A new working group comprising national-level mining and exploration associations and transparency-focused NGOs signed a memorandum of understanding last week to improve Canada's transparency regime as it relates to extractive company payments to governments.
Composing the newly formed Resource Revenue Transparency Working Group are the Mining Association of Canada (MAC), the Prospectors and Developers Association of Canada (PDAC), Publish What you Pay Canada (PWYP-Canada), and the Revenue Watch Institute (RWI).
Framework for Disclosure
The group aims to develop a framework for the disclosure of payments to governments for Canadian oil and mining companies operating domestically and internationally by June 2013.
Once the framework is complete, the working group says it will make policy recommendations to federal government policymakers and/or provincial security regulators for the Canadian adoption of mandatory disclosure requirements based on the framework.
"This is a groundbreaking collaboration between the mining industry and NGOs that will likely contribute to new financial reporting requirements for Canadian mining, oil and gas companies," says Pierre Gratton, MAC's President and CEO. "The goal of the framework is to provide citizens of resource-rich countries with the tools they need to achieve accountable, responsible and sound management of natural resources."
The establishment of the working group comes at a time when a number of jurisdictions are moving toward mandatory disclosure of payments to governments. Last month, the U.S. adopted new reporting rules created under the Dodd-Frank Act that require publicly listed oil, gas and mining companies to disclose payments to governments on a country-by-country and project-by-project basis.
While there is currently no such mandatory framework in place in Canada, many Canadian mining companies participate in the Extractive Industries Transparency Initiative (EITI), a voluntary reporting standard adopted by more than 35 countries to date.
"Despite the importance of initiatives like the EITI, mandatory disclosure leads to more consistent and reliable data that citizens impacted by resource development need to hold their governments accountable. Increasing transparency will help resource-rich countries reduce corruption, improve governance and ultimately escape the resource curse," says Claire Woodside, Director, PWYP-Canada.
According to PDAC Executive Director Ross Gallinger, the mandatory information disclosure will help assure communities that they are receiving appropriate benefits from both mining operations and governments, as well as reduce instances of corruption and bribery. "More transparent payment information also puts investors in a better position to analyze the financial and political risks associated with development," he adds.
"Ideally, Canada's response will improve upon existing reporting standards and create a framework that will level the playing field by holding all companies to the same high standard of reporting, regardless of where they operate," adds Antoine Heuty, RWI's Deputy Director.