2014 Conference Report - Mining Investment: Stimulating Local Economic Development
On March 1, 2014, Foreign Affairs, Trade and Development Canada (DFATD), in partnership with the World Economic Forum (WEF), hosted its second annual conference on Mining Investment: Stimulating Local Economic Development in Toronto, Canada.
The conference brought together more than 200 participants from civil society, industry and government to discuss the ways in which different types of mining investments can help propel local economic development in resource-rich countries. Keynote speakers and panellists discussed topics such as local content and procurement, resource corridor development and multi-use infrastructure, and innovative ideas for promoting local economic diversification. The conference also included a special session that examined the socio-economic impact of tuberculosis in the mining sector.
A number of key themes emerged during the keynote speeches and panel discussions. Multistakeholder dialogue and community engagement were cited as key to the success of any mineral development project and the creation of shared value for all stakeholders, private sector, communities and governments alike. The importance of engaging communities in the early stages of project development was underscored in order to ensure that companies acquire and maintain the social licence to operate, and to ensure community ownership of the project.
Participants were encouraged to consider the potential economic development impact of all stages of the mine cycle, and in particular the exploration phase of mine development, as this phase often represents the first new economic activity in remote mining regions and there are significant opportunities for procuring local goods and services.
The need to invest in human capacity building or “soft infrastructure” was underscored, given the challenges that many local small and medium-sized enterprises (SMEs) face in accessing procurement opportunities and producing to the standards that international mining companies require. Local government capacity-building was also cited as key to ensuring that local governments are able to pursue economic diversification and manage any related development projects.
The coordination challenges associated with resource corridor development and shared infrastructure projects were highlighted. Panellists cited the important role that governments can play in creating incentives for collaboration between stakeholders who could benefit from these types of projects.
The importance of reducing community dependency on one natural resource, and the need to invest in sustainable economic diversification, was underscored. Speakers also pointed to the need to look beyond the immediate mining region at ways to promote broader value chain diversification.
Finally, the significant impact of tuberculosis (TB) on the economic development of mineral-rich countries, particularly in Southern Africa, was underscored. The panel highlighted the significant impact of TB on workforce productivity, company operating costs, and migrant worker communities located far from mine sites.
On March 1, 2014, Foreign Affairs, Trade and Development Canada (DFATD), in partnership with the World Economic Forum, hosted its second annual conference on Mining Investment: Stimulating Local Economic Development in Toronto, Canada. The Prospectors & Developers Association of Canada and the Canadian Institute for Mining, Metallurgy and Petroleum also supported the conference, sponsoring the lunch and conference reception.
The conference brought together more than 200 participants from civil society, industry and government to discuss the ways in which different types of mining investments can help propel local economic development in resource-rich countries. Keynote speakers and panellists discussed topics including local content and procurement, resource corridor development and multi-use infrastructure, and innovative ideas for promoting local economic diversification. The conference also included a special session that examined the socio-economic impact of tuberculosis in the mining sector.
Robert Schafer, Second Vice-President, Prospectors & Developers Association of Canada (PDAC), Chair of the International Committee PDAC, and President, Canadian Institute of Mining, Metallurgy and Petroleum (CIM), opened the conference, underscoring the significant impact of mining investments on resource-rich countries, with 60–80 percent of the value of metals mined or recovered remaining in country. The importance of not overlooking the exploration phase of mining was also highlighted, as this phase often represents the first new economic activity in a remote area and is an opportunity where local employment and procurement of food, construction materials and other related supplies can mean both cost- and time-savings for exploration companies. Furthermore, the exploration phase is also a period of time when the demand for people, goods and services can often be accommodated by the local supply, as demand tends to increase as production scales up.
Alex Wong, Senior Director and Head of Global Industries, World Economic Forum, also provided opening remarks outlining the Forum’s work related to mining and sustainable development, and in particular its Responsible Mineral Development Initiative (RMDI). The RMDI was established by the World Economic Forum in 2010 to identify and provide guidance on the key challenges of creating a responsible, sustainable approach to mineral development. Given the continued growth in global demand for metals, the ongoing development of new mining projects in developing countries has the potential to be a key driver of economic growth and poverty reduction. Yet governments and local communities in developing countries are increasingly questioning the value of mineral development within their borders. In this context, the RMDI serves as a neutral and multistakeholder platform where leaders from business, government, multilateral/bilateral agencies, and civil society can engage respectfully to discuss and develop ideas capable of unlocking the potential socio-economic benefits of mining.
