tag:theconversation.com,2011:/global/topics/extractive-industries-transparency-initiative-4635/articlesExtractive Industries Transparency Initiative – The Conversation2022-03-15T12:16:22Ztag:theconversation.com,2011:article/1788622022-03-15T12:16:22Z2022-03-15T12:16:22ZSmall oil producers like Ghana, Guyana and Suriname could gain as buyers shun Russian crude<figure><img src="https://images.theconversation.com/files/451928/original/file-20220314-118290-sywzv4.jpg?ixlib=rb-1.1.0&rect=11%2C0%2C2485%2C1665&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A woman sells drinks on a street in Georgetown in Guyana, one of South America's poorest countries, March 1, 2020. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/woman-sells-water-and-soda-in-a-street-stall-in-georgetown-news-photo/1204536568">Luis Acosta/AFP via Getty Images</a></span></figcaption></figure><p>As the <a href="https://www.nytimes.com/2022/03/07/business/russia-us-trade-relations.html">U.S.</a> and <a href="https://www.reuters.com/markets/rates-bonds/eu-phase-out-russian-gas-oil-coal-imports-leaders-draft-2022-03-07/">Europe</a> cut back purchases of Russian oil, and energy traders <a href="https://www.cnn.com/2022/03/03/investing/russia-oil-sanctions-ukraine/index.html">shun it for fear of sanctions</a>, the search is on for other sources. Attention has focused on <a href="https://www.cnn.com/2022/03/08/politics/joe-biden-saudi-arabia-venezuela-iran-russia-oil/index.html">Iran and Venezuela</a>, both of which are led by governments that the U.S. sought until recently to isolate. But emerging and less-developed producers could also play roles. </p>
<p>Among the world’s <a href="https://www.eia.gov/international/data/world/petroleum-and-other-liquids/annual-petroleum-and-other-liquids-production">many oil-producing countries</a>, a few are positioned to jump the list and become increasingly active. They include the West African nation of Ghana (No. 33), along with Guyana (No. 42) and Suriname (No. 69), two small adjoining countries on the north Atlantic coast of South America. All three nations have become oil producers within the past 12 years, working with large companies like <a href="https://corporate.exxonmobil.com/News/Newsroom/News-releases/2022/0105_ExxonMobil-makes-two-discoveries-offshore-Guyana">ExxonMobil</a>, <a href="https://www.tullowoil.com/our-operations/africa/ghana/">Tullow Ltd</a>, <a href="https://www.reuters.com/business/energy/suriname-state-oil-firm-chevron-sign-offshore-oil-output-sharing-contract-2021-10-13/">Chevron</a>, <a href="https://www.nytimes.com/2021/01/20/business/energy-environment/suriname-oil-discovery.html">Apache, Total and Royal Dutch Shell</a>. </p>
<p>I study factors that influence <a href="https://www.linkedin.com/in/jennapher-lunde-seefeldt-455a52113/">levels of democracy and social justice within nations</a>, especially as they relate to natural resources and <a href="https://doi.org/10.1111/polp.12365">economic structures</a>. As I see it, these newer producers are in a unique position compared to other oil-exporting nations, such as Nigeria and Ecuador. </p>
<p>In too many cases, developing nations opening their economies to oil production have been expected to accept the terms companies demand, with little room for <a href="https://www.theguardian.com/global-development/2021/nov/09/a-wealth-of-sorrow-why-nigerias-abundant-oil-reserves-are-really-a-curse">negotiation</a> and <a href="https://law.stanford.edu/wp-content/uploads/2018/05/kimerling.pdf">continued</a> <a href="https://www.brookings.edu/blog/africa-in-focus/2021/11/24/nigerias-petroleum-industry-act-addressing-old-problems-creating-new-ones/">exploitation of host communities</a>. In contrast, Guyana, Suriname and Ghana are better situated to obtain favorable terms. </p>
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<figcaption><span class="caption">Social scientists coined the term “resource curse” to describe countries that are rich in natural resources such as oil, but have poor economic growth or development. One challenge for these nations is negotiating equitable deals with foreign investors.</span></figcaption>
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<h2>Striking better deals</h2>
<p>As world markets grapple with the current oil price shock, niche producers are in especially favorable positions to secure advantageous contracts and more favorable terms from international energy companies. For example, oil companies typically pay host countries royalties on their revenues that average <a href="https://www.nytimes.com/2021/01/20/business/energy-environment/suriname-oil-discovery.html">about 16%</a>. To date, Guyana and Suriname have accepted fees of less than 6.5% in an effort to attract investors. Under current conditions, they may be able to ask for more during new contract negotiations. </p>
<p>Oil production started in Guyana in late 2019, and currently the country produces over <a href="https://corporate.exxonmobil.com/News/Newsroom/News-releases/2022/0211_ExxonMobil-starts-production-at-Guyanas-second-offshore-development">340,000 barrels per day</a>. Guyana learned from its first block contract with ExxonMobil to demand more “<a href="https://www.forbes.com/sites/davidblackmon/2020/08/20/guyanas-new-government-makes-plans-for-more-demands-on-exxonmobil/">local content</a>” – a key condition in oil negotiations that refers to hiring local workers and using locally made goods and equipment. Natural resources minister Vickram Bharrat has called that agreement, made by a previous administration, “one of the worst ever between a government and an oil company,” and Guyanese officials say they <a href="https://www.argusmedia.com/en/news/2299461-guyana-seeks-bigger-take-from-new-oil-contracts">will seek more-favorable terms in future agreements</a>. </p>
<p>Suriname’s new offshore oil discoveries offer potential. Small operations are currently producing about <a href="https://oilnow.gy/featured/suriname-oil-discoveries-estimated-at-1-4-billion-barrels-rystad-energy/">20,000 barrels per day</a>, and major projects are <a href="https://www.worldoil.com/magazine/2021/may-2021/features/guyana-suriname-basin-rise-from-obscurity-to-super-potential">expected to start by 2025</a>. </p>
<p>Suriname is <a href="https://www.kaieteurnewsonline.com/2021/12/23/suriname-does-continuous-reviews-of-companies-oil-spill-response-plans/">demanding increased insurance</a> from oil companies in the event of an oil spill, along with prepared emergency cleanup procedures. These processes are continually reviewed and criticized, keeping companies on their toes. </p>
