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World Bank Document Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Mining Community Development Agreements FINAL REPORT for: – Practical Experiences and Field Studies June, 2010 The World Bank Environmental Resources Management 1001 Connecticut Ave, NW Suite 1115 Washington, DC 20036 Public Disclosure Authorized www.erm.com Delivering sustainable solutions in a more competitive world. FINAL REPORT Mining Community Development Agreements- Practical Experiences and Field Studies For and on behalf of Environmental Resources Management Approved by: David Blaha Signed: Position: Partner Date: 06/30/2010 This Report has been prepared by Environmental Resources Management the trading name of Environmental Resources Management Limited, with all reasonable skill, care and diligence within the terms of the Contract with the client, incorporating our General Terms and Conditions of Business and taking account of the resources devoted to it by agreement with the client. We disclaim any responsibility to the client and others in respect of any matters outside the scope of the above. This Report is intended to the client and we accept no responsibility of whatsoever nature to third parties to whom this report, or any part thereof, is made known. Any such party relies on the report at their own risk. Authors: • Sunrita Sarkar • Alastair-Gow-Smith • Tunde Morakinyo • Roberto Frau • Matthew Kuniholm TABLE OF CONTENTS: 1 INTRODUCTION .............................................................................................................. 1 1.1 OBJECTIVES OF THE STUDY ........................................................................................... 2 1.2 LAYOUT OF THE REPORT ............................................................................................... 3 2 METHODOLOGY ............................................................................................................. 4 2.1 METHODOLOGY ............................................................................................................. 4 2.1.1 Stakeholder Focused ............................................................................................... 4 2.1.2 Focus on Key Building Blocks ................................................................................ 4 2.1.3 The use of country specific case studies to illustrate context and conditions influencing the outcomes and impact of CDAs .................................................................... 4 2.1.4 Composition of the Team and Country Specific experts ........................................ 5 2.2 STUDY TASKS ................................................................................................................ 5 2.2.1 Desktop Review of Relevant Reports, Studies and other secondary literature...... 5 2.2.2 Survey Design.......................................................................................................... 6 2.2.3 Desk/ Phone Interviews........................................................................................... 6 2.2.4 Field Visits............................................................................................................... 6 2.2.5 Preparation of Draft Report.................................................................................... 6 2.2.6 Presentation of the findings at the Workshop......................................................... 6 2.2.7 Final Report............................................................................................................. 6 2.3 LIMITATIONS OF THE STUDY ......................................................................................... 6 3 BACKGROUND AND TRENDS IN CDA ...................................................................... 8 3.2 CHANGES TO COMMUNITY DEVELOPMENT IN THE MINING SECTOR ............................ 10 3.2.1 Drivers in Community Development Agreements ................................................ 11 3.3 COMMUNITY DEVELOPMENT AGREEMENTS – THE LACK OF GLOBAL DEFINITIONS AND STANDARDS .............................................................................................................................. 14 3.3.1 Global overview of Regulatory and non regulatory approaches......................... 16 4 CASE STUDY: GHANA.................................................................................................. 22 4.1 LEGAL CONTEXT OF CDA S IN GHANA ....................................................................... 22 4.2 SUCCESSES OF VOLUNTARY BEST PRACTICE STANDARDS FOR COMMUNITY DEVELOPMENT AGREEMENTS IN GHANA ................................................................................. 23 4.3 CHALLENGES FACED BY THE APPLICATION OF VOLUNTARY STANDARDS FOR COMMUNITY DEVELOPMENT AGREEMENTS IN GHANA ............................................................ 23 4.4 CHALLENGES THAT COULD BE FACED IF CDA S WERE MANDATORY ......................... 24 4.5 NEWMONT ................................................................................................................... 25 4.5.1 Background of the Ahafo Project.......................................................................... 25 4.5.2 Existing Community Agreements and Associated Processes ............................... 26 4.5.3 Lessons learnt from the Ahafo CDAs.................................................................... 29 4.6 CONCLUSIONS ............................................................................................................. 31 5 CASE STUDY:PAPUA NEW GUINEA ........................................................................ 33 5.1 OVERVIEW OF PNG MINING SECTOR .......................................................................... 34 5.2 LOCAL AFFILIATIONS AND CUSTOMARY LANDOWNERSHIP ........................................ 36 5.3 LEGAL CONTEXT OF CDA ............................................................................................. 37 5.3.1 Evolution of the Mineral Policy............................................................................ 37 5.3.2 The Regulatory Environment ................................................................................ 38 5.3.3 Compensation Agreements.................................................................................... 39 5.3.4 The Development Forum....................................................................................... 39 5.3.5 Memoranda of Agreements ................................................................................... 41 5.3.6 Mining Development Contract.............................................................................. 42 5.4 SUCCESS AND CHALLENGES OF THE CDA MODEL IN PNG ............................................ 43 5.4.1 Revenue Distribution............................................................................................. 43 5.4.2 Direct community benefit streams......................................................................... 43 5.4.3 Indirect benefit streams......................................................................................... 45 5.4.4 Challenges in implementing CDA......................................................................... 46 5.5 LIHIR GOLD MINE ....................................................................................................... 48 5.5.1 Socio-Economic Development .............................................................................. 49 5.5.2 Lihir Sustainable Development Plan .................................................................... 50 5.6 CONCLUSIONS ............................................................................................................. 52 6 CASE STUDY: ARGENTINA ........................................................................................ 54 6.1 HISTORICAL CONTEXT OF MINING ACTIVITIES IN ARGENTINA ................................. 54 6.1.1 Legal Context of Community Development Agreements...................................... 55 6.1.2 Social Unrest in Context of Mining Activities ...................................................... 56 6.1.3 Challenges that could be faced if CDAs were mandatory.................................... 57 6.2 VELADERO PROJECT ................................................................................................... 58 6.2.1 Successes of the Efforts ......................................................................................... 60 6.2.2 Key Challenges..................................................................................................... 61 6.2.3 Lessons Learnt....................................................................................................... 62 6.3 CONCLUSIONS ............................................................................................................. 62 7 FINDINGS OF THE STUDY.......................................................................................... 64 7.1 KEY FINDINGS ............................................................................................................. 64 7.2 FINDINGS ON CONTEXT AND CONDITIONS INFLUENCING CDA .................................... 64 7.2.1 Differing views on regulated versus non regulated CDAs................................... 64 7.2.2 The critical role of partnerships, development forums/ platforms in success of CDAs 67 7.2.3 The risk of unequal development and creation of divisions and power elites ..... 68 7.2.4 Need for Integration of Closure Planning into CDAs.........................................
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