Contract Disclosure Key To Guarantee Level Playing Field – Tom Butler

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The International Council on Mining and Metals (ICMM) is a partner and supporting organisation to the EITI. 27 companies are members of ICMM, through which they are supporters of the EITI. ICMM CEO Tom Butler attended the recent EITI Board meeting in Berlin and participated in a side event on contract transparency with EITI Chair Fredrik Reinfeldt. Tom explains ICMMs policy on contract transparency and the impact it has had in this Q&A.

Can you briefly outline what ICMM’s policy is on contract transparency?

ICMM member companies are required to commit to a set of 10 principles and eight supporting position statements. Those position statements are policy commitments which are personally signed off by the CEOs of our company members. One of those eight position statements on the Transparency of Mineral Revenues includes a provision requiring members to ‘Engage constructively in appropriate forums to improve the transparency… of contractual provisions on a level-playing field basis, either individually or collectively through ICMM.’ We believe that the only way for a level playing field to be guaranteed is for governments to disclose contracts (and to do so in a systematic way), either through an EITI requirement or through government regulation.

How are you able to assure your members concerned about confidentiality and commercial sensitivity?

There’s no doubt that confidentiality and commercial sensitivity is a concern for our members and we would want any proposed disclosure regime to take that into account. The International Finance Corporation (IFC) requires contract disclosure in the projects that it finances but allows for the redaction of commercially sensitive information that is not essential to understanding the terms and conditions under which the resource is developed. That seems to us to be a reasonable provision which governments could match.

What does ICMM hope to achieve through this policy?

From a company perspective, contract transparency helps build trust between companies and governments and also companies and citizens as it shows that the company has nothing to hide and that it is willing to be held to account for the commitments that it has made. In addition, the substantial upfront mining investment costs and the fact that a mine is not a transportable asset can place mining companies at a significant disadvantage whenever a government attempts to renegotiate a contract. Contract renegotiations often occur when a new government comes into power, reviews the decisions made by the previous administration, and attempts to overturn them on the basis that they were ‘inappropriate’ or ‘unfair’. While an open and transparent contract can also be renegotiated, such risks are reduced, as scrutiny of the contract would be public from the moment it was signed.

What consultations has ICMM undertaken with governments and civil society on contract transparency?

We rarely speak to national governments directly, instead we engage with them through our national association members. We speak a lot to civil society about contract transparency, for instance we had substantial engagement with Oxfam prior to the release of their survey and Isabel Munilla, one of the authors of the survey, addressed our Mineral Resource Governance Working Group earlier in the year to brief them about the report specifically and contract disclosure more generally. The Natural Resource Governance Institute (NRGI) is another civil society group that we’ve had a lot of engagement with on the topic.

Have you noted any other national or international impact, with companies or governments?

There are undoubtedly concerns about contract disclosure, including within our membership, in large part because contracts have historically been seen as something that should be kept secret – it was seen as self-evident. However, if you take for example Peru, where 13 of our 27 members have operations, it has been requiring contract transparency for a number of years now. What this says to me is that despite these concerns, contract disclosure has not caused the sky to fall in and Peru very much continues to be a country in which responsible mining companies want to invest. So to answer your question directly it’s the absence of any negative impacts which I find particularly notable.

We would of course also like to hear your views on the findings of the Oxfam survey, as you mentioned during the roundtable discussion in Berlin.

We very much welcomed the Oxfam survey, it’s an excellent piece of work. While some of our members were ranked higher than others, that was in part because a number of them do not have an explicit contract transparency policy. However, as members of ICMM they all have an implicit policy, referred to earlier, which requires them to engage constructively to improve the transparency of contracts on a level-playing field basis, either individually or collectively through ICMM. One of the great things about the Oxfam survey was that it helped to educate members in the art of the possible. It’s extremely helpful for them to see what their peers have publicly committed to and then to be able to go away and consider what they’d feel comfortable committing to themselves.

Culled from eiti.org