ICMM makes new commitment on contract transparency and publishes members’ 2020 tax contribution
London, UK – Members of the International Council on Mining and Metals (ICMM) have committed to disclose all mineral development contracts granted or entered into from 1 January 2021, wherever they operate, marking a significant step by approximately a third of the global mining and metals industry to strengthen mineral resource governance.
This new commitment requires members to disclose contracts they have committed to, what taxes they must pay and when payments are due. Members are also encouraged to disclose mineral development contracts granted or entered into before that date.
The commitment builds on ICMM’s existing membership requirement on ethical business practices and sound systems of corporate governance through the disclosure of tax and royalties as set out in ICMM’s Mining Principles. This new commitment is part of ICMM’s Transparency of Mineral Revenues Position Statement, representing a leadership position that is aligned to the Extractive Industries Transparency Initiative (EITI)’s existing requirements on contract transparency.
ICMM has also published the tax contribution of its members. In 2020, members reported total payments of US$23.7bn, this represents an effective tax rate of 39.7%, an increase of 5% on 2019. This increase is a result of lower profitability in 2020, driven by a decline in commodity prices. This latest report, which was produced by PwC, found that between 2013 and 2020 ICMM members have paid over US$185bn (corporate income tax of $119.1bn and royalties of $66.4bn) to tax authorities across the world.
Contract and tax transparency are two critical components of a safe, fair and sustainable mining and metals industry, representing two sides of the same coin. The former allows citizens to understand what should have been paid, and the latter enables them to see what has actually been paid. Underpinning this is consistent, transparent disclosure, which is why ICMM has also published its annual Tax Contribution Report for 2020.
“Transparency and openness are at the heart of ICMM’s efforts to maximise the contribution of mining and metals to sustainable development. I am proud of this commitment and hope that it energises us all to continually seek ways of supporting development through disclosure.
We welcome this commitment from ICMM member companies. Contract disclosure has been a requirement for EITI implementing countries since 1 January 2021. With both countries and companies now committing to their publication, we hope to see accelerated progress in this vital area of transparency. Publishing contracts is a powerful weapon against corruption, enabling contracts to be compared, and creating a level playing field for business. Transparency incentivises governments to arrange fair contracts with reputable companies, drafted in a way that is consistent with the country’s legal framework, and deters officials from concluding contracts that are disadvantageous or result in personal gain. In the context of the energy transition, contract transparency will also enable governments and stakeholders to assess how the extraction of raw materials will influence their ability to reach climate change targets. These are strong reasons to support contract transparency, and we would encourage other companies in the extractive sector to follow the lead of ICMM members.
If citizens of resource-rich countries are able to scrutinise the decisions made by governments on their behalf, those decisions are more likely to be to their benefit. We congratulate ICMM on committing to contract transparency, and we hope that ICMM members will go beyond the requirement by publishing contracts entered into prior to 2021, as encouraged, as these disclosures will empower local stakeholders impacted by current projects and build greater trust between governments, companies, communities and civil society.
Contract transparency is an essential way for citizens to hold companies and governments to account to ensure decisions are made in the public interest. With the energy transition spurring a round of new mineral investments around the world, this commitment sends a powerful signal to the rest of the mining industry and to ICMM’s peers in the oil and gas industry that responsible companies have nothing to fear from disclosing contracts. Governments of resource-rich countries that want to attract responsible companies should take note.
Notes to Editor
- Mineral Transparency of Mineral Revenues Position Statement can be found here.
- ICMM Members’ Tax Contribution Report: 2020 Update can be found here.
The International Council on Mining and Metals (ICMM) is an international organisation dedicated to a safe, fair and sustainable mining and metals industry. Bringing together 28 mining and metals companies and 37 national, regional and commodities associations, it strengthens environmental and social performance and serves as a catalyst for change, enhancing mining’s contribution to society. Every ICMM company member adheres to its Mining Principles which incorporate comprehensive environmental, social and governance requirements, robust site-level validation of performance expectations and credible assurance of corporate sustainability reports.
This commitment on contract disclosure was approved by ICMM’s Council on 1 September 2021. From this date onwards, ICMM decisions are adopted on a ‘conform-or-explain’ basis where at least 75 per cent of its members commit to conform with the position in the stated timeframe at the time of approval. There may be reasonable grounds why certain ICMM members cannot commit to positions at the time of approval. Those members have 12 months (in this case, by 31 August 2022) to either adopt the approved position or publicly explain the reasons why they cannot.
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