The extraction of natural resources, such as oil, gas, metals and minerals, is supposed to boost the economy and improve the quality of life of the residents of resource rich countries. However, in too many cases, resource extraction has led to social inequality, environmental degradation and corruption. In places like Colombia, it aggravates conflict.
The global Extractive Industries Transparency Initiative Standard (EITI Standard) is an international standard for the mining and hydrocarbon industries. By establishing a participatory approach that ensures the collaboration of governments, private sector actors, and civil society organizations, the EITI Standard promotes a fairer, more transparent accounting of resources.
The EITI was launched in 2002 by then-Prime Minister Tony Blair of the United Kingdom to promote accountability and transparency in both the mining and hydrocarbon sectors and to the fight against the so-called “resource curse.” According to EITI Board Chair Clare Short and the head of the EITI Secretariat, Jonas Moberg, “public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development.”
As of September 2014, 46 countries—working in collaboration with more than 80 private supporting companies and 21 partner organizations such as the Inter-American Development Bank—had implemented the initiative.
Natural resource extraction is a key contributor to economic growth in various parts of the Western Hemisphere, but governments, businesses and civil society are faced with how to improve extractive activity and its effects on broad-based socioeconomic development in respective communities. A special section in the Winter 2013 issue of Americas Quarterly, released today, includes photo essays and analysis to look at these challenges and compare the potentials and pitfalls for the natural resource industry in Chile, Colombia and Peru in four critical areas: community relations and consulta previa (prior consultation); value-added economic development; the nature of governance and public management; and the environment.
In the case of consulta previa, although Convention 169 of the International Labour Organization—on the right of Indigenous and tribal peoples to prior consultation—has been ratified by 20 countries, most of which are Latin American nations, the accord is still subject to competing interpretations by community leaders and governments.To maximize success and mitigate conflict, the AQ special section urges all stakeholders to view consulta previa as a regular process throughout the life of the exploration or exploitation project, and for businesses to broaden the scope of consultative mechanisms beyond extraction’s original impact zone.
The special section also suggests that governments and businesses work together to ensure a positive impact of extractive industry over national economies. By leveraging tax and royalty resources, governments can attract investment and promote local innovation. It cites Chile as a model in terms of its Fondo de Innovación para la Competitividad (Innovation Fund for Competitiveness). However, clear priorities for social policy and investment must be in place to ensure an equitable resource distribution.
In addition, despite some progress in economic and community development over the life of extractive industry in the three countries, governments and businesses still lag behind in protecting the environment from the negative effects of mining exploration. The AQ section asks governments to boost the capacity and strengthen the authority of federal environment ministries and for businesses to monitor energy consumption levels and seek creative ways to reduce them.
In addition to the photo essays and analysis, an exclusive AQ documentary looks at a proposed project by the coal mining company Cerrejón to move an entire river 16 miles (26 kilometers) and the effects that would have on the Wayúu Indigenous community that lives alongside it .
Top stories this week are likely to include: India-CELAC dialogue; Jamaica marks its independence; impact of the Antamina spill; Repsol to meet with Venezuela on YPF; and responses to Petrobras’ poor quarterly release.
India-CELAC Dialogue: Tomorrow, Indian Foreign Minister S. M. Krishna will host a troika of high-level diplomats from the Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC) in New Delhi with the objective being to deepen relations with Latin America. As Chile currently holds the CELAC presidency, Chilean Foreign Minister Alfredo Moreno will lead the delegation that will also include Venezuelan Foreign Minister Nicolas Maduro and Cuban Vice-Foreign Minister Rogelio Sierra. According to India’s foreign ministry, India’s trade in Latin America and the Caribbean (LAC) was over “$25 billion in 2011 and cumulative investments are estimated to be $16 billion mostly in hydrocarbons, minerals, agriculture, pharma and IT;” still, there is “vast untapped potential” for further collaboration. This presents an enormous opportunity for Latin America, notes AQ Senior Editor Jason Marczak: “Greater trade and investment linkages with India will be critical for protecting the region against any decrease in demand caused by a slowing Chinese economy. India represents a growing, untapped middle class.” For more on LAC-India relations, read “The Other BRIC in Latin America: India” from the Spring 2011 AQ. As well, AS/COA notes that diplomatic ties between LAC and India have expanded; between 2002 and 2009 the number of LAC embassies in New Delhi grew from 12 to 18.
Jamaica Rings in Independence: Today Jamaica celebrates 50 years of independence from the United Kingdom. Queen Elizabeth II remains the island’s monarch, but Jamaican Prime Minister Portia Simpson-Miller pledges to loosen ties with Great Britain and make her country a republic. Doing so would maintain Jamaica’s status as a British commonwealth, but would remove the Queen as Jamaica’s head of state and have the prime minister become president. Reflecting on 50 years of independence, Simpson-Miller told TIME Magazine that “despite our challenges, I think we’ve done very well on balance our first 50 years […] Jamaica is more than just the ‘brand’ the world recognizes so well; it’s a place of pride for the people who live here, its educational institutions, its sports achievements, and its science and technology growth.”
