The role of the state in mining SADC Lawyers’ Association Annual Conference 23 August 2014 Olivier Binyingo Director – Afriwise Consult

The role of the state in mining Understanding the role of the private sector Understanding the role of local communities Understanding its own role (as a regulator)

Importance Development of realistic mining policies Enactment of legislation that provides the right incentives for policy implementation Constructive negotiation of mining agreements Examples Understanding key principles of project finance Understanding the importance of financial modeling Understanding international tax structuring Understanding the role of the private sector

Importance Local communities feel that they are yet to see the ‘upside’ of natural resource extraction Local communities are becoming increasingly empowered The state has the primary responsibility towards these communities Examples Understanding the issues around involuntary resettlement Understanding the needs in terms of education and capacity building required for local communities to benefit from mining activities Understanding the role of local communities

The role of the state following the end of colonialism Strong emphasis on national sovereignty State as regulator and producer (full ownership of natural resources) Stagnation & decline of the mining industry Redefinition of the state’s role by late 1980’s Strong emphasis on private sector as the driver of the mining sector State only as regulator and deregulation Despite FDI in the mining sector, the sector has not been a catalyst for broad based economic development New era at the start of the 21st century? Resource nationalism inspired changes Stronger focus on environmental impacts Stronger focus on social impacts Understanding its own role (as a regulator)

IFC Performance Standards on Environmental and Social Sustainability Ruggie Principles Equator Principles OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas Understanding its own role (as a regulator) – Transnational framework

Foreign Corrupt Practices Act (USA) Bribery Act (UK) Dodd Frank Act (USA) Understanding its own role (as a regulator) – Foreign legislation

Harmonization of Mining Policies, Standards, Legislative and Regulatory Frameworks in Southern Africa ECOWAS Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector Understanding its own role (as a regulator) – Regional harmonization

Adherence to voluntary standards, codes and certification schemes Intra-firm mechanisms for regulating social performance Inter-firm mechanisms such as contracts and service standards Understanding its own role (as a regulator) – Self-regulation by the private sector

How will the existence and development of multiple sources of regulation impact the role of the state going forward? Understanding its own role (as a regulator) – Discussion

Reading suggestions Africa Mining Vision ision_English.pdf ision_English.pdf Corporate Social Responsibility and development in Africa The Role of Self-Regulation in Improving Corporate Social Performance improving-corporate-social-performance-the-case-of-the-mining- industry improving-corporate-social-performance-the-case-of-the-mining- industry From Fragility to Resilience – Managing Natural Resources in Fragile States in Africa Operations/From_Fragility_to_Resilience_- _Managing_Natural_Resources_in_Fragile_States_in_Africa_- _Summary_Report.pdf Operations/From_Fragility_to_Resilience_- _Managing_Natural_Resources_in_Fragile_States_in_Africa_- _Summary_Report.pdf

Olivier Binyingo Director E T +27 (0) M +27 (0) F +27 (0) S olivier.afriwise A Ground Floor, Rosewood House, Ballywoods Office Park, 33 Ballyclare Drive, Bryanston 2191, Johannesburg P Postnet suite #305, Private Bag X21, Bryanston 2021