Inter-American Development Bank Partnering to enhance the impact of mining sector CSR activities Cartagena, Colombia June 19 th, 2009

2 Index Background –Context –Opportunity IDB Group value-added Advances so far Players attending and potential collaborations Next steps: Lima’s agenda

3 Context Current business environment needs to establish sound practices addressing social and cultural concerns. While complying with legal and economic requirements, companies are committed to improve today’s society. Basic materials companies and society in general are well aware of how critical CSR is in the extractive industry as it addresses key developmental issues such as education, health, water, labor skills, energy, indigenous rights, among others. CSR activities by mining companies represent one of the largest monetary commitment towards social and economic development in Latin America, making it complementary to IDB’s development charter.

4 Context (cont.) Latin America has long been recognized for its abundant geological wealth with world-class resources and reserves. Mining companies bring profound economic benefits, but also changes to numerous rural communities where production takes place due to the substantial requirement of both capital and natural resources. The IDB Group and basic materials companies share a common development agenda in which achieving sustainable growth, combating poverty and promoting socioeconomic inclusion while preserving the environment are key aspects. This opens the door to multiple opportunities to partner to increase the impact of CSR activities.

5 Opportunity Mining industry counts with multiple platforms to generate and share knowledge at the guidelines and principles level; but this kind of platforms are almost non existent at the technical level (i.e. how to implement those principles related to community development). –This shortcoming is magnified by the decentralization of operations in mining companies. Key considerations for any organization involved in development are the extent to which it can: (i) identify best practices and learn from others’ mistakes and successes; and (ii) partner with others that can enhance its capabilities.

6 Opportunity (cont.) As leading developmental actors in the region, we could increase our developmental impact by having an open and frank dialogue on new, ongoing and completed projects. This platform for systematic exchange would allow its members to: –Be more efficient by learning from others, avoiding duplicating mistakes or “reinventing the wheel” –Contributing to improve the mining sector by disseminating lessons and best practices –Increasing impact by mobilizing resources to expand the range and depth of CSR activities

7 Opportunity (cont.) OpportunityDescriptionBeneficiariesAreas CSR of mining companies Permanent working group to transfer best practices and successful pilot projects in community development Largest mining companies in LAC * Economic Development * Health * Education Mining business climate Direct positive impact related to CSR of mining companies effectiveness * National and sub national governments * Industry associations * Junior mining companies * Transparency * Tax Regimes * Royalty Management * Human Rights * Ethic Codes Joint-efforts Pool resources, financial and non financial, to design and execute innovative pilot projects Mining companies in LAC and their communities, business environment 7 initiatives and/or opportunities identified in areas such as transparency, small-scale mining; territorial development, etc. IDB development priorities Pool resources, financial and non financial, to leverage existing programs, improve impact and raise visibility Key IDB sponsored initiatives that address the region’s most pressing development issues Water and sanitation; education; opportunities for the majority; sustainable energy; infrastructure, etc. Multiple areas for collaboration:

8 IDB Group value-added The IDB Group counts with limited but relevant experience with the mining sector. By engaging mining companies, the IDB Group expects to advance its developmental mandate by promoting the identification, sharing and implementation of best practices in community development and social inclusion. A key consideration for us is the extent to which our interventions have an impact beyond the direct beneficiaries of the projects based on their dissemination, replicability, and scalability.

9 IDB Group value-added (cont.) The IDB Group brings in the expertise and know-how, convening power, “honest broker” capabilities and resources of some of its leading departments such as the Structured and Corporate Finance Department (SCF); Multilateral Investment Fund (MIF); Institutional Capacity of the State (ICS); and Office of Outreach and Partnerships (ORP). The IDB Group offers exceptional opportunities for partnership in areas of high social impact that require the combined strengths of multiple actors.

10 IDB Group value-added (cont.) Associativism Business development services Civil society organizations Corporate social responsibility Early childhood development Economic inclusion Entrepreneurship development Franchising Human capital funds Inclusive business Infrastructure Local competitiveness Microenterprise development services and microfinance Public-Private partnerships Skills development and certification Supply chains Sustainable agriculture Sustainable tourism Teachers quality Transparency Quality and environmental standards Youth training Venture capital Some of the IDB Group’s expertise areas:

11 Advances so far There is a critical mass of operational departments and offices interested in working with the mining sector The IDB Group can add value to the sector with financial and non-financial resources Assessmt. of internal demand Assessmnt. of external demand A critical mass of mining companies see the need and opportunity of sharing knowledge and learning opportunities on a permanent basis Civil society and public entities showed interest to support the initiative First workgroup session  Lima (Peru). May 27 th, 2009  Objectives: confirm establishment of the working group, its operating methodology and governance model, and decide areas of interest to work at OLAMI Annual Meeting. Cartagena (Colombia). June th, 2009 Working groups on specific areas of expertise active and engaged Expansion of partnership according to the needs and preferences of members Engage donor countries to support CSR mining activities Next steps

12 Players attending

13 Potential collaborators Civil society –The Clinton Giustra Sustainable Growth Initiative –International Council of Mining and Metals –Organización Lationamericana de Minería (OLAMI) Government –Canadian International Development Agency: In alignment with the recent new initiatives to support CSR principles for Canadian mining, oil and gas businesses when operating abroad

14 Next Steps First meeting of the working group will take place in Lima, on May 27 th, Lima’s Agenda: get to know and generate consensus on: Operating methodology Governance model Member admission policies Working plan Selection of first areas of expertise and interest