Overview of major governance initiatives in the extractives sector

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Overview of major governance initiatives in the extractives sector

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The aim of this mapping is to provide an overview of the major initiatives designed to promote good governance of the extractives sector. The focus lies on sector-wide initiatives rather than commodity-specific frameworks to include initiatives that apply broadly. Furthermore, the selected initiatives primarily target governments and aim to influence government activities to improve governance in the sector.

The chart maps the substantive scope, target audience, theory of change and intended purpose of each initiative, among other variables. The initiatives are clustered into four categories:

a. initiatives that provide data with few or no policy prescriptions (Data products);b. initiatives that provide a framework or process to collect data and policy guidance

on areas for reform (Policy documents and diagnostic tools);c. multi-stakeholder dialogue processes (Multi-stakeholder dialogue platforms); andd. initiatives that set standards (Standard).

The following initiatives are included:

• the Natural Resource Governance Institute’s (NRGI) Resource Governance Index (RGI);

• the Fraser Institute Annual Survey of Mining and Exploration Companies (Fraser Institute Annual Survey);

• the NRGI`s Natural Resource Charter and accompanying Benchmarking Framework (NRC Benchmarking Framework);

• the Africa Mining Vision and the related African Minerals Governance Framework (AMV and AMV Governance Framework);

• the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development’s Mining Policy Framework (IGF MPF);

• the World Bank’s Mining Investment and Governance Review1 (MInGov); • the Organisation for Economic Co-operation and Development`s Policy Dialogue

on Natural Resource Based Development (OECD Policy Dialogue);• the World Economic Forum’s Responsible Mineral Development Initiative

(WEF RMDI); and• the Extractive Industries Transparency Initiative (EITI) Standard.

Overview of major governance initiatives in the extractives sector

1 Note: MinGov is now the Mining Sector Diagnostic

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Initiative NRGI Resource Governance Index Fraser Institute Annual Survey of Mining and Exploration

Background RGI assesses the quality of natural resource governance in 81 countries. Together, these countries produce (among other commodities) 72 per cent of all copper mined worldwide. The RGI ranks the countries based on country assessments of extractive industries governance policies.

The Fraser Institute Survey of Mining and Exploration is an attempt to assess how mineral endowments and public policy factors such as taxa-tion and regulatory uncertainty affect exploration investment.

Substantive scope

(1) Value Realisation (the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises);

(2) Revenue Management (national budgeting, subnational resource revenue sharing and sovereign wealth funds);

(3) Enabling Environment (open data, political stability and absence of violence, control of corruption, rule of law, voice and accountability, government effectiveness and regulatory quality).

(1) Investment Attractiveness Index;(2) Best Practices Mineral Potential Index;(3) Policy Perception Index.

Participants involved in generating benchmarks

Civil society researchers conduct country level assessments; NRGI collates, assesses and analyses the data to generate the index.

Companies complete survey; Fraser Institute collates and presents data.

Target group Governments, journalists, civil society actors and companies Government and investors

Government involvement

Index - no commitment Index - no commitment

Theory of change and intended purpose

By measuring and ranking the quality of extractives governance in resource rich countries, the Resource Governance Index provides informa-tion on the strengths and weaknesses in extractives governance - what is working and what is not working. This information can provide a basis for governance reform efforts and advocacy.

The Fraser Institute Survey is leveraging the desire for extractive industries growth to promote strong governance policies. The survey is designed to incentivise governments toward improved policy environments in order to attract investment.

a. Data products

Initiative NRGI Resource Governance Index Fraser Institute Annual Survey of Mining and Exploration

Data sources The RGI is the product of data collected from surveys completed by lead-ing civil society researchers in the countries included in the assessment. In 2017, the survey consisted of 149 questions. The responses are collated and analysed by NRGI.

A survey ranking the attractiveness of a particular investment location is circulated to over 2,700 individuals, primarily mid to upper level employ-ees of mining corporations.

Timeframe for data collection and labour intensity of the data provision process for governments

The NRGI index is released annually in the early summer of the subject year. Because the survey is primarily conducted by civil society actors, there is minimal government involvement.

Index is conducted annually. No government involvement.

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Initiative Natural Resource Charter and Benchmarking Framework

Africa Mining Vision and African Minerals Governance Framework

IGF Mining Policy Framework and Country Assessments

World Bank MinGov

Background The NRC is a policy guidance doc-ument. It is designed to assist countries in realising the potential of their resources. The policy options that it lays out are centred around 12 precepts, 10 of which are relevant for governments.