<p>Ghana started oil development in 2007 and now produces about <a href="https://hawilti.com/uncategorized/ghana-bets-on-higher-oil-revenues-despite-production-decline-over-2022-2025/">163,000 barrels per day</a>. However, ExxonMobil pulled out of the country in 2021, reportedly to <a href="https://www.theafricareport.com/98380/exxons-exit-from-ghana-may-be-first-sign-of-majors-quitting-africa/">focus on higher-value projects elsewhere</a>, and depressed demand during the COVID-19 pandemic cut into Ghana’s oil exports. </p>
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<a href="https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Men on an offshore oil platform in coveralls and helmets, smiling" src="https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451909/original/file-20220314-19-1co98vw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Ghanaian President John Atta Mills turns a valve to symbolically open oil production in the Jubilee field off Ghana’s west coast, Dec. 15, 2010.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/ghanaian-president-john-atta-mills-turns-the-valve-to-flag-news-photo/107606452">Pius Utomi Ekpei/AFP via Getty Images)</a></span>
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<p>Now, Ghana’s national oil company, Ghana National Petroleum Corp., is <a href="https://www.bloomberg.com/news/articles/2021-10-18/ghana-s-gnpc-on-acquisition-drive-to-better-control-oil-assets">taking a larger role</a>, buying shares in oil fields from companies like Occidental Petroleum. Greater state involvement is raising uncertainty about how much access Ghana will offer to foreign oil companies. Some, including Tullow Oil and Aker Energy, are producing there now, but <a href="https://www.theguardian.com/business/2019/dec/09/tullow-oil-shares-ghana-stock-market-value">Tullow’s shares have plummeted</a> in recent years, and there has been speculation that it may leave Ghana.</p>
<h2>Managing oil income</h2>
<p>Nations and states that produce oil or other natural resources often put their royalties into <a href="https://www.swfinstitute.org/research/sovereign-wealth-fund">sovereign wealth funds</a> instead of simply adding them to general treasury funds. A sovereign wealth fund is essentially a rainy day pot that the government can use in times of economic stress to continue funding major priorities, such as infrastructure projects and social programs. </p>
<p>Some of these funds, notably in <a href="https://abcnews.go.com/Business/norwegians-millionaires-norways-sovereign-wealth-fund/story?id=21488085">Norway</a> and <a href="https://www.bbc.com/worklife/article/20181220-why-alaska-sends-each-resident-a-cheque-in-the-mail">Alaska</a>, have produced significant benefits for residents. However, some experts argue that they <a href="https://doi.org/10.1016/j.erss.2021.102048">aren’t necessarily well suited for developing nations</a>.</p>
<p>According to this view, the success of these funds <a href="https://openknowledge.worldbank.org/handle/10986/17313">depends on many hard-to-control variables</a>, such as whether the country has a diversified economy, its level of corruption and global events like commodity price collapses. And managing the funds <a href="https://globalswf.com/news/png-s-struggle-to-establish-swf-illustrates-challenges-facing-resource-rich-least-developed-countries">requires significant technical skills</a>. </p>
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<p><a href="https://doi.org/10.1080/02646811.2017.1329120">Ghana</a> created an Oil Heritage Fund in 2011, and <a href="https://oilprice.com/Latest-Energy-News/World-News/Guyana-Votes-To-Set-Up-Oil-Wealth-Fund.html">Guyana</a> and <a href="https://suriname-energy.com/en/article/top-three-things-suriname-must-learn-guyanas-oil-boom">Suriname</a> are in the process of doing so. All three may need assistance to manage these funds effectively and maximize benefits for their citizens.</p>
<h2>Transparency and peer support</h2>
<p>Recognizing that it can be challenging for developing countries to negotiate with major corporate investors, a number of nongovernmental organizations have become active in this sector. One that’s particularly relevant to oil production is the <a href="https://eiti.org/About">Extractive Industries Transparency Initiative</a>, which seeks to publicize information about extraction practices, contracts, taxing and spending processes, and more. This benefits the public by tracking where revenue goes and promoting accountability. </p>
<p>The <a href="https://www.newproducersgroup.online/what-we-do/">New Producers Group</a> works to help countries manage resources effectively through peer-to-peer relationships and knowledge exchange. Emerging producers can learn from other nations’ experiences and collaborate with other governments on issues that affect them all. For example, the organization has held several events recently, analyzing <a href="https://www.newproducersgroup.online/event/cop26-side-event-climate-change-and-new-petroleum-producing-countries/">what the global transition away from fossil fuels means for emerging oil producers</a>, and how these countries can manage the transition while working to end poverty.</p>
<p>As members of both organizations, Ghana, Guyana and Suriname have access to tools that many early producers did not. All three countries have participated in <a href="https://www.newproducersgroup.online/members-area/">multilateral meetings and exchanges</a> with peers and <a href="https://eiti.org/public-benefit">shared information</a> with local citizens. </p>
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<p>Keeping the public informed helps to hold government officials and corporations accountable and promotes public involvement. Citizens and civil society watchdogs <a href="https://www.transparency.org/en/blog/in-depth-guyanas-oil-makes-the-case-for-publishing-public-contracts">criticized</a> ExxonMobil’s first contract in Guyana for not including citizen feedback and being created behind closed doors. </p>
<p>Public involvement and transparency also reduce the potential for corruption, a common problem in resource-rich nations. Transparency International’s <a href="https://www.transparency.org/en/cpi/2021">Corruption Perceptions Index</a> measures perceived levels of public sector corruption in nations worldwide. On a scale with 100 as the worst score, Guyana and Suriname scored 39 and Ghana scored 43, so all three states have significant room for improvement. </p>
<p>As the world slowly transitions away from fossil fuels, emerging producers are acutely aware of the need to seize the moment for development’s sake, but also seek to meet climate change pledges. Guyana and Suriname may have an <a href="https://www.worldpoliticsreview.com/articles/30258/to-develop-oil-guyana-and-suriname-could-set-back-climate-goals">asset</a> in the fight against climate change: dense forests that can absorb large quantities of carbon, helping to offset emissions. </p>
