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TORONTO (miningweekly.com) – The mining sector should do more to broadcast its full benefit footprint on local and national economies, Kinross Gold VP corporate responsibility Ed Opitz told delegates at a recent conference in Toronto.
By doing so, the industry will also help debunk much of the “resource curse” thesis, he told the audience at the Mine Latin America conference on November 15.
CURSE OF THE CURSE
Opitz explored the resource curse, first coined by Richard Auty in 1993, and then expanded upon by Jeffery Sachs, in 1995.
At its heart, the thesis argues that countries richly endowed with natural resources experience the threat of heightened corruption, poorer development strategies and growth-debilitating inflation.
The cure presupposes that governments of resource-rich nations will focus a disproportionate amount of time, effort and money on facilitating the needs of the extractive sectors as opposed to delivering on other economic and civic commitments.
The resource curse also feeds into popular misconceptions about the mining industry. Under this scenario, foreign mining companies are deemed suspicious at best, reprehensible at worst. They seem to propagate corruption, attempt to dodge taxes and only engage in community programmes with great reluctance.
“It’s a story that captures the imagination: you have corrupt and inept government officials in poor, underdeveloped countries being duped by corporate fat cats with jets,” Opitz said.
“The gut response is often to say: ‘well we’re good guys; we just need to work harder telling our story’,” he said. “So mining companies seek to provide transparency on the amount of taxes paid and jobs created.”
The growing success in the Extractive Industries Transparency Initiative (EITI) is illustrative of this. “The EITI was formed back in 2002 and has gained a lot of momentum. There are now 23 compliant countries and 16 candidate countries, focused mainly on Africa but also in Latin America and Asia. Even the US is signing up for [the] EITI,” Opitz said.
“More recently, voluntarily measures are being replaced by mandatory requirements, such as Section 1504 of the Dodd Frank Securities Reform Act of 2010. This has upped the ante, significantly increasing the amount of detail required on a project-by-project basis,” he said.
“But transparency [is perceived] not to have really changed many on-the-ground issues of development and poverty reduction … so governments are being asked by their constituents, and they’re asking themselves, whether they are getting a fair share of the pie,” he said. “As a result, we are witnessing governments seek greater royalties.”
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