�End of mining secrecy� � EU

Lawrence Seretse | Friday April 11, 2014 11:57

During President Festus Mogae’s ten­ure, Botswana joined the Extractive In­dustries Transparency Initiative (EITI) that sought to promote transparency among countries rich in minerals.

The new rules regulate the provision of financial information by all limited li­ability companies registered in the Eu­ropean Economic Area (EEA), mean­ing several locally based miners are likely to be affected.

The EU’s new set of regulators is ex­pected to be the game changer in local mining, providing fresh insight into the contributions of Debswana into local coffers.

De Beers, which holds 50 percent eq­uity in Debswana annually publishes a report detailing its overall contribution to government, without distinguishing between royalties, taxes and dividends.

The new regulations will also allow Batswana to compare and contrast the figures emanating from the De Beers’ report with those from the regulations, known as European Accounting and Transparency Directives.

Other EEA companies operating lo­cally, from explorers to juniors, will also be required to disclose their contribu­tions to government.

European negotiators reached this provisional deal contained within the revised European Accounting and Transparency Directives on Tuesday evening but approval is expected in June.

“This legislation will help create a new global benchmark for transparency in the natural resource sector,” said Jana Mittermaier, Director of the Transpar­ency International EU Office.

Mittermaier said: “With this infor­mation, citizens of mineral-rich coun­tries can ask hard questions of both companies and governments about the deals that they make.

The secrecy that surrounds these deals has been fertile ground for the corruption that has too often blighted the development of natural resources.

EU leaders now need to persuade their counterparts at the G8 and G20 to enact similar legislation to ensure that all citizens can benefit from these reforms and that there is a level playing field for extractive companies.”

All EU-listed or large privately owned oil, gas, mining and logging companies will be required to publish all payments over P1.2 million (€100,000) to every country where they operate and for each extractive project.

The United States has already passed legislation through a provision in its 2010 Dodd-Frank Act, which requires all oil, gas and mining companies listed on US stock exchanges to publish their payments to all countries and for every project without exception, a report stated.

Crucially, the EU rules will not con­tain any exemptions. A number of oil companies had claimed that there were countries that forbid the disclosure of payments to governments in their crim­inal law.

But the EU lawmakers were not per­suaded by any of the examples put for­ward by the industry.

“Today’s EU agreement is the culmi­nation of years of work by the Publish What You Pay coalition.

It shows what collaboration can achieve and we’d like to thank our members worldwide for their commit­ment,” said Marinke van Riet, Publish What You Pay International Director.

“We also salute the lawmakers in all EU institutions who held out for the strongest deal possible.”

According to the European Ac­counting and Transparency Directives (EATD) draft this is what has been agreed:

• The new transparency requirements will cover companies active in the ex­tractive industries to publish an annual report outlining the payments made to governments.

• Companies will have to report payments at both country-level and project-level.

• Project-level reporting requires companies active in the extractive in­dustries to publish the payments they make to governments for each lease or licence that they obtain to access resources. This creates a link between a project, for example a mine or an oil field, and the payment.

• All levels of government are de­fined within the rules, so payments to centralised, national, regional and lo­cal governments would have to be re­ported.

• The types of payments that will have to be reported include: produc­tion entitlements; certain taxes; royal­ties; dividends; bonuses; fees - includ­ing licence fees, rental fees and entry fees; and payments for infrastructure improvements.

• The rules include a review clause which is activated after three years, and calls on the European Commission to explore the possibility of broadening the scope of these rules to additional sectors, as well as the possibility of re­quiring the disclosure of additional in­formation.

• The review clause also calls for the European Commission to consider pro­posing legislation that would require all EU-listed companies to carry out due diligence when sourcing minerals to ensure responsible supply chain man­agements.

The EATD points out that exploita­tion natural resources should ideally provide developing countries with fi­nancial incomes and know-how, need­ed to develop their economies and so­cieties. Extraction and export of these products should result in job creation and increased living standards, thus contributing to a reduction of poverty in developing countries.

Furthermore, by investing earnings from the EI in other sectors of the economy these countries should be able to stimulate opportunities