<p>[<em>Over 150,000 readers rely on The Conversation’s newsletters to understand the world.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-150ksignup">Sign up today</a>.]</p>
<p>Guyana has unveiled a <a href="https://www.thedialogue.org/wp-content/uploads/2021/11/LEA211119.pdf">Low Carbon Development Strategy for 2030</a> and has <a href="https://www.stabroeknews.com/2022/02/19/news/guyana/guyana-looking-to-market-at-least-8m-carbon-credits-by-july/">partnered with Norway to generate carbon credits</a> for protecting its forests. I see partnerships like these as ways to advance environmental goals alongside the social and economic development that these nations desperately need.</p><img src="https://counter.theconversation.com/content/178862/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jennapher Lunde Seefeldt is affiliated with American Political Science Association. </span></em></p>Buyers are avoiding Russian oil in response to the war in Ukraine. Can smaller producers leverage this moment to strike favorable deals with big oil companies?Jennapher Lunde Seefeldt, Assistant Professor of Government and International Affairs, Augustana UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/512642015-11-30T04:35:22Z2015-11-30T04:35:22ZWhat the global open government partnership can do for Africa<figure><img src="https://images.theconversation.com/files/103447/original/image-20151127-11628-1jaij9u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Open Government Partnership can play an important part by increasing trust among citizens and public accountability in Africa. </span> <span class="attribution"><span class="source">shutterstock</span></span></figcaption></figure><p>South Africa recently took over as <a href="http://www.dpsa.gov.za/article.php?id=304">chair</a> of the Open Government <a href="http://www.opengovpartnership.org/">Partnership</a>. This represents an important opportunity for the country, and Africa.</p>
<p>The partnership is a voluntary initiative that aims to promote transparency, public accountability and civic participation in government. Ten of the 69 countries in the good governance partnership are in Africa. </p>
<p>It is hoped that, with South Africa leading, the partnership will continue to grow in Africa. The importance of promoting transparent governance that puts citizens at the centre cannot be overemphasised in Africa. </p>
<p>Most participating countries are in south, central and north America, Europe, Asia and Australasia. They include the US, Brazil, the UK, Turkey, South Korea and New Zealand. The significance of the partnership is that it has become a central policy-making platform in partner countries. </p>
<p>Member countries use the platform to formulate accountability standards and share knowledge about how to go about making good policies. This could include drawing up legal frameworks. The goal is to improve the transparency of government and eliminate corruption. </p>
<p>Each country has to produce <a href="http://www.opengovpartnership.org/blog/category/country-action-plans-updates">action plans</a>, in collaboration with civil society. These plans contain commitments to advancing access to government information, civic participation and public accountability. This can also include a technology and innovation component (e-government). </p>
<p>Individual country commitments to the partnership are internationally <a href="http://www.opengovpartnership.org/awards">bench-marked</a> and evaluated annually by independent <a href="http://www.opengovpartnership.org/irm/about-irm">country researchers</a>.</p>
<p>In <a href="http://www.opengovpartnership.org/country/south-africa">South Africa’s</a> case, a recent <a href="http://www.opengovpartnership.org/country/south-africa/irm">assessment</a> showed that the partnership still plays only a peripheral role in national policy making.</p>
<h2>The fight against corruption</h2>
<p>Tackling corruption is especially pertinent in the developing world. Many of the countries are too poor to absorb the damaging effects of corruption. This is particularly true in South America and sub-Saharan Africa. </p>
<p>The two regions also have high levels of inequality. South Africa, in particular, is among the most <a href="http://data.worldbank.org/indicator/SI.POV.GINI/countries?display=map">unequal</a> in the world.</p>
<p>Social and economic upward mobility in these countries is often significantly curtailed. This is primarily, but not exclusively, because of a host of historical, physical and institutional weaknesses. These impose significant transaction costs on already marginalised <a href="https://sustainabledevelopment.un.org/post2015/transformingourworld">societies</a>.</p>
<p>One of these is high levels of corruption, which diverts scarce resources from areas of critical need, perpetuating the <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.178.8184&rep=rep1&type=pdf">inequality trap</a>. </p>
<p>The partnership can play an important part by increasing levels of trust among citizens and accountability in government. An important way this can happen is by opening up government to citizens. </p>
<p>Tunisia won a partnership award for its innovative <a href="https://www.opengovawards.org/2015results">e-procurement</a> system that tackles public sector corruption. The system provides real time public procurement information to the public. It lists the number of tenders, tender results and how the funds will be allocated.</p>
<p>An increasingly popular commitment involves countries signing up to the Extractive Industries Transparency <a href="https://eiti.org/document/standard">Initiative</a>. This is a voluntary multilateral initiative aimed at instilling transparency and accountability to avoid the risk of corruption and bad <a href="http://blog-imfdirect.imf.org/2012/05/16/escaping-the-resource-curse/">governance </a>. </p>
<p>It is especially relevant in Africa. Factional <a href="http://www.cfr.org/africa-sub-saharan/beating-resource-curse-africa-global-effort/p28780">interests</a> often hijack countries’ natural resource wealth, at the expense of national interest and development.</p>
<h2>(Un)accountability of office</h2>
<p>Another challenge is democratic consolidation following political transition. Many former liberation movements struggle with the <a href="http://www.african.cam.ac.uk/images/files/Brenthurstpaper201208FromLiberationMovementtoGovernment2.pdf">transition </a>into modern democratic governments. And they are often unwilling to cede power as political office and privilege are intertwined. </p>
