Jocelyn Fraser, PhD Candidate, Mining Engineering // May 12, 2015

Our research team travels to Ulaan Baator – the capital of Mongolia, a country that once ruled the largest land empire in the world. Today, the city is the home to +1 million people, an eclectic mix of old and new, rich and poor, traditional and modern. It is a city where crumbling Soviet-era infrastructure is juxtaposed against traditional gers and modern gleaming high-rise towers. And it is a city hard hit by the economic downturn in the international commodity market: idle building cranes dot the landscape and unemployment numbers high.

We have travelled to UB, as it is known locally, to present the findings of our comparative analysis of 13 EITI member countries’ sub-national reporting (SNR) plans and implementation. We have concluded that Mongolia is amongst the best positioned of the developing world countries we studied. Our in-country meetings both confirm and negate our findings.

When we meet with the EITI secretariat, we learn Mongolia has implemented an electronic database system for reporting sub-national revenue transfers. We are told that a common SNR template and nomenclature has been established, and that workshops are scheduled this year to provide training for local officials tasked with SNR. Of the 21 aimags, 19 are now using the database to record revenues from SNR.

At the Mongolian Ministry of Mines we are updated on the status of extractive industries transparency legislation now before parliament for review. Our host firmly believes this legislation will reduce corruption and facilitate transparency.

Yet civil society organizations (CSOs) paint a different picture, asking the challenging question: what has the EITI done to support transparency in Mongolia? They tell us the EITI reports are dense, incomprehensible to many, and because the EITI does not mandate reporting on how extractive revenue is used, the average citizen has little reason to be engaged with the EITI.

Critics allege no one would even notice is the EITI ceased to operate in Mongolia, lamenting the waste of millions of dollars of donor funding. Mining companies, already encumbered for the cyclical nature of the global commodities market, cite the challenges of trying to manage within the confines of the electoral cycle, struggling to maintain programs in the face of changing personnel and priorities.

Our meetings remind us of the vast discrepancy that can exist between academic theory and its practical application. We leave UB the richer for our experience: both academically and personally. We remain convinced of the importance of transparency yet recognize the gap that can exist between words and deeds, and of the importance of making policy information clear, concise and, perhaps most importantly, relevant to stakeholders.

The Unexpected Conclusions to our Mongolian EITI Project

Jonathan Brasnett, MAAPPS // May 9, 2015

Ulaanbaatar, Mongolia. A city of 1.3 million, the home to more than one third of Mongolia’s population, and among one of the most polluted cities in the world. It is also considered to be a bastion of democracy in a continent that is predominantly governed by authoritarian leaders and corrupt bureaucracies. In spite of this democratic system, the country lacks a certain efficiency that would enable it to dig its way out of financial difficulties and stimulate the development that is so sorely needed. Upon landing in this capital city, the beauty of both the country and its culture were instantly obvious to me. So too, unfortunately, was its lack of development, equality and most importantly, government accountability.

Our team of researchers spent the semester (from January to April) studying the Extractive Industry Transparency Initiative (EITI) and the ways in which it has been implemented throughout the world. My own assignment involved researching the implementation of resource-revenue reporting (particularly sub-national reporting) in the Islamic Republic of Mauritania in western Africa. It became instantly clear that this country’s government is characterized by greed and corruption which make implementation of transparency and accountability initiatives very difficult. As a result, it ranked very low in its implementation of sub-national reporting for the purpose of our project. By contrast, however, Mongolia ranked very high as its EITI secretariat has been able to create offices and reporting structure in the Aimag (provincial) and Sum (district) levels which would report their own resource-revenue transfers between companies and local governments, as well as transfers from the national government to sub-national levels. Among the countries we studied for our project, Mongolia ranked relatively high in terms of democracy, rule of law and civil society participation, and comparatively low in terms of corruption. This inevitably led our naive team to conclude that Mongolia was advanced in sub-national reporting and EITI implementation, and that there was much room for hope that resource extraction could lead to accountable revenue sharing and subsequent high levels of development. Right? Wrong.

