Disputes between international companies and national governments commonly arise in the extractive industry where high expectations from producer countries often run alongside emotive issues of ‘ownership’ and ‘exploitation’. In 2013, Chatham House published the report Conflict and Coexistence in the Extractives Industries, examining the rising occurrence of long-running and expensive company-government disputes. Continuing the conversation, the speakers will share their personal insights regarding doing business in Africa's oil and gas sector and preparing for crisis situations. They will outline why they believe the effective management of any crisis is critical to achieving an early settlement and why arbitration is the best formal mechanism for resolving disputes in Africa. They will also discuss what the preconditions of success are, and how companies must adjust to new commercial and political realities when engaging with national companies. 

Attendance at this event is by invitation only.

Disputes over resources are a persistent challenge to international peace and security. Natural resources (such as oil, natural gas, minerals, timber and water) are a major source of national income for many countries and, alongside land, are essential to the livelihoods of many millions of people. There is a growing recognition among researchers and decision-makers that in many fragile states disputes over these resources have fed into, and underpinned, violent conflict and instability. 

Although international engagement in national resource disputes is not always desirable or feasible, where it is necessary and possible to support, supplement (or even substitute) national dispute resolution processes it is important to think through the parameters of such action: Who gets involved? With what financial resources? When does an intervention begin? How do they act? 

This one-day roundtable will bring together around 30 experts from policy, academia and business to discuss these questions and more.

The event will be held under the Chatham House Rule. Attendance is by invitation only.

In 2012, Kenya joined the swathe of East African countries with recent significant oil and gas discoveries. Long-established as a regional leader in terms of economic growth, foreign investment and technological innovation, Kenya's leaders are now assessing how to establish an effective policy framework to manage oil revenues while at the same time managing the expectations of its citizens.  

At this event, the panel will discuss how transparency and accountability can be strengthened as Kenya moves to become an oil-producing nation. This event will mark the UK launch of a report by the Kenyan Civil Society Platform on Oil and Gas, entitled Setting the Agenda for the Development of Kenya's Oil and Gas Resources.

LIVE STREAM: This event will be live streamed. The live stream will be made available at 12:00 BST on Wednesday 8 October 2014.

THIS EVENT IS NOW FULL AND REGISTRATION IS CLOSED.

This paper accompanies a series of Chatham House assessments on China, France, Japan, the Netherlands, the UK, the US and Vietnam and provides details on how the estimates of the level of illegality of imports of wood-based products into those countries were derived. The assessments are part of a research project that monitored levels of illegal logging and related trade in selected consumer, producer and processing countries in order to evaluate the effectiveness of efforts to tackle this problem.

The paper describes the methodology for estimating the levels of wood-based products at high risk of illegality that are being imported into consumer and processing countries. The methodology was developed in order to provide quantitative estimates of the scale of such imports and to assess how they have changed over time. The figures adopted for the assessments are based on the best available evidence; but, given the challenges of quantifying levels of illegal logging and the limited information available for some countries, they should not be regarded as definitive. Rather, they indicate the likely levels of illegality and, perhaps more important, how they may have changed over time.

At the end of November amidst much speculation, OPEC kept its formal production level of 30 million barrels per day in what appears to be an oversupplied market. This controversial decision was taken because cutting production would cede market share to the growing production flooding out of the US. The immediate result was a significant fall in oil prices.

The 'official' logic behind the decision was twofold. First, it was contended that weak demand was temporary because of slow economic growth and would recover next year. Second, the argument went, lower prices would close high-cost production from the shale technology revolution. In other words, current prices were too low and the market, allowed to operate, would rectify this.  Many (rightly) saw this decision as a significant landmark in global oil markets. In effect, OPEC had ceded any semblance of control over the market and prices, instead launching the oil price onto a sea governed by market forces.

Those with knowledge of oil market history will see this as a very dangerous gamble based on two serious misconceptions. After the oil shocks of the 1970s, the market was in a similar position as now. Demand was falling and non-OPEC supply was rising. In response, to defend prices, OPEC (but effectively Saudi Arabia) cut production because the fall in demand was seen as temporary as a result of global recession and would shortly recover. It did not. Then when the oil price eventually collapsed in 1986, the OPEC view was that lower prices would quickly reverse as they would shut in high-cost production, specifically in the North Sea. These views in the 1980s were conceptual mistakes, still relevant today and likely to undermine OPEC’s current strategy. The mistakes are a failure to understand the difference between an income effect and a price effect on demand and the failure to understand the difference between a break-even price (what investors consider when deciding whether to invest in new producing capacity) and a shut-in price (what existing operators consider will cover variable costs and if not, will stop production from existing wells.).

While some of the fall in demand in the 1980s was because of the recession (an income effect), some was due to genuine demand destruction as the result of much higher prices (a price effect). Recession-induced lower demand reverses itself when the global economy recovers, but demand destruction is permanent. Today, part of the fall in oil demand is because oil prices have inexorably risen (from $32.40 in 2002 to $108.66 in constant 2013 dollars). Furthermore, many sources of recent oil demand growth, notably China and India, have been moving from subsidized domestic oil prices to higher border-based prices. OPEC’s expectations of quickly recovering demand may be optimistic as they were in the early 1980s.

OPEC is hoping lower break-even prices will reduce shale production.  Various estimates for the US shale break-even price have been bandied around (usually in the realm of $60-$80 per barrel). Most are far too high, because they ignore the fact that the recent boom in shale operations has grossly inflated project costs. If investment in new capacity slows, then project costs − and hence the break-even price − will fall.

However, in terms of OPEC’s current strategy, the break-even price is the wrong metric. What matters in the next few years is the shut-in price.  After the 1986 price collapse, a number of stripper wells in US (with high variable costs) did close, but the loss of production was minimal. North Sea production, which had been OPEC’s prime target, was hardly affected and actually increased in 1987. The current level of shut-in price for shale oil is again debatable, but almost certainly is well below $40 per barrel. Thus it will be some time before existing shale oil production falls, even if prices stay low.

Should the oil price fall towards variable costs, threatening shale supply, it will be the OPEC producers who must blink first. They will then try to take back control of the market, if they can.

To comment on this article, please contact Chatham House Feedback 

This paper is part of a broader Chatham House study which assesses illegal logging and the associated trade. 

The Vietnamese government has made some progress towards tackling illegal logging and the associated trade. It has negotiated a voluntary partnership agreement (VPA) with the EU, a process that has prompted a review of relevant legislation and improved the government’s engagement with civil society. In addition, it has signed agreements with Lao PDR and Cambodia in which it has committed to coordination on forest management and trade. However, there has been little progress in policy reform, and there is still no legislation regulating illegal timber imports.

There is a high level of awareness of illegal logging and associated trade within the private sector: Forest Stewardship Council (FSC) chain-of-custody (CoC) certification has increased rapidly, particularly in the furniture sector. But efforts are hampered by poor access to third-party verified raw material.

Both trade data discrepancies and analysis of trade flows indicate that illegal trade remains a serious problem. The volume of imports of wood-based products at a high risk of illegality is estimated to have increased since 2000, while its share in the volume of total imports of wood-based products gradually declined until 2009 and then increased slightly: they are estimated to have comprised 18 per cent of the total by volume in 2013.

In order to build on its response to illegal logging and related trade, the government should establish a legal responsibility for Vietnamese importers to ensure that their timber sources are legal. Furthermore, to increase domestic demand for legal products, it should establish a public procurement policy requiring the use of verified legal products. Within the framework of the VPA, broad and effective multi-stakeholder engagement will be vital to ensure that a robust timber legality assurance system is developed. In addition, proactive partnerships should be forged with high-risk supply countries to establish legality criteria and indicators that reflect the full scope of the relevant legislation in those countries.

The discovery of valuable natural resources such as hydrocarbons or minerals in conflict-affected states or disputed regions can be a double-edged sword. While economic growth may help overcome conflict and consolidate peace, much of the academic literature links the economic, social and environmental impacts of resource development with an increased risk of violent conflict between or within fragile states. 

Recently however, the role of business in advancing peace has emerged as a topic of increasing discussion in academia and in forums such as the UN Global Compact. Resource development has also become a key objective for donor development strategies in fragile states such as Afghanistan, Somalia and Myanmar, on the assumption that extractive sector development can contribute to stability and security. 

This event will gather key stakeholders from business and policy to investigate if and where natural resource development has contributed to peace-building, built cooperation among stakeholders or helped to resolve, rather than exacerbate, tensions. If so, it will endeavour to draw out common, replicable lessons of what made these developments successful from a peace-building perspective.

The event will be held under the Chatham House Rule.

Recommendations

Enhanced dialogue and intensified international cooperation in four areas could significantly improve the functioning of global mineral markets:

1. Deal with the last remnants of producer-country cartels 
   Consumer countries should make a publicly visible case that in an age of interdependence and global supply chains, any remaining forms of producer-country cartels are an anachronism. Given limited means to coerce governments to stop supporting the last remaining mineral cartels in potash, a ‘naming and shaming’ approach in key forums such as the Group of Twenty (G20) and the Organization for Economic Cooperation and Development (OECD) is likely to be most effective. Such action could be initiated by the three largest potash importers China, India and Brazil, and should seek support from others such as the EU and Japan.
    
2. Prevent damaging export restrictions through win-win arrangements
   WTO litigation against export restrictions is unlikely to be a silver bullet and in the short term cooperative policy dialogues, such as those pursued by the OECD, offer the best prospects for concrete results. Such dialogues should also be initiated by major emerging economies and could focus on providing incentives such as investment packages or technology-sharing to entice producer countries to abstain from imposing restrictions. Consumers should continue to push for more specific and stricter WTO rules on export restrictions. Japan, the EU and the US should seek to include similar measures in regional trade negotiations.
    
3. Strengthen cooperation among regulators on clandestine private cartels and other anti-competitive practices 
   Concerted action will be required by governments to tackle anti-competitive practices such as clandestine cartels, price-fixing and territorial agreements. Key regulators, such as those in the EU and China, should expand collection and sharing of data and best practice on anti-trust enforcement in minerals markets. In key cases they could also coordinate prosecution. Sustained investment in institutional capacity is required in many emerging economies; this should be supported through bilateral cooperation and via regional forums. Governments should also resuscitate the stalled negotiations on the WTO’s role in competition policy.
    
4. Enhance governance for transnational market platforms and pricing mechanisms
   The responsibility to regulate key nodes in global minerals markets will remain in the hands of national bodies, but coordination is vital given interconnected global markets. International organizations and regulators should strengthen structural cooperation and exchange in the area of physical markets and with greater involvement of emerging economies. An informal high-level forum on regulating physical markets could reinvigorate debate, foster new perspectives and stimulate new partnerships. Governments in key consumer countries should also give their national regulators a clear mandate in minerals markets.

As part of the international dialogue on Valuing Vital Resources, this seminar will convene policy-makers, scholars, technical practitioners, NGOs, multilateral agencies and the media to discuss recommendations for new policy approaches in India to reorient energy and water use in agriculture. The aim is to gain input to practical policy proposals and identify the work now needed to make them robust. 

Attendance is by invitation only. Please note this event is held in New Delhi, all times are local. 

This event is organized together with the CUTS Institute for Regulation & Competition (CIRC).

Katanga Province in the Democratic Republic of Congo (DRC) is immensely wealthy in minerals such as copper, uranium and gold, and is home to around fifty per cent of the world’s cobalt reserves. Rising outputs from the province’s copper and cobalt mines have contributed to the DRC’s average GDP growth of 8.5 per cent over the past two years. However, despite visible infrastructure developments in the province to service the industry, few Congolese are benefiting from the revenues and the economy is yet to diversify.

Moïse Katumbi Chapwe, the governor of Katanga Province, will discuss his approach to resource governance and will examine how regional governments can capitalise on resource revenues to improve livelihoods. 

Attendance at this event is by invitation only.

While there is much anecdotal information about the impact of mining on forests, no comprehensive review of minerals as a forest risk commodity has yet been undertaken. Indications are that mining activities are an important driver of deforestation in many countries, and that the impact of mineral extraction on forest resources is likely to increase with growing global demand for minerals. 

This event will discuss the state of knowledge on the impact of mining on forests, identify the available policy tools aimed at supporting sustainable supply chains, and determine the data needs to facilitate improved monitoring, control and regulation of the sector. 

Attendance at this event is by invitation only.

Summary

• This paper challenges the view that the ‘resource curse’ – for which so many academics found evidence in previous decades – has now been laid to rest.
• During the commodities boom of the past decade, a number of influential policy and corporate institutions have encouraged poor countries to capitalize on below-ground resources for economic growth and development. The key assumption is that improved management of the extractives sector will enable it to spearhead positive national development and avoid resource curse effects such as declining global competitiveness in the rest of the economy and a widening wealth gap. This assumption continues to influence governance advice and country investment choices.
• The extractives-led growth agenda promoted by donors and international advisers in multilateral banks, consultancies and some development agencies has tended to reinforce domestic, government and investor pressures to pursue a ‘fast-track’ approach to extractives projects. This appears logical, given the obvious benefits of foreign-investment inflows and export revenues for countries suffering from poverty, lack of infrastructure and high levels of indebtedness.
• However, there is an urgent need to re-evaluate whether the policy advice stemming from this agenda can serve as an antidote to the negative effects identified in the resource-curse literature. First, there is often a mismatch between governance advice given and the capacity of countries to follow it. Second, the global context has changed: exporters are suffering as a result of the current downturn in commodity prices, while reliance on the sale of high-carbon fuels is challenged by the global shift to lower-carbon technologies and energy efficiency.
• Extractive revenues should not be viewed as income to be consumed, but as representing a reshuffling of the national portfolio of assets. Converting extractive resources below ground into cash above ground raises key questions about how this cash can be deployed to create productive assets for the future which do not rely on depletable resources.
• Diversification of the economy away from the resource sector over an appropriate timeframe remains a key priority. In many cases, this will require slower development of projects to allow time for institutional capacity in government and the private sector to develop.
• More economic and governance capacity needs to be in place before investment begins in a project, to enable investment and eventual revenues to generate real benefits to the rest of the economy, as well as appropriate, sustainable diversification.

The aim of the meeting is to identify ways to improve monitoring of illegal logging and the trade in illegal timber. Building on the experiences of Chatham House’s project Indicators of Illegal Logging, the discussions will focus on the data needs of particular end users and methodological challenges for estimating levels of illegality. The potential for improved coordination and collaboration between global efforts to monitor trade flows will also be considered.

Attendance at this event is by invitation only.

Executive summary

China’s new role in the global governance of natural resources is coming to the fore against a backdrop of profound uncertainty, driven by the convergence of three interlinked trends. At home, China’s leaders are navigating the structural shift to slower but higher-quality growth, a phase of development referred to as the ‘new normal’, while facing considerable environmental and resource security challenges. Globally, the slowdown in China’s economy has sent reverberations through commodity markets, pulling the plug on the decade-long commodities ‘super cycle’. Meanwhile, China is taking on a growing role in global governance, from the G20 and multilateral development banks, to its regional partnerships in Latin America and Africa.

During the resources boom of the last decade, policy-makers and businesses in consumer countries were focused on high and volatile resource prices. The risks posed by resource nationalism in producer countries were seen in the proliferation of export restrictions and the increase in investment disputes. Today, the tables have turned, leaving producer countries facing economic pressure from falling revenues and investments. Many organizations have called on governments to phase out subsidies for fossil fuels and other natural resources while prices are low. The international policy debate is shifting to the immediate challenges presented by a massive oversupply of many energy and mineral commodities, and the longer-term risk of ‘stranded assets’.

These new resource realities will provide the context for China’s growing global role, as well as setting the tenor of its relations with producer countries. Over the past decade, narratives around China often focused on its real or perceived impacts from resource production overseas and consumption at home. In the next, China’s approach to resource security and sustainability will help define its reputation, and whether it is perceived as a responsible actor on the world stage and as a development partner. The collection of international narratives, norms, rules and organizations that currently guides resource production, trade and consumption – what we call ‘global resource governance' in this report – will provide the framework.

Much political leadership will be required to overcome the barriers to China assuming a more active role in global resource governance. On the one hand, there has been slow progress in expanding China’s role in organizations from the World Bank to the International Energy Agency (IEA). On the other, new instruments or processes initiated by China can be seen as a challenge to the existing rules-based order, as the US reaction to the establishment of the Asian Infrastructure Investment Bank (AIIB) demonstrated. Yet developments such as the US–China Joint Presidential Statement on Climate Change in September 2015, ahead of the Paris Climate Conference, show that it is possible to forge cooperation and boost the prospects for progress on public goods at the multilateral level, even in politically fraught areas.

China’s international role on natural resources is also closely tied to ongoing reforms at home. The introduction of ‘ecological civilization’ as a guiding principle for China’s development at the Communist Party’s 17th Congress in 2007 marked a recognition of the need not only to address China’s domestic challenges such as air quality and water scarcity but also shift to an environmentally sustainable model of economic development. In 2015 China’s leaders set out the key incentives, accountability and mechanisms to deliver the ecological civilization in China’s 13th Five-Year Plan. Central elements of this vision, such as building sustainable cities, pursuing environmentally-friendly economic growth and developing the circular economy will have major impacts on China’s future resource consumption and import needs.

Globally, the speed and scale of the economic realignments have taken most experts and policy-makers by surprise – in many respects, China’s new normal is the world’s new normal. The greatest challenge that China’s government faces is managing a shift to slower but higher-quality growth. It is clear that the ramifications of this reach far beyond the confines of the Chinese economy or global commodity markets; yet the situation remains fluid and the nature of a new equilibrium is difficult to predict. This only makes it more urgent to consider the strategic and practical options available to policy-makers, both in China and around the world.

This report is the result of two years of joint research between Chatham House and the Development Research Center of the State Council (DRC), including six expert workshops in China and conversations with international organizations. It discusses key policy areas in global resource governance as they relate to China – in light of recent falls in commodity prices, China’s shifting economic situation, and its growing global role in the ‘new normal’. The scope of the research is limited to non-renewable energy, metals and mineral resources; throughout this report, the term ‘resources’ refers to these commodities. Other traded commodities such as agricultural goods are not included, and land, water and air are discussed only in the context of their important linkages with energy and metals. 

The report considers the costs and benefits of a more active role for China in global resources governance. It recognizes that different commodities face different challenges and require different governance frameworks, and that different regions require context-specific responses. The report also considers the risks of more limited engagement of China and other new actors, which could mean declining relevance for existing processes and institutions that govern resource production, trade and consumption, and a diminished capacity to tackle longer-term challenges like climate change.

As Nigeria seeks to diversify its economy, the federal government is prioritizing the development of the solid minerals sector, in order to enhance foreign investment, create local job opportunities and build technological capacity and expertise in mining.

At this event, Minister for Solid Minerals Development HE Dr Kayode Fayemi, will discuss plans and priorities for the solid minerals sector including the strengthening of regulatory frameworks and opportunities for investment. Following this, HE Aminu Bello Masari, governor of Katsina State, will discuss state initiatives for solid minerals sector development in northern Nigeria.

This event is now full and registration is closed.

Summary

The Guidelines for Good Governance in Emerging Oil and Gas Producers 2016, compiled under the auspices of the New Petroleum Producers Discussion Group, review common challenges facing emerging producer countries in the phases of exploration, recent discoveries and early production. The following are the Guidelines’ broad recommendations for addressing these challenges.

• International best practice may not be appropriate in the case of emerging producers in the oil and gas sector. Instead, the aim should be for more appropriate practice, taking account of the national context; more effective practice, in the interests of achieving rapid results; and better practice, allowing incremental improvements to governance.
• Government policy should be guided by a clear vision for the development of the country and a strategic view of how the petroleum sector will deliver that vision. 
• In order to attract the most qualified oil company to a country with an unproven resource base, the host government can invest in geological data, strengthen its prequalification criteria and ensure transparency. It should also plan for success and anticipate the implications of hydrocarbon discoveries in its tax code, and be robust through declining oil and gas prices.
• Licensing is a key mechanism whereby government can reap early revenues and maximize long-term national benefits. Government must ensure that it simplifies both negotiations and tax structures to mitigate knowledge asymmetries with oil companies.
• Government and industry must engage and share information with affected communities to manage local expectations regarding the petroleum sector and build trust. 
• In emerging producers, budgets for local content may be small and timelines for building capacity short. In this context, the focus should be on the potential for repeat use of any local capacity developed. 
• Meaningful participation of national organizations in resource development is a central objective of many emerging producers. Capacity is needed to enable this, and the Guidelines examine where and how best to develop that capacity.
• Incremental improvements to the governance of the national petroleum sector will allow emerging producers to increase accountability. The focus in this regard should be on building up capacity in checks and balances as resources become proven.

This workshop will bring together experts from across Asia to discuss the challenges around natural resources that cause them to become drivers of conflict in the region, particularly in the context of territorial disputes, geopolitical competition and concerns over national sovereignty.

Attendance at this event is by invitation only.

Today Indonesia begins issuing the first ever FLEGT licenses for timber exports bound for the EU market. A major step in the battle against illegal logging and trade in illegal timber, these licenses are issued under a national system to verify the legality of all timber and timber products. A commitment to licensing its timber exports to Europe was made in the country’s Voluntary Partnership Agreement (VPA) with the EU, although the licensing system applies to all exports and to the domestic market. The scale of this achievement can not be underestimated given the size of the country and of its forest sector – there are hundreds of thousands of forest enterprises ranging from large-scale concession holders and processing industries, to smallholders and micro-scale loggers, saw-millers and manufacturers.

It is also remarkable given the state of Indonesia’s forest sector at the turn of the century. Looking back to 2000, rule of law was all but absent and corruption was rife - with the allocation of concessions and timber industries closely tied with the country’s ruling elite. Widespread logging contributed to the high rates of deforestation seen at the turn of the century, which stood at over one per cent per year.

In 2016, the forest sector is vastly different – there are much higher levels of accountability and legal compliance, the result of the considerable effort and resources that have been put into enforcement and anti-corruption efforts. The sector is also much more open, reflected both in the significant improvements in the availability of forest data and legislation as well as the increased space that has been made available to civil society to participate both in policy processes and in monitoring of the sector.

These improvements are the result in large part of the reform processes that have been enabled and supported by the VPA process, for which negotiations began in 2007. However, the process is far from complete and the issuance of FLEGT licences is best viewed as a marking point in an ongoing trajectory towards establishing a legal and sustainable sector.

If we take 2000 as the starting point of this trajectory, with FLEGT licensing as the midway point, this brings us to just beyond 2030, the target date for the UN’s global agenda for sustainable development of which the Sustainable Development Goals (SDG) are an integral part. The SDGs provide a broader framework for considering what further progress is needed in the coming years both to improve legality and to ensure that the forest sector makes a positive contribution towards achieving widespread sustainable development in Indonesia.

There are a number of factors that risk the achievement of these aims. Key challenges that remain in the country’s forest sector include the high levels of informality in the small-scale sector, corruption, limited transparency and pressure on forests from other sectors (as highlighted in the report 'Illegal Logging and Related Trade. The Response in Indonesia').

As noted, there are hundreds of thousands of forest enterprises in the country, many of which – particularly small-scale businesses – operate informally. Further concerted efforts are needed to ensure that these enterprises are not excluded from the formal market, but are able to contribute to a thriving economy – for example, through continued support for certification, as well as much greater investment in the provision of extension services and further reforms to establish a policy framework that facilitates the growth of small businesses (see 'Improving Legality Among Small-Scale Forest Enterprises'). This will make an important contribution to the achievement of SDG 8, to enable ‘decent work and economic growth’, this including the target [8.3] to encourage the growth of small enterprises.

Both corruption and limited transparency also need to be addressed if widespread legality and sustainability are to be achieved in the forest sector. Transparency has improved greatly in the forest sector, with significant improvements to the availability of information and the establishment of independent monitoring by civil society. However, further progress is needed to improve the accessibility of information, not least to ensure that NGOs are able to fulfil this monitoring role. In relation to corruption, the anti-corruption agency has made good progress, but it remains under threat and needs to be strengthened. Improving governance is a priority under the SDGs, Goal 16 (peace, justice and strong institutions) including targets to reduce corruption, develop transparent institutions and ensure public access to information.  

The progress made in these areas also needs to be replicated outside the forest sector. A major threat to Indonesia’s forests comes from conversion to other land-uses, in particular agricultural plantations. Effective land-use planning, including transparent and participatory decision-making, is needed if the sustainable management and efficient use of natural resources is to be achieved and deforestation slowed – as set out under SDG 12 (responsible consumption and production) and SDG 15 (life on land).

An important means to drive progress is to ensure close monitoring of progress as well as the evaluation of the measures being adopted. A framework for monitoring the impact of FLEGT licences, as well as the related measures being implemented under the VPA, is under development. This will need to link up to national efforts to monitor progress towards the SDGs – both to contribute towards the monitoring of these goals and to facilitate communication of the progress and lessons being learnt in the forest sector.

To comment on this article, please contact Chatham House Feedback

During the resources boom of the last decade, countries, companies and communities alike were quick to highlight the transformative potential of the mining sector. With appropriate governance advice and capacity-building support, it seemed the ‘resource curse’ could be overcome. Yet as companies have adjusted their spending in response to declining global commodities prices and longer-term supply and demand projections, low- and middle-income resource-rich economies appear to have increased their dependence on the minerals sector. But how far has the potential of the mining sector been realised to date, and how different does this potential look today?

Taking ICMM’s third edition of the ‘Role of Mining in National Economies’ as the starting point, this meeting will critically assess the contribution that mining has made to development over the past decade, the prospects for ‘mining-led’ growth in the new global context, and the relevance of classic fiscal, employment and governance prescriptions.

Recommendations

• Integrate chokepoint analysis into mainstream risk management and security planning - for example, government agencies should assess exposure and vulnerability to chokepoint risk at the national and subnational levels.
• Invest in infrastructure to ensure future food security – for example by agreeing on guidelines for climate-compatible infrastructure through an international taskforce established under the G20.
• Enhance confidence and predictability in global trade - for example, through a process under the World Trade Organization (WTO) to continually reduce the scope for export restrictions
• Develop emergency supply-sharing arrangements and smarter strategic storage, e.g. an emerging response mechanism among major players in the global food trade, modelled in part on that of the International Energy Agency in oil markets and led by the UN Food and Agriculture Organization (FAO), the UN World Food Programme (WFP) or the Agricultural Market Information System (AMIS).
• Build the evidence base around chokepoint risk - including through the collection of data on real-time food trade and infrastructural capacity to aid in assessing risks to food supply chains.

Further Reading

• Read more about chokepoints in global food trade at resourcetrade.earth
• Take a closer look at chokepoints and food security threats in an interview with a report author and experts in related fields
• Discover the 5 things you need to know about chokepoints
• Explore what the Qatar crisis tells us about food supply risk (in The New Arab)

Summary

• There is growing optimism about the potential of the ‘circular economy’ (CE) as a new model for sustainable growth in developing countries. A CE is one in which products are recycled, repaired or reused rather than thrown away, and in which waste from one process becomes an input into other processes. In recent months there has been CE-related activity in countries as diverse as Laos, Rwanda and Colombia.
• A CE strategy could help lower-income countries ‘leapfrog’ to a more sustainable development pathway that avoids locking in resource-intensive practices and infrastructure. But a stronger evidence base is needed to show how the agenda can deliver opportunities for industrialization, as well as addressing environmental insecurity.
• Lower-income countries are in many ways more ‘circular’ than their developed-economy counterparts – the question is how to turn this into a development opportunity. Much economic activity in lower-income countries revolves around sorting and reusing waste. However, higher-value, employment-generating opportunities for reuse and remanufacturing are yet to be captured.
• The existence of circular activities in developing countries provides excellent political ‘entry points’, which could enable governments, the private sector, civil society and other actors to promote innovative economic models. The CE could provide a powerful narrative, helping to build momentum around a set of ideas that can be applied in and tailored to multiple sectors or cities.
• There is a window of opportunity in which to align the efforts of development organizations and partner countries. Donors are exploring how the agenda should be aligned with the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. Wider international cooperation on the CE could involve trade partnerships, regional hubs or pilot zones.