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Raw materials as a factor in development

International initiatives


Gas gathering in Hassi R'Mel, Algeria.

Germany supports international initiatives in the raw materials sector and promotes the creation of regulatory mechanisms that apply worldwide. The German government also contributes to international processes to develop and roll out recognised minimum standards for environmental protection and industrial health and safety. For the extractive industries, these include the ILO Core Labour Standards, the Extractive Industries Transparency Initiative (EITI), the OECD Guidelines for Multinational Enterprises and the principles of the UN Global Compact Initiative. Another instrument is the introduction of certification schemes.

Businesses have also developed their own voluntary commitment initiatives to strengthen corporate social responsibility. Examples include the International Council on Mining and Metals (ICMM) and the Equator Principles, under which financial institutions have undertaken to uphold environmental and social standards.

United Nations

In 2015, the international community pledged to fight poverty as one of the goals of the 2030 Agenda for Sustainable Development. Exploiting raw materials in a sustainable way and using the revenues obtained from them for development can make a fundamental difference when it comes to improving living conditions. The extractive sector offers opportunities to mobilise domestic revenues, particularly for developing countries that are rich in natural resources.

The United Nations Conference on Trade and Development (UNCTAD) produces regular analyses of the potential for development offered by raw materials and the price movements on commodity markets. It also makes recommendations as to which mechanisms can be used to make commodity prices more stable. The Global Commodities Forum, which UNCTAD has been staging annually since launching it in 2010, offers high-level government representatives, in particular from developing and emerging economies, a platform for discussing current challenges in the raw materials sector.


Extractive Industries Transparency Initiative (EITI)

The Extractive Industries Transparency Initiative (EITI) is a global initiative for more financial transparency and accountability in registering and disclosing the revenues that are generated through the extraction of natural resources.

The EITI standard is implemented by governments in collaboration with companies and civil society in around 50 countries worldwide. The standard requires the disclosure of information on tax payments, licenses, production volumes and other important data concerning the extraction of energy and mineral resources.

Germany has been supporting the EITI since the initiative was founded in 2003, mainly for reasons of foreign and development policy interests. Further information about EITI and Germany’s contribution can be found here.


European Union

In 2008, the European Union (EU) adopted a raw materials initiative aimed, among other things, at eliminating distortions to trade and to competition on international commodity markets. The topic of raw materials is to be mainstreamed in development cooperation. The German government is supporting the EU in its activities and is lobbying for close coordination between national strategies and EU policy on raw materials.

The African Union (AU) and the EU have a strategic partnership. The current Roadmap 2014-2017 on EU-Africa cooperation in the area of industrial development includes the following areas and measures:

  • Increase transformation of raw material at the source
  • Transparent and prudent management of natural resources
  • Cooperation in the field of geological surveys

African Union

The African Union (AU) plays a decisive role in promoting and coordinating the sustainable exploitation of raw materials. An important step was taken in 2009 with the adoption of the Africa Mining Vision, an initiative which emerged from a number of different mining harmonisation processes across Africa.

The vision outlines a resource-based industrialisation and development strategy for Africa. The idea is that the transparent, fair and optimum use of mineral resources will help foster dynamic growth that is also sustainable. Measures to achieve this goal include, among other things, improving governance, negotiating and management capacities in the raw materials sector, reforming small-scale mining and infrastructure expansion.


World Bank

The World Bank offers developing countries technical support along the entire value chain in the raw materials sector. Moreover, the World Bank is managing global measures such as the Extractives Global Programmatic Support Multi-Donor Trust Fund (EGPS MDTF). The trust fund provides technical support to resource-rich developing countries, for instance in the area of EITI implementation. As a donor to the fund, Germany is a member of the EGPS MDTF steering committee.

As part of the German Extractives and Development Sector programme, the Mining Investment and Governance Review (MInGov) was developed together with the World Bank. MInGov is an innovative instrument that offers an opportunity to conduct systematic and comprehensive analyses and assessments of the investment climate and governance in the mining sector in selected developing countries.


OECD

Within the framework of the Organisation for Economic Co-operation and Development (OECD), Germany is working to promote, among other things, voluntary commitments by international players, including the commitment to observe OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

Moreover, the OECD established the OECD Policy Dialogue on Natural Resource-Based Development in 2013. The forum is focused on four priorities: Shared Value Creation, Revenue Management and Spending, Getting Better Deals and Domestic Resource Mobilisation (tackling base erosion and profit shifting as well as corruption). German development cooperation focuses primarily on the "Getting Better Deals" working group and, within that group, on the CONNEX Initiative in particular (see below).


