Stung Mining Firms Want To Be Catalyst For Growth

Stung mining firms want to be catalyst for growth

by Eric Onstad, Reuters, JOHANNESBURG

8th March 2006

Mining firms, stung by criticism that proceeds from mining rarely filter down to the poor, want to prove their presence can aid economic growth.

The International Council on Mining and Metals (ICMM) aims to put new research into action with pilot projects to help governments spend their mining wealth on infrastructure, health care and education, the council's head told Reuters.

"We can be an important catalyst, we can't be a full solution, but it is important there are good governance models, people need to see the economic benefits of these activities," ICCM Chairman Wayne Murdy told Reuters late on Tuesday.

"Some of our critics would like us to just disappear, that's not realistic, but what is appropriate is that we have learned from our mistakes in the past."

Murdy, who is also chairman of Newmont Mining Corp, the world's second biggest gold producer, spoke by telephone from his firm's headquarters in Denver.

The ICCM was formed in 2002 by mining firms battered by criticism that poor countries were "cursed" with windfalls from mining and oil operations, with much of the populace falling deeper into poverty as economic growth stagnated.

ICMM-sponsored research showed that the "curse" was not a blanket trend and set out to dig up the reasons why some mineral-rich countries like Chile have managed to grow their economies and slash poverty while others have failed dismally.

Corruption is an ongoing difficulty, but in many cases, lack of funds was not the biggest problem -- local authorities had limited training to oversee long-term development programs.

Peru, where Newmont is one of the country's biggest taxpayers, still sees protests against mines even after changing its laws so that some tax revenue from mining goes directly to communities surrounding an operation.

"Unfortunately there's very limited capacity among these local politicians and their staff to cope with and deal with the kind of funds that are available to them," Murdy said.

PILOT PROJECTS

Following the release of the research, conducted by independent groups, the ICMM plans to launch two pilot projects in the second half of the year to put its new "Community Development Toolkit" to the test.

It aims to select two governments who will cooperate along with non-governmental organizations and institutions such as the World Bank to put some of the recommendations in place.

When the World Bank approves financing for projects, it might also be able to work with local authorities to improve their efficiency and capabilities in spending tax money generated from the mines, he added.

This is much more a collaborative effort than ongoing moves to lessen the environmental impact from mining, over which firms have much more control.

"These are not easy matters on the social side. On the environmental side, for the most part we've got standards where we operate, these things are measurable, we've got technical people who can monitor these things," Murdy said.

"There is only so much we can do in that (social) regard. We do have a social responsibility, but it's very important that we understand that we maintain the responsibilities of government."

The ICMM, which also sponsors research on technical environmental issues, eventually aims to formulate an ethical code of conduct for mining firms.

"Clearly we are trying to look toward the time where individual mines can be assessed for compliance on environmental and social benchmarks."

ICMM members include the biggest diversified mining groups BHP Billiton, Rio Tinto Plc and Anglo American Plc.

Other members are South African gold producer AngloGold Ashanti Ltd, Canadian nickel producer Falconbridge Ltd, U.S. aluminum producer Alcoa, and Japanese base metals producer Sumitomo Metal Mining.