<p>For example, political leaders such Zimbabwe’s Robert Mugabe and Uganda’s Yoweri Museveni have <a href="https://theconversation.com/africas-old-mens-club-out-of-touch-with-continents-suave-burgeoning-youth-48618">clung to power </a> for too long. In Burundi, President Pierre Nkurunziza has <a href="http://www.bbc.com/news/world-africa-32490645">extended</a> his time in office despite widespread discontent. His actions have brought the country to the brink of civil war. </p>
<p>In South Africa, after 21 years of freedom, questions are being asked about the scope and quality of <a href="http://www.tandfonline.com/doi/abs/10.1080/14742837.2013.820904">democracy</a>. The recent overarching recommendation for the partnership’s <a href="http://www.opengovpartnership.org/country/south-africa/irm">action plan </a> for the country highlighted the need for a greater commitment to public accountability. It also called for consequences for errant public officials and elected officials. </p>
<p>In particular, the assessment recommended that South Africa’s office of the Public Protector be <a href="http://www.nylslawreview.com/wp-content/uploads/sites/16/2014/11/Malunga.pdf">adequately funded</a>. The office should also not be <a href="http://www.news24.com/SouthAfrica/News/Dont-muzzle-public-protector-watchdog-SCA-20151008">hindered </a> in any way in carrying out its mandate.</p>
<p>It is hoped that as head of the partnership, South Africa will play an increasingly important role in addressing common governance challenges on the continent. This is where the peer learning aspect presents a significant opportunity. Countries can share innovative ideas and good practice.</p>
<p>In a world that is becoming increasingly interconnected, the partnership can serve as an important and useful <a href="http://www.opengovpartnership.org/blog/blog-editor/2015/10/21/ogp-webinars-enabling-ogp%E2%80%99s-race-top">shared source</a> and policy development platform. It could also play a <a href="http://www.opengovpartnership.org/blog/open-government-partnership/2015/09/27/press-release-open-government-partnership-declaration">key role</a> in developing policies to address the new <a href="https://sustainabledevelopment.un.org/post2015/transformingourworld">sustainable development goals</a>.</p><img src="https://counter.theconversation.com/content/51264/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Filitz consults for the Open Government Partnership's Independent Reporting Mechanism. </span></em></p>The Open Government Partnership promotes transparency, public accountability and civic participation in government to combat corruption. It is hoped South Africa will help it grow in Africa.John Filitz, Wits City Institute Research Fellow , University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/329542014-10-30T00:33:13Z2014-10-30T00:33:13ZWhy isn’t Australia signing up to mining revenue transparency?<p>It’s a far-from-perfect instrument of global governance. But as the <a href="https://eiti.org/">Extractive Industries Transparency Initiative</a> (EITI) coalition celebrates its 12th birthday, it can point to steadily increasing membership and dialogue between countries, mining companies and NGOs.</p>
<p>Regrettably, Australia, with one of the world’s largest mining economies, has still not committed to joining the 48 other nations working on EITI disclosure. This is despite the obvious benefits that greater transparency could deliver to all Australians as they confront deep-seated disputes about mining revenues, taxation, royalties and land use.</p>
<p>With the looming deadline of the <a href="https://theconversation.com/au/topics/g20-brisbane">Brisbane G20 meeting</a>, the Abbott government is considering a “hybrid” model of EITI implementation. This may – or may not – satisfy the stringent disclosure standards imposed by the global transparency movement. </p>
<h2>How does the EITI work?</h2>
<p>Transparency EITI-style involves a simple game of show-and-tell. In each country, private sector “extractive” industries (producers of oil, gas and minerals) voluntarily disclose their payments to governments. Governments reveal the taxes they have received from those companies. An external independent auditor validates and reconciles the two sets of numbers before they are published. </p>
<p>The EITI data gives the public an official glimpse of actual revenue flows from local resource projects. This is information that, in many cases, has never been made public before. Any inconsistencies between the two sets of data point to lax administration or perhaps corrupt skimming of resources. </p>
<p>The particular strength of the EITI model is the involvement of civil society as a full player, alongside governments and mining companies, in each country’s Multi-Stakeholder Group (MSG), which oversees EITI implementation. </p>
<h2>Success stories</h2>
<p>EITI was the brainchild of then-British prime minister Tony Blair. It was launched in 2002 as a new tool to help tackle the “resource curse”: the phenomenon of resource-rich societies that actually become poorer, more unstable and more corrupt as mining extraction takes place. Revenue transparency would, it was hoped, provide civil society with the financial data previously concealed within corporate boardrooms and government treasuries.</p>
<p>Since then, 31 <a href="https://eiti.org/countries">countries</a> have started publishing annual “compliant” EITI reports. Another 17 countries are “candidates”, trialling the process and awaiting formal compliance status granted by the EITI board. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=763&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=763&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=763&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=959&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=959&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62856/original/5vcvthxm-1414386985.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=959&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Iron ore being transported in Liberia, one of EITI’s success stories.</span>
<span class="attribution"><span class="source">Flickr/jbdodane</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>One of EITI’s biggest success stories is Liberia. The tiny poor West African country, scene of a horrible 15-year civil war and now struggling against the devastation of Ebola, is an EITI giant. One of the first compliant countries in the world, Liberia has completed five successive years of EITI reporting. The latest round involved 80 companies disclosing payments of more than $US100 million.</p>
<p>EITI in Liberia has strengthened civil society, embedded transparency in the legal system, exposed improper awarding of contracts and used innovative infographics to combat illiteracy and promote wide public understanding of resource revenues.</p>
