Successful and sustainable natural resource management requires responsible governance and transparent payment flows – possible only through close cooperation between the private sector, civil society and governments.
This kind of cooperation can come about in different ways, as experts from academia and government pointed out during a workshop on "Resource management for sustainable development" organized by the Development and Peace Foundation (SEF) and the Federal College for Security Studies (BAKS) in Berlin on 10 and 11 May.
While initiatives such as Publish What You Pay and EITI, which are working for greater transparency, have been active for quite some time, other ideas for a more equitable distribution of profits from the mining sector are now being conceptualized. Mongolia, for instance, recently introduced a "windfall tax". This involves charging an additional tax on all income from gold and copper mining above a minimum price. The tax revenues are channelled into a development fund, two thirds of which are earmarked for financing social programmes and investments while the remainder is saved for future uses. Such an arrangement is advantageous when mineral resource prices are high, but at the same time encourages dependence on international price fluctuations. It is also likely to increase resource smuggling. The implementation of this regulation should therefore be preceded by an adequate lead time to ensure the buy-in of mining investors and companies and to prevent any drastic impacts on the sector.
There was also a heated debate on the issue of compensation payments to resource rich countries if they refrained from exploiting their natural resources to avert environmental and social repercussions. Ecuador, for instance, put forward a proposal to forgo development of its oil reserves in the Amazon basin if the international donor community were prepared to provide adequate compensation for the lost revenues. Different methods of sustainable natural resource management therefore frequently have advantages and disadvantages, and these need to be carefully balanced. The establishment of the required international normative framework for enhancing transparency in this sector is still in its infancy. Within the concerned countries, capacity building is also required to strengthen their position during the negotiation and award of licences. (by Christiane Roettger)

Further information on the workshop is available at http://www.sef-bonn.org/de/veranstaltungen/index.php

Published in:ECC-Newsletter, June 2007