Some Thoughts on Community Agreements Luke Danielson Ulanbaatar, - PowerPoint PPT Presentation

Ministry of Mining and Energy Some Thoughts on Community Agreements Luke Danielson Ulanbaatar, Mongolia November 7, 2014

International Practice in This Area is New • The benefit of Community Agreements on many contexts is now clear • These are being established at many projects around the world • The process by which they are negotiated is of equal importance to their contents • They have many different names, Impact- Benefit Agreements, Community Development Agreements, etc.

Who Pays the Cost of Negotiation of Community Agreements? • Companies typically have all kinds of expert advice in negotiation. They have economists, accountants, geologists, engineers and lawyers. • Government also has access to skilled professional advice in negotiation. • Local interests in many countries feel that they need similar kinds of advice and help. But how can they pay for it?

The Community Agreement Has a Context A major mining project does not involve a single relationship but a number of relationships What needs to be in a Community Agreement depends heavily on what is in the other relationships

MAJOR RELATIONSHIPS o Host government  Company o Company  Community o Host government  Community o Company  Lenders What are the legal instruments that regulate each of these relationships?

Practice in Community Agreements • Community Development Agreements are sometimes required by custom • And sometimes required by law • Sometimes by the Mine Development Agreement • They are often negotiated simply because the parties feel it is in their interest.

Collection of Available Community Agreements SDSG Community Development Agreements Library: http://www.sdsg.org/archives/cda-library/

Typical Subjects of Community Development Agreements I. Managing the environmental and social impacts of mining at the local level II. Taking advantage of opportunities for local development III. Defining local role in ongoing management during (and even after) the life of the project

More Context: A Question of Timing Is the mine development agreement between government and company already negotiated when the negotiation of the Community Agreement begins? Then what provisions of the mine development agreement affect the Community Agreement?

Mine Development Agreement: A Question of Timing Issues on which local people generally have an important contribution to make, or a right to be consulted: • Taking land for the project and the compensation to be paid • Loss of access to water, wood, grazing, hunting and other resources • Access to religious sites and graves of ancestors

Issues in which local people should be heavily involved • Relocation of families homes and villages • Loss of traditional livelihood • Health and safety issues • Employment training and skill building • The kinds of infrastructure they deem important • Their right to be consulted about changes in the project What if these issues are already determined in the Mine Development Agreement ?

If Issues Very Important to Local People Were Already Agreed in the MDA? • Do we renegotiate the MDA if necessary? • Do we simply accept this and regret the lost opportunity? • In the future, should affected local communities have some kind of role when the MDA is negotiated or amended? As „observers?‟

Who Knows the Most About A. Local livelihoods and the requirements for people who pursue them? B. The local environment? C. Local communities and what they want? D. Who uses local water sources? E. Sites of cultural importance? Who are the real experts?

CONTENTS OF COMMUNITY AGREEMENT: OPTIONS 1. Are all possible subjects of interest to local people open to negotiation? 2. Does the government have a „standard form‟ CDA under which almost everything is already decided? 3. Does the national government decide the amount of money to be received, and the local government then decide how to spend it? 4. Is there a “list of subjects for negotiation?”

CONTENTS OF COMMUNITY AGREEMENT: OPTIONS There are examples of each of these approaches. But practice in this area is so new it is hard to say which are working best. The International Bar Association Model Mine Development Agreement takes the fourth Approach www.mmdaproject.org

• XXXX Source: World Bank, Mining Community Development Agreements, 2011.

Unanswered Questions • What is the enforcement mechanism? What happens if a company (or a community) does not comply with its obligations? • Agreements usually put obligations on both parties. What are the obligations of the community under a CDA? • When and how can the CDA be reviewed and adjusted or renegotiated?

MMDA Annex B (w) – Community Development Agreement Objectives A breach by the Company of the terms of the CDA shall be considered to be a breach of this [Mine Development Agreement] , and the State shall be entitled to terminate the CDA upon the failure of the Company to diligently and consistently pursues a course of action that is reasonably intended to remedy the breach within sixty (60) Days of being notified in writing by the community of the breach.

MMDA Section 22: Relationship of this Agreement to the CDA [Where an inconsistency occurs between a provision in the Community Development Agreement and the terms or conditions of this Agreement, the provision in the Community Development Agreement shall prevail unless this Agreement specifically states that the provision in this Agreement shall prevail.] [A final written and reasoned decision of a duly constituted court or arbitral panel declaring a material breach of the Community Development Agreement by the Company, shall constitute a breach of this Agreement.] [A breach of the Community Development Agreement shall be governed by the terms thereof.] [See comments for discussion of issue.]

A Vision of Success Combining: • Technical knowledge of companies • Effective government framework • Mineral wealth • Local knowledge and skills To manage impacts, and promote sustainable development.

Resources on CDAs • MMDA: www.MMDAProject.org Section 22, Annex B, Annex C • SDSG Community Development Agreements Library: http://www.sdsg.org/archives/cda- library/ • World Bank, Mining Community Development Agreements Source Book , https://openknowledge.worldbank.org/handle/1 0986/12641.

References, cont. • Mining, Minerals and Sustainable Development (MMSD) Reports, Including Breaking New Ground (2002), available at http://pubs.iied.org/9084IIED.html?k=Mining%20Minerals%20and%20Sustai nable%20Development • World Bank, Extractive Industries, Gender and Communities Website, http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/EXTEXTIN DWOM/0,,contentMDK:21187134~menuPK:5874691~pagePK:210058~piPK: 210062~theSitePK:3156914,00.html. • World Bank, Mining Foundations, Trusts, and Funds: A Sourcebook (2012 ), available at http://siteresources.worldbank.org/EXTOGMC/Resources/Sourcebook_Fu ll_Report.pdf. 22

Questions? Thanks for your attention! Further Discussion?