2 Jul 2012

Sustainable Mining? Pull The Other One!

Australia's contribution to the Rio+20 summit was to push mining as a development booster. Why are our aid dollars promoting African mining interests, asks Liz Barrett
While the Australian media were in a frenzy over mining magnate Gina Rinenhart's attempts to take control of Fairfax, many of the world's leaders, corporations and NGOs were at the RIO+20 summit discussing how to work together towards a sustainable development model to create a "more equitable, cleaner, greener and more prosperous world for all".

Australia's contribution to the debate centred on tackling climate change included a push for that well known carbon mitigator, mining — or "sustainable mining" to be correct. The Government's perspective is that economic growth is the key to poverty reduction and as mining generates a lot of income, it should be encouraged, but with appropriate rules and regulations in place to make it more sustainable.

Glaring oxymorons aside, AID/WATCH criticised the promotion of mining as "sustainable development" at the RIO+ 20 conference in an open letter to Bob Carr and suggested that the government instead should be promoting a position consistent with international principles of human rights and environmental sustainability.

In textbook form, the NSW Minerals Council ignored both the point of our argument and all the evidence about the inherent unsustainability of exhausting non-renewable resources, instead issuing a limp critique suggesting AID/WATCH, Friends of the Earth and Quit Coal seek to undermine the employment status of thousands of people in NSW.

The Government's push for "sustainable mining" has been given financial support by the Australian aid program through the $127 million Australian Mining for Development Initiative that was launched in October last year. The centrepiece of this Initiative is the creation of the International Mining For Development Centre that has so far flown out a number of bureaucrats and ministers from around the world (mostly from Africa) to Australia to participate in "study tours", workshops and visits to mine sites of companies such as Rio Tinto and BHP Billiton.

What net effect a two-week trip to Australia has on either the policies of recipient nations, and then those policies on poverty reduction, is hard to say. Although money may not be going directly in the pockets of Australian mining companies, it would be disingenuous to argue that it is of no benefit to them to network with people from around the world who may be able to influence resource contracts.

Australian aid money is also being used to actively promote mining activities in Africa, funding a communications consultant and awareness campaign "aimed at government decision makers and the mining industry in Africa".

The current aim of the Australian aid program links the national interest to poverty reduction measures and supports aid dollars being spent on initiatives that further the economic and strategic interests of Australia. An AusAID-commissioned report found there is a "strong commercial rationale" for Australia to invest aid money into African mining, with around 230 Australian companies active in mining industries in Africa with investments worth more than $50 billion.

Measured against effective development and poverty reduction strategies mining comes bottom of the class with evidence showing that the mining in developing countries is synonymous with dispossession, environmental destruction, human rights abuses, conflict and corruption, widening disparities between rich and poor and the destabilisation of economies.

In fact, this phenomenon is so well known that is has been given a number of names: the Resource Curse, Dutch Disease and the Paradox of Plenty. The resource curse can be illustrated by countries like Equatorial Guinea, which has enjoyed rapid economic growth on the back of oil exploitation since the 1980s, but has horrific inequalities with the majority of the population remaining in deep poverty and increasing infant mortality rates which are among the worst in the world.

It is also a phenomenon that Australia is not immune from, with studies finding overall impacts of mining on the economy are negative due to the high exchange rates brought about by the boom eroding the manufacturing, tourism and education sectors. Anglicare also have argued the boom is also driving widening social disparities in Australia, rapidly leaving a proportion of Australians behind who are unable to afford the rising costs of living driven by the boom.

Both these examples and the scaled-down mining tax that the Government recently negotiated with mining raises questions over AusAID's capacity to assist in achieving fair resource rents overseas let alone at home.

If the Australian government is serious about reducing the negative impacts of mining they might be best placed to investigate how they might regulate the behaviour of Australian mining companies overseas. Last week they were criticised by the UN Committee on the Rights of the Child for their "participation and complicity in serious violations of human rights" in Africa, Asia and the Pacific that included instances of children becoming victims of evictions, land dispossession and killings.

Instead of supporting mining, aid money should be going towards projects that have a real and demonstrated impact on poverty and actually promote sustainability such as such as health, education and rural development. In supporting this position the United Nations Development Program also argued that there needs to be recognition that "growth driven by fossil fuel consumption is not a prerequisite for a better life in broader human development terms".

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Spike Boydell
Posted Tuesday, July 3, 2012 - 15:15

Thanks Liz, for this useful contribution which usefully highlights one of the more dangerous Australian exports, the aid budget funded oxymoron of 'sustainable mining'.

You are correct in your assertion about mining being a major course of land dispossession... and resource grab internationally has long been a manifestation of land grab (albeit the term has come to the fore over the last five years in the context of food security). At a domestic level we see this on large tranches of aboriginal land in Australia, as an unfortunate result of the otherwise positive recognition of Native Title is the ability of the States, in conjunction with mining interests, to 'extinguish' the Native Title with compensation to the indigenous landowners of unimproved site value plus a nominal contribution for 'special indigenous value'. The law of the dominant party prevails, and in the Australian context the extinguishment of title is permanent.

Unfortunately we live in a growth motivated era where there is a seemingly unstoppable global rush to liberate natural resource from the earth and sell them to the highest bidder. Observing this rush in a Pacific context, we recently proposed a more equitable compensation model to the World Bank (and anyone else who would listen) that at least sees the long term interest in the land retained my the (often) customary landowners, tight damage and remediation clauses in contracts, and a compensation model based on a synergistic 'marriage' of interests between the parties that sees a significant share of the return going back to the mining impacted community (see www.landandpoverty.com/agenda/pdfs/paper/boydell_full_paper.pdf ).

To date, there has been positive interest in this approach from South Africa, PNG, Bougainville, and Fiji.

The challenge to any equitable solution (albeit environmentally unfavourable) is the disproportionate power that the mining interests hold at a political level, both domestically and internationally.

Posted Tuesday, July 3, 2012 - 18:34

Grow up you people.
How do you think the African people can make money if they dont use their resources?
Do you think making straw baskets is the way out of poverty?

Everything we use is from the earth.
Wood from trees, iron ore for steel for knives and forks(do you want to use fingers?),aluminium for pots and pans and, as foil, helps control temperatures in buildings, silica from sand for glass and of course there's gold for jewellry.

Its time people started to realise we live in a world using all our resources.
We are no longer stone age people.

Posted Wednesday, July 4, 2012 - 09:58

This is an important topic - and one the large NGO I work for recently looked at in depth to plan our global strategic direction.

I believe the author has overstated the negatives of mining and left out a few critical considerations.

I'll stick to the doozy:

Large developed country mining companies (known as Majors) are reducing their investment on riskier ventures relative to proven deposits in easy operating environments. This has a lot to do with very high prices in cash cow ventures e.g. iron ore deposits for Australian miners, combined with the increased scrutiny they experience on say, human rights issues.

Upshot: the risk versus reward for investing in a developing country is not great in most commodities.

"Great!" The author of this report might say. Poor countries can be left to develop in peace. Not so:

The ground is simply cleared for state owned shops (think Chinese companies), and junior miners. They have either less accountability (China) or less experience (juniors).

Many mistakes have been made in the past, and are still being made. But the future is not set in stone. There are many things that say mining CAN be of benefit to poorer countries if it is done in the right way.

But even ignoring this, there is always the question of: If BHP won't develop a deposit in Africa, who will? Well, we know who, and they won't be as accountable.