<h2>Australia lags behind</h2>
<p>This month’s EITI board meeting in Myanmar accepted Chad and Indonesia as compliant. The UK was accepted as a “candidate”. Its involvement is a watershed, as EITI membership now extends beyond the developing “south” to include the developed “north” alongside Norway and the United States.</p>
<p>However, Australia is lagging. When the Gillard government <a href="http://www.foreignminister.gov.au/releases/Pages/2011/kr_mr_111027.aspx?ministerid=2">announced</a> in 2011 that Australia would conduct an EITI “pilot”, this was <a href="https://eiti.org/news-events/australia-pilot-eiti">greeted</a> as a likely prelude to full implementation. But that pilot has only just been completed. </p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=801&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=801&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=801&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1006&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1006&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62858/original/nmkbqs8n-1414387288.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1006&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Little progress has been made since Australia committed to piloting EITI at the 2011 Paris Conference.</span>
<span class="attribution"><a class="source" href="https://flic.kr/p/9nvPuj">Flickr/The EITI</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>During the past three years, EITI standards have become more stringent while Australian enthusiasm seems to have cooled.</p>
<p>The pilot was conducted under an <a href="http://www.industry.gov.au/resource/Programs/ExtractiveIndustriesTransparencyInitiative/Pages/MSGMembers.aspx">MSG</a> convened by the Department of Industry and with representatives of federal and state governments, major mining companies and civil society organisations. The MSG meetings were confidential, save for a grandly titled “communique” issued after each gathering. </p>
<p>The <a href="http://www.industry.gov.au/resource/Programs/EITI/Communique_%20Feb2014.pdf">final communique</a>, issued in February 2014, revealed what appears to be a convenient compromise. The MSG recommended Australia adopt a “hybrid” model: company payments would not be annually reconciled but would be subject to spot checking in a “statistically valid sample”.</p>
<h2>Will a ‘hybrid’ model compromise the EITI?</h2>
<p>The MSG hopes this will be acceptable under EITI rules, though this is not certain. The hybrid concept seems driven by confidence that Australia’s financial and governance arrangements are already so robust that further reporting would be unnecessary. </p>
<p>And, of course, as an Industry Department spokesman reminded me, “the Australian government remains committed to reducing the burden of regulation on Australian businesses”, as well as to open and transparent government.</p>
<p>A local coalition of NGOs under the banner Publish What You Pay has <a href="https://www.oxfam.org.au/media/2014/10/decision-time-for-government-on-mining-transparency/">called on</a> the government to “show leadership on extractive industry transparency” by committing to implement EITI.</p>
<p>One member of Australia’s MSG, Oxfam’s Serena Lilywhite, said Australian candidacy of EITI would:</p>
<blockquote>
<p>… not only send a strong signal to other governments that it is serious about transparency and accountability in the extractive industries, but it would also be better placed to assist with implementation by our neighbours in the Asia-Pacific.</p>
</blockquote>
<p>Beyond these foreign policy goals, Australian implementation would deliver significant domestic benefits. Another MSG member, CAER’s Julia Leske, said: </p>
<blockquote>
<p>Full implementation would help Australians better understand how we benefit from the extraction of our finite natural resources.</p>
</blockquote>
<p>Leske did not spell it out, but this point merits underlining. As the <a href="http://www.smh.com.au/business/mining-and-resources/wa-premier-colin-barnett-lashes-bhp-rio-over-iron-ore-price-squeeze-20141009-113ql7.html">spat</a> between Western Australian Premier Colin Barnett and mining giants BHP Billiton and Rio Tinto shows, disputes about the “right” levels of production, cost and taxation of mineral commodities are not confined to developing economies. </p>
<p>Many such issues confront Australian policy and politics. These include the Rudd government’s failed minerals “super tax”; the <a href="http://www.icac.nsw.gov.au/investigations/current-investigations/investigationdetail/192">allegedly corrupt dealings</a> in relation to Hunter Valley coal mines; WA’s <a href="http://www.drd.wa.gov.au/royalties/Pages/default.aspx">“royalties for regions”</a> program and its claims of <a href="http://www.abc.net.au/news/2014-08-09/west-australian-government-takes-another-swipe-at-tasmania/5660380">unfair distribution</a> of GST revenues; and land use disputes between farmers and coal seam gas producers.</p>
<p>Transparent disclosure of mining revenues and taxation receipts would greatly improve public debate on such issues.</p><img src="https://counter.theconversation.com/content/32954/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Mills lectures at the Graduate School of Government, University of Sydney, which receives funding from the Australian Government for teaching into the Australia Awards program.</span></em></p>It’s a far-from-perfect instrument of global governance. But as the Extractive Industries Transparency Initiative (EITI) coalition celebrates its 12th birthday, it can point to steadily increasing membership…Stephen Mills, Lecturer, Graduate School of Government, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/147572013-06-06T04:21:02Z2013-06-06T04:21:02ZBeyond the talk to action: When does transparency translate to accountability?<figure><img src="https://images.theconversation.com/files/25018/original/38937r75-1370335561.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">While there has been an increasing amount of support for transparency initiatives by global resources giants, nations involved are impatient this has yet to translate to social good.</span> </figcaption></figure><p>Global miners are being asked to <a href="https://theconversation.com/australian-miners-disclose-what-you-pay-our-neighbours-14624">publish what they pay</a>, but is transparency enough? </p>
<p>This was the hard question being asked of governments, mining and extractive industry representatives, intergovernmental agencies and the Extractive Industries Transparency Initiative (EITI) Secretariat itself in <a href="http://eiti.org/sydney2013">Sydney recently</a>. </p>