Through the RMDI, the World Economic Forum is actively working to establish collaborative multistakeholder dialogues in countries where mineral development is or will be an important sector of the economy—plans for 2014 include Peru, Chile, Mongolia, Mozambique, Tanzania, and Guinea—and has identified several key actions in order to ensure responsible mineral development, including:
- Dialogue in the early stage of mineral development among all stakeholders
- Continued investment in capacity building
to ensure dialogue is constructive
- Increased focus on ways to collaborate within and between stakeholder groups
- Leveraging the global community (international organizations, donors, industry platforms, etc.) to provide a neutral platform and create trust for establishing and maintaining partnerships
For more information please consult the WEF’s Responsible Mineral Development Initiative.
Luis Alberto Moreno, President, Inter-American Development Bank (IDB), delivered a keynote address.
Mr. Moreno emphasized the importance of two distinct trends that will affect the demand for minerals: 1) the growth of the middle class, and 2) rapid urbanization. As a result of these trends the demand for mineral resources, which are key to our modern society and lifestyle, will only continue to grow. Given that mineral exploration and development will continue, we must ensure that it is done in an efficient, responsible and sustainable way.
Mr. Moreno underscored the need to diversify economies in resource-rich countries by linking up to other economic sectors such as agriculture and manufacturing. He emphasized the importance of investing in institutional capacity-building to promote the adoption of best practices in the extractive sector. The quality of institutions in resource-rich countries is often uneven and can impact the progress of mineral development projects and the benefits derived by the host country.
Mr. Moreno spoke about how the IDB has seen a sharp increase in requests from member countries in Latin America and the Caribbean to address the challenges they face in their extractive industries and to prove to all kinds of stakeholders that they can exploit natural resources sustainably. In that sense, there is much to do to strengthen government agencies responsible for regulating the sector: helping countries plan, design and build infrastructure to spur investments in mining regions, financing public goods, among others.
Mr. Moreno concluded by noting that a successful mineral development project is characterized by a significant amount of royalties flowing to local, regional and national governments, with royalties re-invested into national and local development objectives. These projects succeeded because governments, companies and civil society found ways to collaborate.
"Mining has long been a major activity in Latin America and the Caribbean, but our countries face the growing challenge of developing their resources in a responsible, transparent, and sustainable manner. In Canada’s Department of Foreign Affairs, Trade and Development we have found a partner that shares our region’s concerns."- Luis Alberto Moreno, President of the Inter-American Development Bank
Her Excellency Marisol Espinoza, Vice-President of Peru, delivered a keynote address outlining the development opportunities in Peru, some of the challenges Peru has faced in developing its mineral resources, and the strategies that the Government of Peru has employed to overcome these challenges.
Vice-President Espinoza spoke about her government’s efforts to focus on transparency, accountability and working with communities. The Government of Peru has emphasized the need for multistakeholder dialogue (between and among governments, companies and communities), and has established the National Office of Dialogue and Sustainability. Encouraging this form of multistakeholder dialogue has had a positive effect on resolving and mitigating social conflict in and around mining areas and helping mineral development projects to move forward. Including communities in the development of projects related to the mining sector was also noted as a necessary element to ensure their success.
Vice-President Espinoza concluded by emphasizing Peru’s ongoing commitment to supporting mining, sustainable development and community development.
"Including communities in the development of projects related to the mining is a necessary element to ensure their success."- Her Excellency Marisol Espinoza, Vice-President, Peru
The Honourable Christian Paradis, Minister of International Development and La Francophonie, Canada, delivered a keynote address. Minister Paradis pointed to the Canadian experience in the natural resources sector and to the success Canada has had in harnessing its natural resource wealth for economic growth and diversification.
The Minister emphasized the potential development impact of the natural resources sector in developing countries, noting that in 2011 alone, exports of oil and minerals from Africa, Asia, and Central and South America were worth more than $1.4 trillion, more than ten times the value of the international development assistance provided that same year.
The Minister also announced a number of new projects that the Government of Canada is supporting, including: the Transparency Trust Fund of the Inter-American Development Bank, the African Legal Support Facility, the Extractives Cooperation for Enhanced Economic Development (EXCEED) Program, the Transparency in the Extractive Sector Project (Indonesia), the International Institute for Sustainable Development, the Global Fund to Fight Aids, Tuberculosis and Malaria, and the Clinton Health Access Initiative. For additional information on these projects please consult the Backgrounder - Canada a Leader in Leveraging Private Sector Investment to Stimulate Economic Growth, Create Jobs and Eradicate Poverty
Discussion Panel I
Maximizing Local Content and Procurement
Panel I was moderated by Anthony Hodge, President, International Council on Mining and Metals, and focused on the potential for local content and procurement to create shared value and stimulate local economic development.
