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Mining’s contribution to sustainable development Trends and Conflicts in the Extractives Sector: Designing Public Policy for a More Sustainable Future Rio+20 Tuesday 1 June 2012. Ben Peachey, Director, International Council on Mining and Metals ICMM at a glance CEO led 22 Company members 34 Association members Over 800 sites in 62 countries www.icmm.com ICMM member companies www.icmm.com Enhanced transparency and accountability Robust entry criteria and process Clear performance expectations Reporting www.icmm.com The value proposition of enhanced transparency and accountability Better decisionmaking Transparency and accountability Enhanced Trust www.icmm.com Mining sector risks... and opportunities Life cycle aspects, e.g. recyclability, disposal Political instability Chemicals management/ inherent HSE risks Supply/value chain Market access Expropriation War/civil disturbance Breach of contract Business interruption Resource access – land, energy, water Access to capital & talent H&S and ESG Failure of systems Climate change Regulatory noncompliance Reputation Commodity price Currency Risks Interest rate risks Equity risks www.icmm.com % of reports identifying issues as material Material issues – 2011 SD reports www.icmm.com Reality check: key trends Increasing public concerns (climate change, water, human rights, 1 biodiversity, corruption and transparency, workplace fatalities, distribution of economic benefits of mining, poverty reduction, indigenous peoples’ role in decisionmaking) Intensifying political struggles over distribution of resource rents 2 Increased emphasis on corporate social and environmental practices 3 Increased NGO campaigning on a range of issues 4 (community consent, ethical sourcing, biodiversity, energy minerals, chemicals management) 5 Increasing complexity and breadth of issues facing the industry 6 8 Growing recognition that no single interest can address issues effectively (growing need for multi-interest collaboration) Operating environment – key trends 1. Strong demand continuing – with some bumps and supply challenges 2. Poor or middle income countries dominate the top 30 national mining and metals economies – increasing dependency 3. From global production perspective, higher and high middle-income countries dominate 4. Schedule/cost over-runs remain significant – community and civil society resistance a key factor in commissioning delays 73% of project delayed Conflict on the increase What is fair? Source: OPM and ICMM www.icmm.com Understand the contribution 1. Costs + Risks 2. Benefits 3. Responsibilities 6 Understanding the benefits (1) Foreign Direct Investment Mining FDI often dominates the total flow of FDI in low income economies that have only limited other attractions for international capital Exports Mineral exports can rapidly rise to be a major share of total exports in low income agrarian economies even when starting from a low base. Government Revenue Mineral taxation has become a very significant source of total tax revenues in many such economies with limited tax raising capacity . National Income (GDP & GNI) Modern-day mining technology is sophisticated, so most upstream value addition takes place outside the host country Employment This is also low – typically only 1-2% of total Employment 60% - 90% 30% - 60% 3% - 20% 3% - 10% 1% - 2% www.icmm.com Understanding the benefits (2) Economic Social Cultural Towards integrity, trust and strengthened reputation Environmental Restoration ecology 7 From the dark side to a positive agent of social change 10 For further information: www.icmm.com @icmm_com