<p>It’s been 10 years since the <a href="http://eiti.org">Extractive Industries Transparency Initiative</a> (EITI) Principles were agreed at the <a href="http://collections.europarchive.org/tna/20070701080507/http:/www.dfid.gov.uk/news/files/eitireportconference17june03.asp">Lancaster House Conference</a>. Those principles set out an agenda for financial transparency in the mining and extractives industries which aimed to promote disclosure of resources companies’ payments to governments and revenues received by those governments. </p>
<p>In six years, numbers attending EITI’s global conference have increased almost tenfold to 1,200 people from 96 different countries, reflecting the initiative’s growing stature and level of buy-in. </p>
<p>Delegates from non-profit organisations such as Oxfam rubbed shoulders with senior government figures and executives from global players such as BHP Billiton, Anglo American, Royal Dutch Shell and Chevron. </p>
<p>Yet, while the EITI has made considerable legitimacy gains and achieved widespread industry acceptance in the decade since the initial agreement, there is increasing debate and impatience from some nations that transparency reporting has not necessarily translated to “social good”. A <a href="http://eiti.org/files/2011-EITI-evaluation-report.pdf">2011 evaluation</a> found that “little impact at societal level can be discerned”.</p>
<p>This is a severe and significant critique. But it does not mean that the EITI should be shelved, or that there is no potential to transform the practices of both extractives companies and governments. </p>
<p>EITI is not “targeted transparency” like the restaurant hygiene labels which help you decide whether to eat at the local curry hut. And it’s not full-scale freedom of information. It’s somewhere in-between, and the reports of representatives from a variety of countries suggest more formalised accountability measures are necessary if EITI wants successfully to advance “financial democracy”.</p>
<p>Changes to the <a href="http://eiti.org/document/standard">EITI Standard</a>, formally launched during the conference, go some way towards addressing accountability concerns. The Standard will apply across the mining life cycle, allowing it to tackle a greater number and scope of issues, including early licensing, corporate social responsibility and issues related to value and supply-chains. </p>
<p>Mid-last year, EITI supporters were frustrated by certain companies pushing back against movements towards <a href="https://theconversation.com/show-me-the-money-should-big-miners-be-made-to-disclose-who-they-pay-8266">project-by-project reporting</a>. The new EITI Standard requires more rigorous and comprehensive reporting at least down to a company level, with some requirements for project-by-project reporting. It is likely these requirements will be the focus of future debates. </p>
<p>Difficulty engaging with and understanding EITI reports has also been a major criticism of the initiative. The recording of payments and revenues is important, but how meaningful is disclosure if the communities it seeks to help cannot understand it? As Open Society Fellow Diarmid O'Sullivan said, “When people hear that mining is coming to their community, they want to know two things: "What on earth has the government done with our money?” and “Are the foreigners cheating us?”</p>
<p>Partly in response to this type of critique, the Standard has been simplified down from 21 rules to seven. EITI reports will also now provide readers with contextual data, such as production data, licensing information, contract disclosures and concessions, to assist them to make sense of the figures presented. The new Standard also places greater emphasis on accessible and meaningful reports. </p>
<p>But to achieve societal impact, accountability beyond EITI is needed in conjunction with the Standard. In an impassioned speech to the conference plenary, OECD Chair of the Development Assistance Committee Erik Solheim declared that, “Unless we have political will, we will not have anything”. </p>
<p>Solheim went on to suggest that to overcome the “resources curse” faced by many of the developing nations in attendance, the international community
should look to his own home country, Norway, for the solution. </p>
<p>Citing Norway’s current 78% tax level for oil and gas, Solheim urged governments to be bolder in their application of tax to create a strong “social contract” between extractives companies and the countries from which they draw their wealth.</p>
<p>But perhaps the conference’s most prescient insight came from Dr Sixtus Mulenga, CEO at Tranter Zambia, when he used a colloquial metaphor to explain that the real solution lies in both accountability and close cooperation of companies, governments and communities. “If you want to understand the workings of the crocodile, you must ask the hippo,” he said, “For they all must live in the pond.”</p><img src="https://counter.theconversation.com/content/14757/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sara Bice is a Senior Associate of the Australian Centre for Corporate Social Responsibility. ACCSR has past and current clients in the mining industry. Details: <a href="http://www.accsr.com.au">www.accsr.com.au</a></span></em></p>Global miners are being asked to publish what they pay, but is transparency enough? This was the hard question being asked of governments, mining and extractive industry representatives, intergovernmental…Sara Bice, Research Fellow, Centre for Public Policy, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/146242013-05-28T20:33:18Z2013-05-28T20:33:18ZAustralian miners, disclose what you pay our neighbours<figure><img src="https://images.theconversation.com/files/24541/original/jrpt69sp-1369723243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australian neighbours such as Timor Leste - asset rich, but also very poor - are keen to ensure the money paid by Australian extractive companies is fully disclosed.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Australian mining firms remain at the forefront of natural resource exploration and extraction in some of our nearest - and poorest - neighbours. </p>
<p>Timor Leste, Papua New Guinea and the Solomon Islands are host to numerous Australian domiciled or ASX listed extractive companies, all of whom operate under both Australian corporation law, as well as the individual regulation and legislation of host states. </p>
<p>But as it currently stands, Australian mining firms are not required to disclose payments to governments, unless legislated by the countries in which they are operating.</p>
