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Extractive Industries Transparency Initiative (EITI)

Natural resources such as metals and minerals belong to a country’s citizens, and extraction of these resources can lead to economic growth and social development.

However, when poorly managed, it can lead to corruption and even conflict. More openness around how a country manages its natural resource wealth is necessary to ensure that these resources can benefit all citizens. In addition, greater transparency about the payments that companies make to governments helps to build trust with local citizens. Without trust, it is very difficult for a company to achieve its social license to operate.

Strengthening operational capacity

ICMM is committed to open and transparent management of natural resources, and as such, we actively support the Extractive Industries Transparency Initiative (EITI).

Presently, representatives from two ICMM member companies sit on the EITI International Board, and a third is an alternate to the Board. Many ICMM member companies are active participants on EITI national multi-stakeholder groups. In addition, ICMM acts as the coordinator on behalf of the EITI mining sub-constituency, carrying out this role on behalf of all EITI supporting mining companies, not just ICMM members.

Reducing corruption

Since its launch, EITI has undoubtedly helped to reduce opportunities for corruption. In its requirement for revenue transparency, implementation of the EITI Standard reveals what money has been paid and where it has gone. The concept of contract transparency is designed to show what money should have been paid in relation to particular operations, so that citizens can hold their governments to account for the decisions made on their behalf.

In this way, ICMM believes EITI plays an important not only in reducing corruption, but also in improving development outcomes in mineral-dependent economies. Our members are seeing the benefits through an increase in trust and dialogue between interested parties – be they governments, civil society or business.

Shared benefits

Perhaps most importantly, EITI encourages the implementing countries to report on how mining revenues are being distributed. For example, the Government of Peru notes that nearly half of all revenues from the extractive industries are being dispersed from central government to local and regional levels.

In Ghana, where local communities had become increasingly concerned about the contribution of mining companies, the government’s EITI report has been a catalyst for changing the way that mining royalties and other revenues are used – as well as for ensuring that they reach the municipalities for which they are intended.

Through examples such as these, ICMM believes that EITI can be used to drive reform in implementing countries and an equitable sharing of benefits. Since its inception, EITI reports have disclosed some US$2.65 trillion in revenues – a vast sum by any standards, and the means to secure significant social and economic development, providing that those funds are well managed.