
About 5.2 million tonnes of certified sustainable palm oil was produced last year — roughly 10 percent of world supply — but only 56 percent was purchased, the WWF said.”

Unsustainable food
The International Institute for Environment and Development uses the example of ketchup to illustrate how unsustainable the global food industry is.
“Analysis of the steps involved in processing ketchup – from farming the tomatoes through to packaging – to transporting and retailing that symbol of American mass consumerism reveals an alarming fact. To produce it requires a mind-boggling 150 separate processes, across several continents, according to research cited in a new book by the International Institute for Environment and Development.
It’s just one small part of a ‘staggeringly inefficient’ food system according to the new book Virtuous Circles. When the overall energy costs for producing food are taken into account – including farm machinery, transportation, processing and packaging – ‘the modern food system consumes between ten and fifteen calories of fossil fuel energy for every calorie of food energy (nutrition) produced.’”

Just say no (to the war on drugs)
The Overseas Development Institute’s Jonathan Glennie argues wealthy, recreational drug-consuming countries need to renounce the war on drugs in order to “save west Africa from a fate worse than Mexico.”
“Clearly an end to prohibition will not end the problems created by the war on drugs at a stroke, nor the problems created by drugs themselves. The gangs that are now so powerful in Colombia, Mexico and elsewhere engage in many types of crime including people trafficking and kidnapping. But one of their largest sources of income would be decimated, as prices fall in a regulated market.
Insiders are more hopeful than ever that an end to global prohibition is possible within a decade. Both Barack Obama and David Cameron, the leaders of two of the most important drug-consuming nations in the world, are on the record in their opposition to the war on drugs before they were elected. If they followed through on their promise of a rethink they could go down in history as the leaders that began one of the most important global policy shifts of our time.”

Symbolic justice
Princeton University’s Richard Falk writes about past and present efforts to address the double standard of victors’ justice that has been the international norm since the end of World War II through “societal efforts to bring at large war criminals to symbolic justice.”
“The existence of double standards is part of the deep structure of world politics. It is even given constitutional status by being written into the Charter of the United Nations by allowing the five permanent members of the UN Security Council, that is the winners in 1945, to exercise a veto over any decision affecting the peace and security of the world, thereby exempting the world’s most dangerous states, being the most militarily powerful and expansionist, from any obligation to uphold international law.”

Latest Developments, October 26

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License to bribe
Main Justice reports that a co-author of a US Chamber of Commerce proposal to water down the Foreign Corrupt Practices Act has just become the FBI’s general counsel.
“In its report ‘Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act’ the Chamber said that the FCPA is a costly burden to business and ‘there is also reason to believe that the FCPA has made U.S. businesses less competitive than their foreign counterparts who do not have significant FCPA exposure.’ The paper called for five specific reforms including limiting a company’s ‘successor liability’ for the prior actions of a firm it has acquired and giving a clear definition of ‘foreign official’ under the statute.
The Open Society Foundation, a George Soros-funded organization issued a report, charging that [Andrew] Weissmann’s plan would ‘significantly reduce the scope and efficacy of the FCPA while substantially undermining more than 30 years of successful U.S. leadership in promoting global anti-corruption standards.’ ‘[T]he Chamber’s proposal looks more like a license to commit pervasive and intentional bribery than a modest attempt to eliminate the risk of prosecutorial over-reach,’ the report said.”

Proposed EU legislation I: A victory for transparency
Tearfund’s Jonathan Spencer welcomes proposed EU legislation that would require extractive industry companies listed in Europe and operating abroad to disclose what they pay to host governments on a project-by-project basis.
“[This information] will play a key role in releasing resources for development, improving transparency and engaging citizens with their governments. Evidence from other countries has shown that where details of budgets and projected expenditure is published, the money is much more likely to reach its intended destination and support development.”

Proposed EU legislation II: Bad for business
But a number of the companies – including Anglo American, Rio Tinto, Shell and Total – that would be subject to the proposed legislation have argued in a letter to the European Commission that such regulations are misguided and would be bad for business.
“One example is oil or gas fields which cross borders, where governments are understandably careful to safeguard the confidentiality of the terms they offer to investors,” said the letter.
“Further damage to competitiveness will be caused by the additional cost and administrative burden of project-level reporting.”

Proposed EU legislation III: No legal teeth
On the other hand, France’s Citizen Forum for Social and Environmental Responsibility argues the European Commission’s proposal lacks legal teeth.
“In fact, notwithstanding progress in certain areas such as reporting obligation, the [European Commission’s] statement on social and environmental responsibility does not address other crucial questions. The proposal lacks concrete measures to improve the legal responsibility between the parent company and its subsidiaries: companies based in Europe cannot, therefore, be considered responsible for violations perpetrated by their subsidiaries and subcontractors in the South. Nor does the statement spell out the legal avenues that would guarantee real access to justice for all victims of violations.” (Translated from the French.)

South-South cooperation
The Guardian has reproduced part of an IRIN series on how countries like Brazil, India, China and South Africa are changing the world of aid as they become increasingly significant donors.
“Many are not new at all – India, Brazil and China have been giving aid for decades – but what is new is that a group of non-western donors is giving more humanitarian and development aid year on year, and reporting it more consistently to official trackers, such as the UN’s Financial Tracking System (127 donors reported aid in 2010).
As they “emerge”, the traditional hegemony held by western donors over how and where aid is dispersed is starting to be dismantled.”

South-South colonization
While many within the development industry speak of the growing importance of South-South cooperation, Al Jazeera uses the issue of African land grabs to raise the question of possible South-South colonization.
“What would Gandhi say today were he to know that Indians, who were only freed from the shackles of colonialism in recent history, were now at the forefront of this “land-grabbing” as part of the race for foreign control over African land and resources; currently being called the Neo-Colonialism of Africa?,” ask the Ethiopian authors of an open letter to the people of India.

One-step solutions
The University of Ottawa’s Rita Abrahamsen argues that attempts to rein in trading of “conflict minerals” are well-intentioned but may not be particularly helpful for ending African conflicts.
“The danger is that by making illegal mining the only story about the conflict in eastern Congo, other causes—requiring more complex solutions—will be ignored. Meanwhile, the international community will invest vast sums in cumbersome tracking procedures that may be easily avoided in an environment of weak institutional capacities and porous borders.
Ultimately, then, the campaign against conflict minerals might do more to restore Canada’s image abroad and make Canadians feel like ‘good global citizens’ than it does to bring peace to the DRC.”

Size doesn’t matter
The UN Population Fund has released its annual State of World Population just as the number of Earth’s inhabitants is set to hit 7 billion, but its authors are more concerned with how people live than with raw numbers.
“Environmental journalist Fred Pearce echoes the view that a small proportion of the world’s population takes the majority of resources and produces the majority of its pollution.
The world’s richest half billion people— about 7 per cent of the global population— are responsible for about 50 per cent of the world’s carbon dioxide emissions, a surrogate measure of fossil fuel consumption. Meanwhile, the poorest 50 per cent are responsible for just 7 per cent of emissions, Pearce wrote in an article for Yale University’s “Environment 360” website. ‘It’s overconsumption, not population growth, that is the fundamental problem,’ Pearce argued”