G8/G7 and G20

At the 2007 G8 summit in Heiligendamm it was agreed to step up measures to support good governance in the raw materials sector and to launch a pilot project on the certification of mineral resources from conflict regions. Subsequent summit declarations have also noted the key role of resource governance. Both in the 2015 declaration of the G7 summit in Elmau under the German presidency and in the 2016 declaration of Ise-Shima, the heads of state and government reaffirmed their continued support for the CONNEX Initiative.

For its part, the G20 has been increasingly concerned with commodity market issues. Its deliberations centre on the question of how price volatility on global markets can be minimised. The G20 Leaders Statement issued at the 2009 Pittsburgh summit highlighted the importance of transparency in the raw materials sector and called on resource-rich countries and companies operating in the raw materials sector to support this objective.


Global Compact

The UN Global Compact is a value-based platform that brings together UN agencies, companies and civil society with the aim of promoting institutional learning. The pact is based on ten principles and creates transparency and opportunities for dialogue to identify and support good practices. The Global Compact is not meant to be a political instrument to control globalised markets or a quality label. Instead the intention is that wherever enlightened self-interest fosters voluntary commitment, the pact will fill the gap.


Kimberley Process

The Kimberley Process brings together government, industry and civil society in an effort to curb the illegal trade in diamonds from conflict regions. The states signing up to the process agree to certify rough diamonds and prevent uncertified diamonds from entering the international markets.


Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF)

The Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) provides a unique global platform for discussing issues in the areas of mining and mineral resources. Each year, representatives of the ministries of mining from currently more than 50 developing, emerging and industrialised economies gather to discuss how the mining sector can promote development. Germany has been a member of the IGF since 2015.


Natural Resource Charter

The Natural Resource Charter comprises twelve precepts, or principles, on how best to harness the potential of natural resources for the public good. The idea behind the initiative is that compliance with these principles will help governments and societies of resource-rich developing countries to manage non-renewable resources in ways that will generate economic growth, raise living standards for society as a whole and be ecologically sustainable.

What makes the charter unique is that it was drawn up in a participatory process and is continuously reviewed and updated. Academic research has an important part to play here.


Publish What You Pay

The "Publish What You Pay" campaign predates the Extractive Industries Transparency Initiative (EITI). It has the backing of the US investor George Soros, the Global Witness organisation and a coalition of more than 50 non-governmental organisations from Europe, Africa, Asia and the US.

This civil society initiative goes beyond the EITI approach by demanding that listed oil companies disclose full details of the taxes, royalties, fees and other payments they make to governments.


International Council on Mining and Metals (ICMM)

The International Council on Mining and Metals (ICMM) brings together twenty leading mining corporations and around thirty international, regional and national mining associations. The ICMM has set itself the goal of promoting the model of sustainable development in the raw materials sector. To this end, the council has drawn up ten principles to be followed by member companies.


Natural Resource Governance Institute (NRGI)

The Natural Resource Governance Institute (NRGI, formerly Revenue Watch Institute) is concerned with promoting transparent and responsible management of extractive resources for the public good. It is dedicated exclusively to addressing the problems countries are facing due to their resource wealth and their dependency on revenues from oil, gas and mineral reserves. The programme focuses on strengthening civil society.


CONNEX Initiative

"Fair raw materials contracts" are needed so that revenues from the extractive sector can be used effectively for poverty reduction. These contracts must create attractive investment conditions, and also ensure that the income from natural resources contributes as effectively as possible to a country's development. However, many developing countries are lacking the necessary funds and technical skills to negotiate with international mining companies on an equal footing.

In order to effectively support development countries in negotiating their contracts with investors, the G7 launched the CONNEX Initiative under the German presidency in June 2014. The aim is to improve and expand the available advisory services. Moreover the initiative is intended to support partner countries in developing their own capacities for complex contract negotiations over the long term, especially in the extractive sector.

As a first step, an online information platform was set up: www.negotiationsupport.org. In addition, a code of conduct for advice on extractive resource contracts was adopted, and a number of pilot projects to place experts on the ground in resource-rich developing countries were launched.

The BMZ has taken the lead in shaping the CONNEX Initiative and developing it further and in implementing pilot measures.


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