<p>Conversely, large mining firms headquartered in the US, EU, UK and South Korea are required by their governments to disclose what they pay for the rights to explore and extract natural resources. </p>
<p>This level of disclosure is in line with the aims of the <a href="http://www.eiti.org">Extractive Industries Transparency Initiative</a>, of which Timor Leste and the Solomons are both signatories. PNG has also signalled its intention to join the initiative by the end of 2013. In EITI implementing countries both the government and companies publish the details of taxation and royalty payments with the hope of creating a climate of transparency and accountability. </p>
<p>One of the greatest challenges facing these states in implementing any kind of transparency legislation is the mismatch in resources (both financial and legal) between small Pacific Island states and large mineral extraction firms. </p>
<p>In a partial response, the United States <a href="https://theconversation.com/sec-takes-on-humanitarian-role-over-congos-conflict-minerals-9129">has added a measure</a> into its <a href="http://www.sec.gov/spotlight/dodd-frank.shtml">Dodd–Frank Wall Street Reform and Consumer Protection Act</a> which demands all SEC listed oil, gas and mining firms publish the taxation and royalty payments they make to overseas governments. </p>
<p>Not only do payments have to be publicised but they must be done so at a country and project level. </p>
<p>Similarly, the European Union has recently agreed on <a href="http://www.iasplus.com/en/news/2013/04/eu-4-7-directive">amendments to their Accounting Directive</a> which will be voted on in July. The amendments make the same demands of EU domiciled companies (even those not listed on a stock exchange) and extend them to the forestry sector. These legislative changes are in addition to those made in the UK and South Korea.</p>
<p>Australia’s tardiness on this issue is not going unnoticed. The recent <a href="http://eiti.org/sydney2013">EITI Global Conference</a> saw 1,400 delegates gather in Sydney to discuss experiences with and ways to improve the transparency initiative. </p>
<p>A notable feature amid the busy agenda was the recurring suggestion that countries where large resource players are headquartered, or listed, should be obligated to take responsibility for these firms’ actions. </p>
<p>The calls for this kind of legislation to be implemented outside the United States and EU came from mining and mineral ministers of countries as diverse as Ethiopia, Timor Leste and Germany as well as from global coalition, <a href="http://www.publishwhatyoupay.org">Publish What You Pay</a>. </p>
<p>There was little doubt many of these comments were pointedly directed at Australia (and for similar reasons, Canada), two countries whose mining companies continue to break new ground all over the world yet remain free from such legislation.</p>
<p>Yet it is clear from Timor Leste and Solomon Islands delegations that they desire more open and transparent relationships with Australian mine and gas firms, which play a crucial role in these economies.</p>
<p>Australia has the opportunity to assist not only in achieving the aims of the EITI, but in securing accountable and responsible leadership in its nearest neighbours – an opportunity it has not yet fully harnessed. </p>
<p>If Australian mining companies were required, by law, to publish the fiduciary details of their relationships with governments around the world, much of the challenge in EITI implementation for small Pacific Island states would have been effectively achieved. </p>
<p>This would not only circumvent the negotiating issues noted earlier, but would free up the limited resources of each in-country EITI team to focus on the publication and dissemination of the information collected as part of the transparency process.</p>
<p>As is stands, Australia remains out of step with the rest of the international community in demanding transparency and disclosure of its companies operating in overseas jurisdictions. The benefits of an open and transparent mining sector in developing states are clear, and include increased stability along with reduced poverty. This is an opportunity for Australia to play a positive role in its region. </p>
<p>Legislating requirements for ASX-listed firms to publish what they pay foreign governments would not only reduce the burden on our under-resourced neighbours, but would contribute to assurances that the money spent by mining firms in these countries reached those who most need it.</p>
<p>As I was told by a member of the Timorese delegation – “Timor Leste is a very rich country, but if you come and have a look, we are also very poor”. Australia has an opportunity, if not an obligation, to ensure its mining firms aren’t contributing to this paradox. </p><img src="https://counter.theconversation.com/content/14624/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ainsley Elbra does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australian mining firms remain at the forefront of natural resource exploration and extraction in some of our nearest - and poorest - neighbours. Timor Leste, Papua New Guinea and the Solomon Islands are…Ainsley Elbra, PhD candidate, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/117312013-01-23T19:33:32Z2013-01-23T19:33:32ZDespite tough lessons for Australian miners, transparency should still be a goal<figure><img src="https://images.theconversation.com/files/19499/original/25v9kp5w-1358906676.jpg?ixlib=rb-1.1.0&rect=20%2C10%2C970%2C558&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The replacement of Tom Albanese by Sam Walsh as Rio Tinto chief following write-downs on Riversdale Mining in Mozambique indicates some of the continuing difficulties of working in developing countries.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Two recent events have highlighted the potential pitfalls of miners doing business in developing states.</p>
<p>The first was the departure of Tom Albanese as Rio Tinto’s Chief Executive following a $13.3 billion write-down that included $3 billion impairment charges on its Mozambique coal investment, Riversdale Mining. The other was the resignation of Professor Ross Garnaut (discussed in detail <a href="http://www.radioaustralia.net.au/international/radio/program/pacific-beat/extended-interview-ross-garnaut-former-png-development-fund-chair/1076028">here</a>) as Chair of the PNG Development Fund after a public disagreement with Prime Minister Peter O'Neill. </p>
<p>Mining companies, including those based in Australia, have long been attracted to developing states, and as a result face problems unique to an industry in which the most lucrative finds are often found in the most risky operating regions. These firms, driven by the necessity to add new and proven and probable reserves to their balance sheets, will continue to face significant levels of sovereign risk.</p>