The NRC Benchmarking Frame-work supplements the NRC by providing a strategic framework for achieving the Charter's norma-tive goals. Marketed as the ‘170 questions you and your govern-ment should be asking about natu-ral resource governance’, the NRGI Benchmarking Framework is a tool for assessing and driving natural resource strategy.

The AMV Governance Framework was designed as ‘a monitoring and accountability tool’ for implement-ing the Africa Mining Vision. Designed by the African Minerals Development Centre, the AMV Governance Framework includes specific assessment tools for eval-uating and guiding countries in the implementation process.

The IGF devised the Mining Policy Framework to establish concrete objectives and processes for good extractive industries governance. Governments can partner with IGF to evaluate compliance with the MPF through country assess-ments, and design capacity build-ing programming around weak-nesses identified.

MinGov is a tool that comprehen-sively analyses a country’s mining sector and its context and identi-fies sector governance strengths and weaknesses. It pinpoints in detail where the sector is not func-tioning as it should. Once a Min-Gov diagnostic has been produced, it can form the basis for sector reforms.

b. Policy documents and diagnostic tools

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Initiative Natural Resource Charter and Benchmarking Framework

Africa Mining Vision and African Minerals Governance Framework

IGF Mining Policy Framework and Country Assessments

World Bank MinGov

Substantive scope

Precept 1: strategy, legal framework and institutionsPrecept 2: transparency and accountabilityPrecept 3: exploration, licensing and moni-toring operationsPrecept 4: taxation and other company pay-mentsPrecept 5: local impactsPrecept 6: state-owned enterprisesPrecept 7: revenue distributionPrecept 8: revenue volatilityPrecept 9: public spending Precept 10: private sector development.

(precept 11 and 12 left out as not relevant for government audience)

(1) Legal and institutional frame-work;

(2) Geological and mineral infor-mation system;

(3) Fiscal regime and revenue man-agement;

(4) Linkages, investment and diver-sification;

(5) Artisanal and small-scale min-ing;

(6) Environmental and social issues.

(1) Legal and Policy Environment; (2) Financial Benefit Optimisation; (3) Socio-Economic Benefit Opti-

misation; (4) Environmental Management; (5) Post-mining transition; (6) Artisanal and small-scale min-

ing.

Country assessments focus on improving legal, policy and regula-tory frameworks that relate to the 6 broad policy goals.

(1) Mining Sector Importance (anal-yses the importance of the min-ing sector to the country’s growth and economic develop-ment).

(2) Mining Sector Management (examines the structural organi-sation of the sector and the key governmental actors involved).

(3) Mining Sector Value Chain (measures the mining sector rules and their implementation along the Extractive Industries Value Chain stages – Contracts, Licenses and Exploration; Oper-ations; Taxation and State Par-ticipation; Revenue Distribution and Management; and Local Impact).

(4) Stakeholder Priorities (identifies topics that have been pin-pointed as priority areas for sound governance of the sector by different stakeholders).

Participants involved in generating benchmarks

Government and civil society organisations

Government and civil society organisations

Independent experts Independent experts

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Initiative Natural Resource Charter and Benchmarking Framework

Africa Mining Vision and African Minerals Governance Framework

IGF Mining Policy Framework and Country Assessments

World Bank MinGov

Target group Government and civil society Government and civil society Government and civil society Government, industry and civil society

Government involvement

Benchmarking - the government can use the tool to evaluate extractives policies. Requires government commitment to implement.

AMV widely adopted by AU States - requires government commit-ment to implement.

Voluntary Guidelines - govern-ment can engage with country assessment process to evaluate sector against MPF. Requires gov-ernment commitment to imple-ment.

Diagnostic - The MInGov reports are country-specific report cards with country-tailored policy rec-ommendations. Requires govern-ment commitment to implement.

Theory of change and intended purpose

The Natural Resource Charter pro-vides policy guidance on how to maximise the benefits of natural resource extraction. The bench-marking framework measures pro-gress toward implementing stand-ards in pursuit of this goal.

The AMV provides policy guidance on how to develop mineral-based development strategies in order to maximise the benefits of natural resource extraction. The African Minerals Governance Framework measures progress toward imple-menting the AMV.

By identifying weaknesses in the sector and supplying experts to build capacity in the areas identi-fied, areas of weakness in extrac-tives governance are strengthened.

By identifying critical points in the sector, areas of weakness in extractives governance are strengthened.

Data sources The framework is a series of 170 questions government actors can independently answer to self-eval-uate.

The African Minerals Governance Framework is a series of questions that a government team can use to evaluate a country's progress toward implementation of the AMV.

Based on desk research, mine site visits, and interviews with govern-ment, civil society and industry.

