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Part A: General Topics - 12. Transparency/Confidentiality | 12.1 General

There is growing international consensus on the importance of transparency in promoting good governance of the mining sector and the efficient management of natural resource revenues. The fundamental idea behind transparency is that the more information the public has about the sector in terms of the legal framework, the mining activities and the revenues such activities generate, the more the public can hold governments and companies accountable for their respective actions related to the sector. From another perspective, transparency also plays an important role in ensuring fair and non-arbitrary processes by the sector regulating authorities ensures a level playing field which in turn instils, which is essential to instil confidence among investors. In other words, in that a level playing field exists. In broad terms, transparency is necessary for accountability, which in turn is necessary for good governance of the sector. Narrowly defined however, transparency provisions focus on information to be disclosed in a relevant, widely accessible, timely and accurate manner, and where possible, in open data format.

Transparency provisions in mining laws may explicitly list the categories of information and various documents that will be made available to the public; or may broadly provide for adherence to global transparency norms and standards such as the Extractive Industries Transparency Initiative (EITI), which requires implementing countries to annually disclose information on tax payments, licenses, contracts, beneficial ownership, production and other key elements around resource extraction (some countries such as the Central African Republic and Liberia have separate legislation implementing the EITI standard).

Transparency is a cross-cutting topic, relevant for all segments of the EI value chain. It is essential for a mining law to provide for robust transparency provisions in the context of (a) the decision to extract; (b) competitive procedures for issuing licenses and allocating mineral exploration or production rights; (c) deciding the mandate of the institutions to regulate and monitor the operations; (d) the status of non-payment obligations surrounding mining activities (e.g., health and safety, environment, and local content; (e) the fiscal regime, reporting of payments and collection of taxes, and publication of deals; (f) revenue management.

A mining law should also provide for disclosures related to information required to assist communities and other stakeholders in monitoring companies’ environmental and social obligations so as to supplement its own monitoring capacity through public engagement (a democratic approach to monitoring activities). Document where such information may be explicitly required include bidding materials and bid evaluation reports, mineral development agreements, environmental and social impact assessments and management plans, local content plans and community development agreements.

Confidentiality provisions may provide for limits on transparency, for example, to protect company commercially sensitive information. It is important, however, that these limitations are used on an exceptional basis, only where there is a valid justification for sensitivity. When allowed, confidentiality should be provided for a period of years with respect to geological, engineering, and other process related information acquired by mineral right holders in the course of exploration, development or exploitation. However, even in this case, exceptions to exception are necessary in order to permit the publication of statistics in the aggregate and to safeguard against potential frauds on the market by mineral right holders.

While some companies have resisted contract transparency on the grounds of commercial sensitivity, executives of some leading mining companies have spoken out in favour of contract disclosure principle. The International Council on Minerals and Metals, whose members are 17 of the largest global mining companies, requires that its members engage constructively in appropriate forums to improve the transparency of contractual provisions on a level-playing field basis.

The mining industry, civil society and mining administration staff favour provisions that require transparency in the application of mining law, as a safeguard against manipulation, corruption and abuse of discretion. Terms that promote transparency in the application of the mining law include:

  • Public access to current information as to the availability of areas for mineral rights, the existence of mineral rights and pending applications for mineral rights and transactions, and the status of processing of applications for mineral rights and transactions;
  • Objective, nondiscretionary criteria as to eligibility and conditions for the grant of mineral rights;
  • Objective, nondiscretionary procedures for the submission and processing of applications for mineral rights and transactions;
  • Clear, objective criteria for maintaining the validity of mineral rights;
  • Clear, objective grounds for the denial of mineral rights or transactions and the cancellation or extinction of mineral rights, together with procedures requiring notice and publication of a written statement of the grounds for the decision, and an appropriate opportunity for challenge of the decision or cure of the failure;
  • Clear, objective grounds for the imposition of sanctions and penalties, together with procedures requiring notice and publication of a written statement of the grounds for the sanctions or penalties, together with an appropriate opportunity for challenge of the decision or cure of the infraction;
  • Clear, updated information on the ‘beneficial ownership’ of the companies that have obtained rights to extract minerals;
  • Clear reporting requirements on mining activities, such as reports on exploited minerals quantity and mineral valuation, accident reports and other relevant information including audit reports.
  • Clear annual reporting requirements on local development obligations.
  • In contract regimes, the use of standard model agreements as the basis for limited negotiation of terms, subject to an objective review and approval procedure prior to signature, and published on the Mining Administration’s website. Ultimately, applying the rule of contracts, mineral development agreements negotiated under the mining law should be consistent with the provisions of the mining law.
  • Clear publication requirements for payments made to governments and allowances provided to companies.

12.1 Example 1:

Article [_]

(1) All companies applying or bidding for a license are required to provide accurate information on their Beneficial Ownership as part of their application or bid documents and throughout the duration of a license, license holders will inform the [Regulating Authority] of any changes to this information, within one month of the change occurring.

(2) The [Regulating Authority] will promptly publish and maintain all Beneficial Ownership information in a publicly accessible format on its website.

(3) Failure to provide the information required in subsection (1) above, in good faith and in conformity with the regulations to this [Law][Act][Code] shall invalidate a license application, and be grounds for revocation where a license has been granted.

(4) For the purposes of this Article [_] (Beneficial Ownership), “Beneficial Ownership” means the control, possession, custody or enjoyment by any natural person, directly or indirectly, of a reasonably significant economic interest in a given legal entity or receives significant economic benefit from such a legal entity, even where formal ownership (title) may be in the name of another person or entity. In addition to any other qualifying criteria, a person is automatically considered to be a beneficial owner if such person owns 5% or more of the legal entity in question.

Annotation

Drawn from Ivory Coast’s mining code (2014), this provision focuses on EITI requirements and requires compliance with the EITI standards and procedures by both mining companies and public authorities. While the provision best serves the legal frameworks of EITI member states, non EITI member states may still use a similar provision by referring to the EITI principles and standards as the objective yardstick for evaluating obligations (South Sudan).

12.1 Example 2:

Article [_]

(1) All information and contracts required, submitted or signed under this [Law][Act][Code] shall be considered non-confidential. Confidentiality clauses or other clauses in a mining contract that prevent disclosure of information shall be void.

(2) The information shall be made available to the public in a timely, widely accessible and accurate manner, including on a public website or newspaper of wide circulation.

(3) Subject to Section (1) above, if any information is deemed sensitive on the basis of national interest or commercial purposes, a request may be made for confidentiality on an exceptional basis and the Minister shall determine the scope of such exception and provide a duration after which such information will be made available to the general public.

Annotation

This suggested provision establishes an expansive approach to transparency, requiring non-confidentiality in all information, data and reports related to the mining activity. Emphasis is placed on the quality of the information, namely, that it should be updated and widely accessible to the public. In cases where confidentiality is deemed necessary, the motivation behind should be clear, justified and limited in time.