- The Honourable Alhaji Inusah Fuseini, Minister for Lands and Natural Resources, Ghana
- Ed Opitz, Vice-President, Corporate Responsibility, Kinross Gold Corporation
- Rosemary McCarney, President and Chief Executive Officer, Plan International Canada Inc.
- Scott Gilmore, Chief Executive Officer, Building Markets
- Panellists emphasized the importance of creating shared value and the ways in which mining can be linked to other economic sectors in order to increase government revenues and create needed jobs.
- In the Ghanaian context, the Government prioritizes local content and participation in order to stimulate local economic development. The main benefits derived by local communities from mineral development are the employment opportunities created primarily in the side-stream services sector. Building the capacity of local communities to provide quality goods and services is also in the interests of the private sector.
- The challenges that local small and medium-sized enterprises (SMEs) face in trying to produce to the standards that companies require were highlighted. Also underscored was the need to invest in capacity building and “soft infrastructure” (human capacity-building), which will reap longer-term development benefits.
- The panel noted that the potential benefits of connecting to local procurement opportunities are highest for SMEs; however, there is a need to build up SME capacity, to understand procurement processes, and increase their access to capital to improve their competitiveness.
- The importance of competition in the private sector was underscored, as it raises local procurement standards and practices among companies and suppliers.
- Emphasis was placed on the need to take into consideration the local market for specific goods when establishing procurement policies, as not all regions/communities may be equipped to produce and supply particular products. The panel noted that it is important to look beyond “local-local” impact (in areas immediately surrounding mine sites) and consider the national strategic role that mining investments can have for development objectives.
- Another issue raised was the opportunity to leverage digital media as a platform to engage local business in procurement and economic development opportunities in a fair and transparent manner. Panellists also recognized the power of digital and social media to make clearer the case of local economic development vs. traditional aid arrangements.
Discussion Panel II
Resource Corridors and Multi-Use Infrastructure
Panel II was moderated by Pierre Gratton, President and CEO, Mining Association of Canada, and focused on the challenges and opportunities associated with resource corridors and multi-use infrastructure for local and regional economic development.
- Daniel Linsker, Vice-President, Control Risks
- Neville D’Souza, Director, Trimex International FZE
- Ian Satchwell, Director, International Mining for Development Centre (IM4DC)
- Paulo de Sa, Manager, Sustainable Energy, Oil, Gas and Mining Unit (SEGOM), The World Bank Group
- The panel emphasized the importance of state involvement in the planning and development stages to the success of any resource corridor project.
- The importance of managing community expectations during the development of resource corridors or multi-use infrastructure projects, was underscored.
- Although resource corridors can have a positive impact on local livelihoods and economic development, the panel emphasized that not all projects lend themselves well to the establishment of resource corridors.
- While infrastructure investments are required for mineral development projects, the panel also highlighted the importance of looking at the infrastructure required to support communities around mine sites. The infrastructure needs include, for example, roads, water, health and education, and such needs often evolve as the mining community develops.
- The panel highlighted the lack of trust that often exists between all stakeholders (communities, governments, companies), and the challenge this poses in finding collaborative solutions to shared infrastructure needs. It was also noted that there is no “one-size-fits-all” model, and that the choice between single-use and multi-use projects should be based on a needs assessment.
- The coordination challenges associated with resource corridor and multi-use infrastructure projects were highlighted. In some cases, multiple companies are involved in a country and coordination is limited. Furthermore, there are not always incentives for large companies to coordinate as they have the means to fund their own infrastructure projects.
- The panel emphasized the important role of government in creating incentives for collaboration among stakeholders in order to maximize the shared value of infrastructure projects. In addition, it was suggested that governments can usefully step in where the business case for a particular infrastructure project (e.g. electrification) is not clear.
Discussion Panel III
Promoting Economic Diversification
Panel III was moderated by Stephen D’Esposito, President, Resolve, and focused on other innovative ways of leveraging mining investments to promote economic diversification.
