Mining: Why communities get less


JF-Expert Member
Feb 11, 2007
Mining: Why communities get less
By Polycarp Machira

A new report by an international organisation on mining says weak governance at national and regional levels hindered community enjoyment of the mining industry's fullest potential.

The report by the International Council on Metals and Mining (IMMC) calls for a stronger relationship between local communities and mining firms operating in their localities.

Weaknesses in governance structures, according to research findings by IMMC last year, have mainly created a vacuum that fanned hostilities between investors and local communities.

This was despite evidence from the study that showed that both the parties stood to gain more from improved economic and national policy environment for mining in their respective countries.

IMMC in collaboration with the World Bank carried out the research in Tanzania, Peru, Chile and Ghana. The study was on �mineral resource endowment and community development.�

The findings from the study carries over the last few years were subject of closed door discussions last week in Dar es Salaam by mining industry stakeholders including the government.

The finding would appear to reinforce ongoing national debate about Tanzania's perceived poor national return and communities earnings from an explosion of mining, particularly of gold.

President Jakaya Kikwete has recently appointed a public and private mining review committee chaired by retired Judge Mark Bomani, to examine mining contracts and point out policy weaknesses to enable Tanzania end a wide spread public outcry.

�Relationship between the mines and locals communities clearly needs to be stronger if the potential positive impacts of mining are to be reached,� reads part of the report.

In all the four countries, local or regional governments were seen to be weak or under-resourced, while mining firms were on the contrary viewed as wealthy and powerful.

These multinational companies according to the study were assumed to be the source of community problems as well as being called upon to provide solutions.

The ICMM's research says mineral economies have experienced a full range of socio-economic outcomes, oscillating from excellent to very poor.

In Tanzania for instance, the findings show that mining firms have helped fund a variety of local social projects, such as schools and hospitals, but local problems and conflicts still persist.

Most of the companies, according to the research face community distrust and escalating expectations. It says the growing horizontal inequality between rich and poor induced social tension and conflict even as general incomes rise.

The six common problems associated with mining industry in the surveyed countries included adequacy, fairness of the tax regime, higher mineral prices which have encouraged government to look for ways to capture more of the profits earned by mining firms,

The others are revenue collection and allocation systems, conflict over land use and property rights and also environmental damage concerns.

Divergence between large-scale and artisan mining; and the problems associated with mine closure also bogs down the mining sector.

The study urges other reforms that might empower local and regional governments and build their technical capacity and legitimacy to ensure social cohesion and harmonious relations.

New, joint approaches between government, companies and non-governmental organisations are also needed to capture the full potential benefits of mineral wealth, the report suggests.

It says that mining can represent an important opportunity for economic growth, poverty reduction, and re-engagement in the global economy-critical for developing countries.

Governments also have the challenge to reform public expenditure management at the national level, to be followed through to the local and regional levels for the sector to bring about truly sustainable development and poverty reduction.

There is also need to establish local and regional development agencies in mining areas to underline the importance of partnership approach, which could help in economic diversification and poverty reduction. Mining companies should strengthen infrastructure and also social investments as part of an overarching regional development plan.

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