Impact of Peruvian Mine Spill: A toxic copper concentrate spilled at the Antamina mine in the Peruvian region of Ancash on July 25 has made over 100 people ill. Antamina’s environmental director has disputed that the material was toxic, instead referring to it as a “dangerous substance that requires a particular handling but not necessarily toxic.” Still, on Sunday, the company was fined for not activating its response plan to the accident. Copper has been instrumental to Peru’s economic ascent, accounting for 60 percent of export income, but “environmental protection has been relatively lax” in the Andean country according to the Associated Press. As more details emerge this week, will the government take additional action?
Repsol Representatives to Meet with Venezuelan Officials on Thursday: Officials from Spanish firm Repsol S.A. will meet with Venezuelan leaders on Thursday to discuss Repsol’s dispute with Argentine firm YPF after Argentina’s government seized a majority share of YPF, formerly held in a joint venture with Repsol. Venezuela has pledged to invest in Argentina to boost its oil production and desires an amicable resolution to the conflict with Repsol and the Spanish government. Repsol has investments in Venezuelan oil and gas fields, according to Bloomberg.
Fallout from Disappointing Petrobras Report: Petrobras posted its worst quarterly report since 1999, registering a R$1.35 billion ($663 million) loss in the second quarter, versus a R$10.94 billion—then equivalent to $6.86 billion—gain one year earlier. Petrobras President Maria Graça Foster blamed the loss in part to an “excessive depreciation” of the real against the dollar. What steps will be taken in response to this report?
Peru’s government declared a 30-day state of emergency in the southern Andean province of Espinar yesterday after clashes between anti-mining protesters and police officers. The state of emergency suspends a number of civil liberties, including the right to freedom of assembly. It also grants local police officers responsibility over public order.
Protestors have been demonstrating against the Tinaya copper mine in Espinar, near Cuzco, since last week, blocking highway access to the mine and halting production. Violence escalated last weekend, resulting in the deaths of two civilian protestors and the injury of 46 police officers on Sunday. An additional 30 police officers were injured on Monday. Interior Minister Wilver Calle, who announced the deaths yesterday, did not explain how they occurred other than to say that police were forced to open fire in self-defense.
Protestors claim that operation of the Tinaya mine is polluting two local rivers and damaging the environment. They also say the mine has not contributed sufficiently to the local economy, and are demanding that the mine owner, Xtrata, increase the amount of royalties it provides the local government to 30 percent, from 3 percent. Xtrata, a Swiss-based company and the world’s fourth-largest copper producer, has denied the pollution allegations.
This is not the first time President Ollanta Humala has resorted to declaring a state of emergency to end anti-mining protests. Last December, his government issued a state of emergency in the northern province of Cajamarca in response to protests against the $4.8 billion Conga gold mining project. That project, owned largely by U.S.-based Newmont Mining Co., has been suspended pending further negotiations over the protection of highland water sources.
Newly sworn-in Prime Minister Laurent Lamothe said the Haitian government is drafting legislation to regulate the country’s nascent mining industry. His statement on Tuesday came shortly after the Associated Press reported findings in the northeastern mountain region of precious metals—including gold, silver and copper—potentially worth $20 billion.
According to Lamothe, the new legislation will lay out rules allocating a portion of royalties to the Haitian government and putting in place protections for the people and environment that could be affected by the mining. “The most important thing,” he said, “is to have the correct mining law.” The legislation is expected to be sent to Parliament soon.
Gold was last gathered in Haiti by the Spanish in the 1500s. After they moved on to Mexico, Haiti’s reserves remained largely unknown. In the 1970s United Nations geologists documented notable pockets of gold and copper, but foreigners remained unwilling to invest in the industry within Haiti because of the country’s long history of corruption and instability. Since the 2010 earthquake, though, U.S. and Canadian companies have invested $30 million in exploratory drilling, worker camps, new roads, and laboratory studies.
Haiti’s current mining laws date back to 1976, although in 1996 the firm SOMINE negotiated permits with President René Preval to extract metals out of the mountains. Lamothe said the legislation currently being drafted is designed to benefit Haiti while also attracting foreign investment with the promise of profiting from the mines. He said he hopes Haiti will receive “as much as possible” of the mining revenue “without hampering the profit motive of the mining company.
Lamothe officially became prime minister on Monday, after Parliament approved his Cabinet and policy plan. He filled a vacuum left by former Prime Minister Garry Conille, who resigned three months ago after only four months on the job, due to differences with President Michel Martelly. In addition to the mining legislation, Lamothe emphasized social investment, including garbage clean-up, better roads and programs to help mothers living in poor neighborhoods in the capital city of Port-au-Prince.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.