<p>In addition to the risk-reward payoff for firms, growth in the mining sector presents both positives and negatives for developing states. Multinational mining firms such as Rio Tinto bring with them a level of legitimacy and authority over areas such as environmental practices and development of local communities. </p>
<p>An emerging area of scholarship highlights the role firms play in setting the rules and regulations within developing states. Known as private governance, this area of research suggests that firms will self-regulate, often going above and beyond what is required by the state. Furthermore, these regulations may positively influence other firms operating in similar areas, or may even be adopted by host governments. </p>
<p>The idea of promoting regulation appears incongruent with the aims of mineral extractive firms who, like all corporations have a responsibility to shareholders to maximise profits. However, the evolution of the <a href="http://eiti.org/">Extractive Industries Transparency Initiative</a> (EITI) shows us that firms can indeed be dually motivated by profit and an acceptance of the norm of transparency. </p>
<p>The initiative is entirely voluntary and yet it currently has 70 corporate supporters, all of whom support the initiative’s core goals of disclosure and improved governance of mining industries in developing states. However, it should be noted that there is no requirement for these firms to disclose payments to governments, with this only occurring when the state is an EITI Compliant Country.</p>
<p>While the EITI is not perfect – its reliance on transparency as a norm results in several weaknesses – it is a way in which firms can contribute positively to the development goals of host states. Mozambique is a Compliant Country within the EITI, meaning the country’s ability to reconcile taxation from its emerging mining industry revenues has been deemed to be adequate. </p>
<p>In addition the country ranks 123rd of 176 countries included in <a href="http://www.transparency.org/cpi2012/results">Transparency International’s 2012 Corruption Perception Index</a>. This ranking places the country on par with Vietnam and Sierra Leone, and suggests that while taxation from the country’s mining industry can be accounted for, there remains a distinct lack of transparency elsewhere in the economy. </p>
<p>Rio Tinto participated in the most recent EITI reporting round in Mozambique, released in 2012, with the discrepancy between taxation declared as paid by Rio Tinto, and what was received by the government lower than the 3% threshold set by the EITI. </p>
<p>Overall, the Mozambique EITI team found that taxation payments from all companies largely reconciled, finding only minor discrepancies. As a leading multinational company operating in Mozambique, Rio Tinto’s support for the initiative is important in affirming the initiative’s legitimacy.</p>
<p>While Rio Tinto’s experience participating in reconciliation process was a positive one, it unfortunately did not reflect a strong relationship with the Mozambique government. Upon the announcement of Albanese’s departure, it was revealed that a disagreement with the government over plans to barge coal down the Zambezi (contrary to the government’s wish that it be transported by rail) and a lack of Portuguese speakers amongst Rio’s in-country staff had strained relations with the government, contributing to the firm’s huge writedowns.</p>
<p>Conversely, Papua New Guinea is yet to join the EITI. As recently as September last year the government showed interest in applying for membership and appeared openly committed to transparency in its mine licensing process. Unfortunately the implementation of any transparency measure in Papua New Guinea - including the EITI - would be hampered by pervasive corruption which sees Papua New Guinea ranked 150th on Transparency International’s Corruption Index.</p>
<p>The recent departure of Professor Ross Garnaut, a long-time Papua New Guinea watcher, as head of the PNG development fund was a result of the decision by PNG Prime Minister Peter O’Neill to effectively ban Professor Garnaut from entering PNG. </p>
<p>At the time, Professor Garnaut was Chair of the $1.4 billion PNG Sustainable Development Program, a development fund established by BHP as a response to the Ok Tedi environmental disaster. The dispute arose from comments by Professor Garnaut, which were interpreted as offensive by Mr O’Neill and resulted in a travel ban and eventual resignation. </p>
<p>This reminder of the sovereign risk that Australian mining companies face in return for lucrative mineral deposits should, however, not overshadow the ability Australian firms have to lead the way in contributing to improved mining industry governance in our nearest neighbour. </p>
<p>Australia has signed a memorandum of understanding with the Papua New Guinea government supporting its aims to eventually join the EITI. This is an important step, but also needs to be accompanied by pressure on Australian mining firms to exercise private governance and lead on the issue of transparency and disclosure – as well as on important environmental considerations arising from mineral extraction. </p>
<p>While it’s been a tough week for Australian mineral extractive firms operating overseas, we should not lose sight of the benefits these firms can bring to host states. Research on private governance tells us that firms can both increase profitability and contribute to positive development outcomes – often through voluntary membership of initiatives such as the EITI. </p>
<p>The promotion of transparency and a focus on disclosure can not only assist citizens of developing states in holding their governments to account, it can also benefit the firms involved. Firms operating in EITI countries are likely to engage in less corruption and graft as well as meeting shareholder expectations of best-practice social responsibility. </p>
<p>As Rio Tinto’s experience in Mozambique shows us, while private governance is not a panacea for the potential downside risks of mining in the developing world, it remains one important piece of the puzzle. </p><img src="https://counter.theconversation.com/content/11731/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ainsley Elbra does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two recent events have highlighted the potential pitfalls of miners doing business in developing states. The first was the departure of Tom Albanese as Rio Tinto’s Chief Executive following a $13.3 billion…Ainsley Elbra, PhD candidate, University of SydneyLicensed as Creative Commons – attribution, no derivatives.