Primary data (the country’s docu-mented laws, rules and regulations) and data gathered through in-country interviews with govern-ment, industry and civil society. 314-question surveys provided to in-country experts and stakehold-ers are also used.

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Initiative Natural Resource Charter and Benchmarking Framework

Africa Mining Vision and African Minerals Governance Framework

IGF Mining Policy Framework and Country Assessments

World Bank MinGov

Timeframe for data collection and labour intensity of the data provision process for governments

The framework can be engaged with at different levels, thus the time needed to complete the framework depends on the scope and depth of assessment.

The African Minerals Governance Framework is new and as such, the timeframes for involvement are unclear. It is anticipated that the framework would require substan-tial government commitment because of the depth of the ques-tions.

Requires governments to engage in capacity building activities during the country assessment process.

While the survey is lengthy and provided to a broad range of in-country actors, primary source requests and interviews may vary in intensity and frequency.

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Initiative OECD Policy Dialogue for Natural-Resource Based Development (OECD Policy Dialogue)

World Economic Forum Responsible Mineral Development Initiative

Background The OECD Policy Dialogue offers an intergovernmental platform for peer learning and knowledge sharing where OECD and non-OECD resource producer countries, in consultation with extractive industries, civil society organisations and think tanks, can craft innovative and collaborative solu-tions for resource-based development. Countries participating in the Pol-icy Dialogue meet twice a year.

Launched in 2010, the World Economic Forum’s Responsible Mineral Development Initiative (RMDI) offers strategic tools for facilitating multi-stakeholder conversations surrounding development in the mining sector. The initiative is divided into four distinct phases to identify major road-blocks in the mining industry and facilitate educated and effective dia-logue techniques.

Substantive scope

(1) Shared Value Creation and Local Development(2) Revenue Management and Spending(3) Getting Better Deals(4) Domestic Resource Mobilisation (tackling BEPS (Base Erosion and

Profit Shifting) and corruption)

(1) Revenues (2) Employment and Skills(3) Environment and Biodiversity(4) Social and Cultural (5) Supply Industry(6) Downstream Industry(7) Infrastructure(8) Governance

Participants involved in generating benchmarks

Relies on contributions from OECD and non-OECD resource producer countries, extractive companies, civil society organisations and think tanks.

N/A

Target group The outputs of the OECD Policy Dialogue are usually focused on governments and industry.

Multi-stakeholder

Government involvement

Participation is voluntary and open to both members and non-members of the OECD. Requires government commitment to implement tools produced.

Open resource for framing and guiding stakeholder meetings. Requires government commitment to implement.

c. Multi-stakeholder dialogue platforms

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Initiative OECD Policy Dialogue for Natural-Resource Based Development (OECD Policy Dialogue)

World Economic Forum Responsible Mineral Development Initiative

Theory of change and intended purpose

Providing a platform for peer learning and knowledge sharing allows stakeholders to co-develop good practice, operational frameworks and guidance. Designed to facilitate the sharing of information, case studies and best practices, intended to spark regional or international discussion.

Strengthen the mining sector’s governance and investment environment by providing sector diagnostics and policy recommendations.

Data sources Multi-stakeholder dialogue forums Multi-stakeholder dialogue forums

Timeframe for data collection and labour intensity of the data provision process for governments

N/A Survey completion; meeting planning and attendance; action plan implementation

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Initiative EITI Standard

Background The EITI Standard is focused on promoting ‘greater transparency and accountability to all aspects of natural resource management, including tax transparency, commodity trading and licensing. It includes ground-breaking disclosure requirements on beneficial ownership, ensuring that the identity of the real owners of the oil, gas and mining companies operating in EITI countries will from now on be public.’ 2

Substantive scope (1) Oversight by the multi-stakeholder group(2) Legal and institutional framework, including allocation of contracts and licenses(3) Exploration and production(4) Revenue collection(5) Revenue allocations(5) Social and economic spending(6) Outcomes and impact

Participants involved in generating benchmarks

Multi-stakeholder group

Target group Civil society, multinational enterprises, governments

Government involvement Voluntary Commitment to the EITI. Mandatory implementation of the EITI Standard. Requires government commitment to implement.

Theory of change and intended purpose

Promoting transparency and accountability in the extractives industry in order to improve management of the sector.

Data sources Report; systematic disclosure

Timeframe for data collection and labour intensity of the data provision process for governments

Continuous

d. Standard

2 EITI, 2017: https://eiti.org/sites/default/files/documents/the_eiti_standard_2016_-_english.pdf

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Nicolas Maennling, Perrine Toledano, Tehtena Mebratu-Tsegaye

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As at

October 2019