A new mining code has been launched by the World Initiative of Mining Lawyers (WIOML) to aid countries in both attracting investment and securing benefits for their own economies.
“The code provides a good starting point for countries without a code in place yet,” Andrew van Zyl, a partner and principal consultant at consulting engineers and scientists, SRK Consulting said, according to IM Mining.
“It also provides a useful benchmark against which a country could compare its existing code.”
Aspects of the code include licence allocation, work-it-or-lose-it, the right to mine, and social licences.
“Clearly, the transparent awarding of exploration licences is a key starting point for any national effort to promote mineral development,” van Zyl said.
He went on to say under the code miners should be given longer lead times for exploration, raising the potential of making economically viable discoveries – given that the average period for economic discovery is around eight years – followed by right to mine permissions, based on objective criteria free of discretion.
“So this should be done on an objective basis with free and open access – although there may be circumstances under which tendering could be considered.”
Van Zyl added that in the current investment strained market, clearer and more reasonable codes will aid in attracting investors, and should be used to build a constructive collaboration with mining stakeholders.
“There is little appetite or ability right now to raise the billions of dollars needed to develop large mining projects,” he said.
“But there is the time to invest much smaller amounts in the vital but neglected process of forging agreement and trust between miners, governments, communities, NGOs and other interested parties.”
“When it comes to stakeholder engagement, miners have traditionally found themselves between the proverbial rock and hard place,” Deloitte explained.
“Reconciling the often competing needs of government, local communities, non-governmental organisations (NGOs), employees, and regulators – whilst still delivering return on shareholder investment – has become a balancing act of huge proportions.”
Researchers found that mining projects with expenditures of between US$3 billion to US$5 billion can incur weekly losses of roughly US$20 million due to delayed production caused by community opposition, according to Rachel Davis and Daniel Franks’ Harvard Kennedy School report, Costs of Company-Community Conflict in the Extractive Sector.
“Too many projects are rushed into construction when commodity prices are buoyant, and are consequently hampered by a lack of local buy-in and insufficient clarity about each player’s respective roles, responsibilities and benefits,” van Zyl said.
“In many cases, the process becomes fraught with mistrust and brinkmanship, which delays or even threatens the project altogether.”
He went on to state: “It is vital for mining companies to take the initiative in setting up these meaningful discussions, rather than waiting for governments to impose solutions that may not be as effective,” he said.
“There is a danger that the industry is perceived as often being on the back foot and reacting defensively to the demands of other parties; goal-driven communication between these groups will help ease that perception.”
The code was launched at the recent WIOML conference.