The Critical Minerals Rush – Why is contract transparency so important?
In the rush to deliver the minerals critical to the clean energy transition, we cannot lose sight of responsible mineral resource governance. Written by ICMM and EITI, this paper sets out both organisations’ commitments around contract transparency, the benefits and challenges it presents, and considerations for good practice.
- To meet demand, the world requires an acceleration in mining developments and increased production, however, this runs the risk of contracts between companies and host countries being hastily entered into, and vulnerable to corruption or other illiegality.
- Critical metals and minerals belong to a country’s citizens. Transforming these finite resources into economic growth and social development is best achieved through their responsible extraction within effective mineral resource governance frameworks and practices.
- There are significant benefits to transparently disclosing contracts.
- It helps governments to demonstrate to citizens that they have agreed appropriate terms with mining companies across employment, environmental, infrastructure, procurement, and payments/benefits commitments.
- This in turn helps companies to demonstrate their contribution to the social and economic development of local regions and economies and build overall trust especially in resource dependent countries.
- Challenges to contract transparency do remain. The main obstacle is contract confidentially, with this sometimes enshrined in legislation or in the contract itself. Other challenges include government resistance linked to a lack of political will and prevailing corruption that exists in many mineral resource dependent countries.
- Voluntary standards such as the ICMM Mining Principles and the EITI Standard, alongside the work of NRGI and the Open Government Partnership (OG) are important for driving change.
- In 2021, ICMM updated membership requirements so that companies now must disclose all mineral development contracts granted or entered into from 1 January 2021, where such disclosure is not prohibited by law or regulation. We also strongly encourage members to publish contracts entered into before this date.
- ICMM and the EITI have been actively working together since 2010 to promote the open and transparent management of natural resources in the mining industry. As part of this partnership and through the ICMM Mining Principles, ICMM members are required to publicly support the implementation of the EITI Standard.