otsile matlou sadc law association annual conference august 2014

1. public participationlocal content – mining agreements as tools to build trust between stakeholders otsilematlou sadc law association annual conference august 2014

2. overview • FPIC • local content as part of the modern mining model • local content in different jurisdictions • regional local content • the distinction between local content and local participation • building trust between stakeholders

3. free, prior, informed and consent • free • right of indigenous peoples and communities to exercise free choice • prior • the requirement that the consent must be sought before project authorisations are secured • informed • right to appraise indigenous peoples and communities of project details • consent • consent not unreasonably withheld

4. local content and the modern mining model • the historical model • skills import, minerals export, • exploitation colonialism • the new model: • unprecedented demand for resources requires revision of the old model • local content as part of the plan for mining companies, regulators and communities to benefit from local economic development of host communities and host countries.

5. local content: comparative study • south africa • zambia • zimbabwe

6. local content: lessons from other countries • local content is no longer unique • there are different ways to measure local content • local content policies should be transitory • phased approaches work well • enforcement is key

7. regional local content • cross-border economic linkages • SADC Protocol 1997 • AU African Mining Vision 2009

8. local content vs local participation • procurement vs ownership • common aim: local economic development • the interplay of the two with social license to operate

9. building trust between stakeholders • local content is important for: • investors • communities • regulators • example: the BHP Billiton Cluster Programme for the Development of World-Class Suppliers • where are the opportunities?

10. reading list • McKinsey Global Institute (McKinsey & Company) “Reverse the curse: Maximizing the potential of resource-driven economies” December 2013 accessed at http://www.mckinsey.com/insights/energy_resources_materials/reverse_the_curse_maximizing_the_potential_of_resource_driven_economies on 16 August 2014 at page 13 • See for instance ‘An overview of land use conflicts in mining communities’ Hilson, Gavin, Land & Policy, Vol 19, Issue 1, pages 65-73 and Darimani, A “Mineral Resource Capture & Conflicts in Africa”, MAC, 2005 (www.minesandcommunities.org/article-php?a=7746) • For more on the NSI, see S Manzini “The National System of Innovation Concept: An ontological review and critique” South African Journal of Science 2012; 108 (9/10) accessed at http://www.sajs.co.za/sites/default/files/publications/pdf/1038-9432-4-PB.pdf on 16 August 2014 • See D Kaplan “South African mining equipment and related services: Growth, constraints and policy” Making the Most of Commodities Programme Discussion Paper March 2011 accessed at http://www.prism.uct.ac.za/papers/mmcp%20paper%205_0.pdf on 16 August 2014 • See http://www.sadc.int/information-services/tax-database/zambia-investment-incentives/ • See “Increasing local content in the procurement of infrastructure projects in low income countries” Institution of Civil Engineers – Engineers Against Poverty briefing note November 2008 accessed at http://www.engineersagainstpoverty.org/documentdownload.axd?documentresourceid=23 on 16 August 2014

11. reading list continued • Mintek 2007 map at page 45 of the Africa Mining Vision accessed at http://www.africaminingvision.org/amv_resources/AMV/Africa_Mining_Vision_English.pdf on 16 August 2014 • See http://ewn.co.za/2014/08/14/Dlamini-Zuma-pushes-mining-industry-for-highspeed-railway accessed on 16 August 2014 • For more on the Ghanaian legislation, see http://thenewcrusadingguideonline.com/index.php?option=com_content&view=article&id=2415:local-content-law-engine-of-growth-for-ghanaian-enterprises-in-oi last accessed on 16 August 2014 • M Hackenbruch and J Davis Pluess “Commercial Value From Sustainable Local Benefits in the Extractive Industries: Local Content” (March 2011), accessed at http://www.bsr.org/reports/BSR_LocalContent_March2011.pdf on 16 August 2014. • For more on the programme see, A Barnett and M Bell “Is BHP Billiton’s Cluster-Programme in Chile relevant for Africa’s mining industry?” The Policy Practice, Policy Practice Brief 7 August 2011 last accessed at http://www.thepolicypractice.com/papers/18.pdf on 16 August 2014. • Report No. 66585-AFR Increasing Local Procurement By the Mining Industry in West Africa Road-test version January 2012 last accessed at http://siteresources.worldbank.org/INTENERGY2/Resources/8411-West_Africa.pdf on 16 August 2014

12. reading list continued • For instance, the ILO Convention 169 on Indigenous and Tribal Peoples • The McKinsey view is that governments must consider six important dimensions to transform sub-soil wealth into long term prosperity: to produce resources efficiently, governments must promote institutions and governance and develop infrastructure; to capture value from resources, governments must make industries competitive through fiscal policy and they must promote local content development (of interest to us here; and to transform value into long-term development, governments must spend the windfall wisely and focus on economic diversification • See McKinsey report supra at page 72-73 • See McKinsey report supra at page 75 • See the McKinsey report above at page 86

13. thank you