- Bern Klein, Acting Executive Director, Canadian International Institute for Extractive Industries and Development
- Richard Lacasse, Executive Director, SOCODEVI
- Cory McPhee, Vice-President Corporate Affairs, Vale International SA
- Juanita Montalvo, Senior Vice-President, Corporate Affairs & Sustainability, Sherritt International Corporation
- The panel emphasized the need to reduce community dependency on one natural resource, and the importance of investing in sustainable economic diversification.
- Also underscored was the need to look beyond the immediate mining region at ways to promote diversification along the broader value chain.
- The panel highlighted the importance of investing in employment training initiatives to ensure that the skills acquired by local citizens during the construction phase of mine development (when jobs are at their peak) are transferable to other employment opportunities when the demand for labour at the mine site decreases, or if the mine closes.
- Training centres for entrepreneurship training, business skills development, community planning, etc., were identified as a useful entry point for promoting economic diversification and building up human capital to engage in other economic sectors.
- The importance of working with multiple stakeholders in promoting economic diversification, and the importance of government involvement in any economic diversification initiative, was underscored.
- The mining project development phase is often a vulnerable time for companies, as projects can be faced with delays or can be stopped altogether. As a result of this dynamic, the panel noted the need to manage stakeholder expectations at all times, because companies risk raising expectations in the early stages of project development.
- Local government capacity-building was cited as key to ensuring that local governments are able to pursue economic diversification and manage any related development projects and associated budgets.
The Special Session focused on the link between tuberculosis and the mining sector as well as innovative partnerships between public and private sectors that can address the impact of tuberculosis on mines and on the communities of origin of mine workers. The panel was moderated by Lucica Ditiu, Executive Secretary of the Stop TB Partnership.
- Dr. John Clarke, President and CEO, Banro Corporation
- Dr. Mark Dybul, Executive Director, Global Fund to Fight AIDS, Tuberculosis and Malaria
- Dr. Mphu Ramatlapeng, Executive Vice-President – HIV, Tuberculosis and Health Financing, Clinton Health Access Initiative
- Neil Clegg, Manager – Business Development, Platinum Group Metals
- Dr. Tim Evans, Director for Health, Nutrition and Population, World Bank
Their discussion highlighted the following:
- Tuberculosis (TB) has a significant impact on the economic development of countries engaged in the mining industry, including the communities that send workers to the mines. TB affects workforce productivity, results in increased operational costs, and affects migrant workers’ communities far from mine sites. In Southern Africa, one third of all new TB cases occur in relationship to mines. It is endemic and of epidemic proportions.
- Although there are many examples of successful initiatives and solutions to address the impact of TB in the mining sector, migration affects these efforts. This is why African countries are looking at harmonized regional approaches.
- It was noted that Canada, as one of the biggest donors at the global level for TB efforts, is creating an enabling environment for innovative public-private partnerships.
- Panellists highlighted the importance of public-private partnerships, and emphasized that together they can have greater impact to find solutions to address TB and other health issues.
- It was noted that, in order to be successful, new approaches should focus on three points of entry: 1) working with mines to develop a standardized approach in the formal and informal mining sector; 2) promoting better home-based opportunities for care; and 3) developing a unified tracking system to ensure that people do not interrupt their minimum six-month treatment program.
- Following the signature of the Declaration on Tuberculosis in the Mining Sector by the Southern African Development Communities Heads of States in 2012, a ministerial summit took place in Johannesburg on March 25, 2014. This summit focused on the harmonization of the regional response to TB in the mining sector with the ministries of Health, Minerals, Labour, and Finance, CEOs of mining companies, mine workers, ex-mineworkers, civil society and development partners.
Diane Jacovella, Assistant Deputy Minister (DFATD), Canada, closed the conference and highlighted the following key takeaways:
- Government capacity-building is essential to ensure that countries can maximize the benefits of mining investments for local and national development objectives.
- Community involvement in mineral development projects from the outset is key to ensuring the success of the project and the creation of shared value for all stakeholders.
- Private sector actors are important partners for development, and emphasis should be placed on leveraging the expertise, knowledge and experience of all stakeholders (governments, communities, private sector, civil society) in order to learn from our successes and failures.
On behalf of DFATD and WEF, Ms. Jacovella thanked all conference participants, the moderators and speakers, the Prospectors & Developers Association of Canada for sponsoring the conference lunch and reception, and the Canadian Institute for Mining, Metallurgy and Petroleum for sponsoring the conference reception.
- Date Modified: