Let poor share in mining riches

Campaigns and Advocacy, Media Releases, Mining, News article written on the 17 Jan 2013

Mining has had an incredible impact on almost every facet of Australian society, from sparking new waves of immigration and the unprecedented wealth of ‘Marvellous Melbourne’, to triggering race riots and sex trafficking.

SBS has highlighted these impacts, both good and bad, in its new series, Dirty Business: How Mining Made Australia (airs 6, 13 and 20 Jan).

The story of Australian mining is an important story and yet, surprisingly, given it has impacted almost every aspect of Australian society, it’s one that most of us don’t know.
Yet it’s still only half the story.  You have to travel away from our shores to get the full picture. 

Australian mining companies have been tapping the mineral wealth of poor countries around the world for decades, and this is increasing at a rapid rate.

Mining can stimulate economic growth and bring prosperity. Yet, without a commitment by mining companies to human rights, sustainability and transparency, it can also cause people to lose their land and way of life, while irreparably damaging the environment. 

A consistent theme of the documentary is the ongoing ‘battle’ for a share of the mineral wealth of Australia.

Through Oxfam’s work with communities affected by mining around the world, we know that this battle – for a fair share of mining wealth – has also long raged in many poor countries struggling to see the benefits of the extraction of their minerals.

For example, communities in Mongolia – where mining is booming – are forced to graze their goats and sheep on poorer quality pastures, significantly lowering the quality of their meat and milk and the prices they can fetch, sinking communities into financial hardship.

As has happened here, booms in mining, oil and gas extraction in poor countries can push up the value of the local currency.  This affects the competitiveness of other sectors and increases the price of everyday goods, including food, housing and health services.  For the poorest of the poor, these price increases can be devastating.

There are more than 250 Australian mining companies active in Africa, with a total investment of more than $20 billion by Australian miners and explorers.

But citizens of many countries in Africa do not benefit from their natural resource wealth because of the secrecy that often surrounds mining deals, and the corruption, weak governance and limited public accountability for the spending of mining revenues.

Lack of reliable, public information about the flow of revenue to governments from extractive companies makes it impossible for communities to monitor the money and prevent it being embezzled by officials.  As a result, communities still may not have adequate hospitals or schools.

Closer to home, Papua New Guinea has a history of mining since the 1930s, but it’s a history of land disputes and environmental disasters rather than improved standards of living.  Civil war occurred on Bougainville Island against a backdrop of environmental damage caused by the Panguna mine (operated at the time by Rio Tinto) and questions over what benefits local people were receiving. 
And there already are reports of simmering community tensions about who will benefit from Exxon’s massive liquefied natural gas project – part-funded by Australian financiers and set to begin operating next year. 
The rapid increase of Australian mining operations in countries with weak governance brings with it the risk that companies will be exposed to corrupt behaviour.

This affects their Australian financiers and even individual shareholders, who may not know the risks associated with their investments. 

Australia has made some positive moves to achieve greater transparency in the flow of mining revenues. For example, it is implementing a domestic pilot of the Extractive Industries Transparency Initiative (EITI), which will require Australian companies to publish what they pay in taxes, royalties and other payments to the Australian Government, and for the government to publish what it receives.

Sydney plays host to the Global EITI Conference in May, and all eyes will be on Australia to see if it intends to move beyond a pilot to adopting the EITI permanently.

But we need to do more.  Last year, the US announced new rules to stamp out corruption by forcing mining, oil and gas companies listed on US securities exchange to report all payments to governments in all countries in which they operate. 

Armed with better knowledge about the income their governments receive from mining, communities in poor countries can fight corruption and hold their governments accountable to spend this income on priorities such as improving healthcare and getting children into school.

The EU is currently finalising the details of requiring EU-listed and large private extractive companies to disclose their payments to governments worldwide.  Norway and Canada also are moving on this issue.
As a mining giant, Australia should catch up and introduce similar legislation here for companies listed on the Australian Securities Exchange.

As we strive to ensure our own mineral wealth is managed sustainably and in a way that benefits all Australians, we can also work to ensure our mining companies operate responsibly with respect for local communities, wherever they operate. 

Serena Lillywhite
Mining Advocacy Coordinator

This opinion editorial was first published in The Courier-Mail on 17 January 2013.