The reality on the ground was very different and this became clear through the various meetings we attended with the EITI Secretariat, Ministry of Mining officials, local journalists and Western researchers/observers. Despite the high levels of bureaucratic involvement among the national and sub-national levels of government, Mongolia lacks government accountability and any checks on their power. While the reporting of resource-revenues continues to progress and improve, we had arrived with high hopes of influencing the government to implement accessible means for rural civil society organizations to understand the EITI reports and demand government accountability. This is clear paradox, as we quickly learned that the government has no interest in making such information more accessible to its citizens. While the government officials and foreign ambassadors live in extravagant, luxurious houses which are closed off from the rest of Ulaanbaatar, the majority of Mongolians continue to live in poor conditions and the rural nomadic herders continue to see low levels of infrastructural development in the countryside. It seems to an outside observer like myself that the wealth from resource extraction goes into the pockets of those with power, while those whose lives are most affected by the extraction see no improvements to their quality of life. All the while, the Mongolian journalists who would like to make a difference seem unable to challenge these norms and are instead tasked with solving the problem of information accessibility themselves.

In my first two days on the ground in Mongolia, I have learned more about the difficult realities of public policy than I had in my previous eight months of studying in a policy program at the University of British Columbia. The reality of democracy, especially in newly developed democracies like Mongolia, is that bureaucratic inefficiencies and corrupt government censorship and control result in the inability of ambitious policy-makers like ourselves and many of the people we have met to make the changes that are desperately needed. This is not to say that the government has done nothing to improve Mongolians lives; there are high levels of literacy and education, an increasing prominence of English and other languages (Mandarin, Russian, etc.), healthcare seems to receive some investment and there seem to be many development projects in the works, at least in the capital. But these are things that need to be seen across the country, and not just in the capital which is home to the largest part of the population. Despite all the negative governance issues we uncovered since arriving in Mongolia, however, I still have hope that this beautiful country with such an amazingly rich culture can make changes to its governing apparatus that would create an accountable system which seeks to improve the lives of all Mongolians. If anything, the flaws we uncovered simply motivated me and my colleagues to work more tirelessly to bring changes to places that need our guidance.

On Our Way to Ulan Bator!

Justin Kwan, MAAPPS // May 3, 2015

Although the semester has just finished, a group of 6 students from the Asia Pacific Policy Class will have the opportunity to travel to Ulan Bator, the capital city of Mongolia to present the findings from two different projects we have been working on. The first team has been formulating policy solutions to help bring further awareness to subnational reporting and attempt to further enhance the usefulness of the data to the general public through various public institutions such as libraries, soum level government and banks. Meanwhile, the second team has formulated a paper, which analyzes the success of subnational reporting on different dimensions, which include democratic governance, rule of law, civil society participation and perception of corruption. Both teams are most definitely excited to share their findings in Mongolia and hope that our research on subnational reporting can not only inform EITI better of the unique experiences countries have faced in their attempts to implement local level reporting but how this information can be used to better civil societies around the world.

Before flying off this past week, some further research for the trip to Mongolia has taught me a few interesting facts. Most fascinatingly, I discovered that after Russian, German is one of the most widely spoken foreign languages in Mongolia, due to the country’s special historical relationship with East Germany. Although, though this trend is slowly giving way to English, the Korean language is also gaining momentum due to the large population of Mongolians working in South Korea. From this, we can see Mongolia as the intersections of various histories; from the historical legacies of socialism to the ways even the Korean Wave has also made an impact on Mongolian society and youth culture. While in Ulan Bator, I am curious to know what influences have impacted the city the most, visually through its architecture but also through the collective public memory in various institutions such as museums, statues and other public places.

In reflection upon the course this year, I realized that a concept like subnational reporting, although now a common word in our team’s vocabulary is still a relatively new concept to most of our EITI candidate and compliant countries. In a country like Canada, interprovincial government transfers and the coordination amongst our federal and provincial governments represent a complicated but relatively effective process that regulates provincial level coordination with our own federal government. In my case study country of Indonesia, the Presidential Regulation RI No.26 2010 which although regulates and legally enforces subnational reporting, the enforcement of such policies have not been as easy. Indonesia is still trying to test out how it is best equipped to deal with the task of subnational reporting implementation, although its initial plans of decentralization and the issuing of local mining permits has somewhat slowed down the process due to the lack of local of coordination amongst local governments to issues licenses. Rather than looking at this as a failure, I see this as one of the many projects that are part of the testing period that will eventually help subnational reporting projects to be successful. It will be interesting to see how our meetings in Mongolia will represent the ways in which the people view and regard subnational reporting within their own country and abroad.

