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Avoiding the "resource curse" - Boston Consulting Group.

Geneva
World Economic Forum 2012
President Elbegdorj of Mongolia

Geneva: Six building blocks can help lift some of the least developed countries in the world out of poverty by harnessing their mineral wealth, according to a new report published jointly by the World Economic Forum and The Boston Consulting Group. The report, A Framework for Advancing Responsible Mineral Development, draws on the expertise of 400 experts from NGOs, governments, and mining companies to provide practical advice aimed at enabling developing countries to avoid the "resource curse" and develop sustainably.

Examples of good practice are highlighted in the report. The world's largest bauxite-mining company, Alcoa, set up a local development council in Juruti, Brazil, which led to 21 projects including the construction of a district police station and school, for instance, and Rio Tinto published all tax and royalty payments in the 28 main countries in which it operates.

"This report offers intelligent, relevant responses, drawn upon real-life experience, on how to create a climate of trust, transparency, and understanding that can bring benefits to all of the various stakeholders in mining development," says Richard O'Brien, president and CEO of Newmont Mining and chair of the World Economic Forum's Mining and Metals Steering Board.

The six building blocks identified are

  • Progressive capacity building and knowledge sharing among all stakeholders
  • A shared understanding of the benefits, costs, risks, and responsibilities related to mineral development
  • Collaborative processes for stakeholder engagement throughout the life cycle of mining projects
  • Transparent processes and arrangements
  • Commonly agreed upon compliance, monitoring, and enforcement of commitments
  • Effective dispute-resolution mechanisms

Huguette Labelle, chair of Transparency International and a member of the World Economic Forum's Global Agenda Council on the Future of Mining & Metals, endorsed the report, saying: "Transparency is essential to ensure prosperity for resource-rich countries, building the trust necessary for effective collaboration among stakeholders."

All six building blocks aim to increase trust between different parties and create a stable long-term environment for mining projects. The report highlights 22 examples of existing projects and initiatives that show what can be accomplished in countries including Mongolia, Liberia, Ghana, and Chile.

Underlying the proposals in the report is an analysis of leading mining countries, revealing that some of these countries have both huge untouched mineral resources and lower levels of social and economic development. These countries, which include Guinea, Mongolia, Peru, and South Africa, could transform their socioeconomic prospects by using the six building blocks to tap their resources.

"Having co-hosted the launch of the Responsible Mineral Development Initiative in Mongolia in June 2010, we fully support the release of this year's report. The case studies and recommendations will help countries such as ours develop our mineral resources in a fair and responsible manner for all stakeholders. Socially as well as environmentally responsible mining is not merely a challenge for the host countries, it is the prerequisite for sustainable global development," says Elbegdorj Tsakhia, president of Mongolia.

Practical recommendations, in keeping with the six building blocks, include encouraging companies and governments to publish mining-related tax and royalty payments, creating local development councils, and establishing capacity-development programs.

A copy of the report can be downloaded here.

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