For now however, the land of blue skies awaits the team in Mongolia!


Mario Ramirez, MASc Mining Engineering // April 30, 2015

Is the future of the mining industry depending on the legacy it leaves behind?

It might be!

During recent years a good percentage of mining projects have been delayed due to lack of social acceptance or Social license to operate (SLO). Last year, the Prospectors and developers association of Canada, presented a report about “the relationship between capital markets and environmental and social risks[1]”.  This report shows that during the last 8 years 31 out of 67 (46%) mining projects have been delayed and 54 out of 102 oil and gas projects have also suffered delays due to Social acceptance or environmental concerns.  For the mining sector out of the 46% projects delayed, 42% of those were due to social opposition, and another 35% due to environmental concerns.  Another important piece of information is the graph shown by Ernest&Young in its yearly report about Business risks facing mining and metals[2]. This year, SLO ranks in the top 3 risks for this business.

Social License to operate (SLO) is becoming more important than ever.  Stakeholders, meaning, the people, communities and organizations affected by a mining project have shown more interest in learning and have become actively involved in projects affecting their surroundings or ways of life.  Therefore, companies need to allow its stakeholders to have a broader and better understanding of the project’s goals and objectives.  Basically SLO is defined as existing when a project has the ongoing approval within the local community and other stakeholders, ongoing approval or broad social acceptance and, most frequently, as ongoing acceptance[3].

ONGOING is one of the key words in the quote above, and ACCEPTANCE another.  In the pyramid of earning a social license to operate, if a project is only accepted it is expected to still have a good deal of opposition, threats and watchful monitoring.  Therefore, for a project to really be socially accepted it needs to go a couple steps up from only the acceptance level.  The next step would be to gain approval or support, in this step the company is seen as a good neighbor.  However, for a mining project to achieve the highest level, the company needs to reach the psychological identification step, meaning, have full support from most, if not all, stakeholders and achieve co-management of projects.

On the other hand, ONGOING means that the psychological identification should be present in all phases of the mining life cycle which begins with the exploration phase, and ends with the post-closure one.  If at any point of the cycle, the psychological identification breaks, the mining projects begin to show the effects of such rupture almost immediately.

Looking at the question posed in the beginning, my answer would be YES.  The future of the mining industry is becoming more and more dependent on the current legacy it leaves behind (sustainable practices), and this legacy dictate the Social License to Operate for future projects.

[1] http://www.pdac.ca/docs/ default-source/public-affairs/ erm-presentation—pdac-2014o. pdf?sfvrsn=4
[2] http://www.ey.com/GL/en/ Industries/Mining—Metals/ Business-risks-in-mining-and- metals
[3] http://socialicense.com/ definition.html


Mario Ramirez, MASc Mining Engineering // April 26, 2015

Sustainable mining as it is addressed today should probably need to be re-defined or renamed since mining cannot be sustainable itself because the minerals that are extracted are finite and will be exhausted at some point in time.   However, the strategies, programs, and projects that the mining industry takes in regards to communities, ecosystems, and some mining processes can be called “sustainable” and lead to “sustainability”.

Sustainable development is a broad topic used not only in mining but in other public and private sectors.  The concept of sustainability covers how human activities impact the economic development of an area or region, also covers the environmental activities and social well-being of the people and ecosystem affected by production projects.  This concept can be the differentiating point between the success or failure of a project.  The basic but very important requirements for sustainable development can be summarized in the 4M concept:

1.      Minimize energy Waste

2.      Minimize materials utilization

3.      Minimize environmental impact

4.      Maximize Social satisfaction and engagement.

During some of my readings, I came across a set of handbooks developed by the Australian government through the department of Industry and Science. These handbooks are widely known as the “Leading Practice Sustainable Development Program for the Mining Industry” and are another aid for companies and regulatory agencies to learn and put in action sustainable practices.  Each handbook provides case studies of both positive and negative consequences and actions taken by different companies and how those actions have benefited or in some cases affected the performance and reputation of a mine project.

Sharing the knowledge found on those handbooks, I believe, is very important not only for developed countries but especially for those societies where mining is a new industry.  Using this information will allow national agencies, communities and companies develop their own strategies based on others experiences.

I leave you the link below to find more about this amazing treasure of knowledge:

http://www.industry.gov.au/ resource/Programs/LPSD/Pages/ LPSDhandbooks.aspx