JP/7/EMIL
MINING: TREASURE OR TROUBLE
Emil Salim Former State Minister of the Environment
A few years ago in the annual meeting of the World Bank Group (WBG), its President, James Wolfensohn, agreed with civil society to review the WBG role in extractive industries (oil, gas and mining) to alleviate poverty through sustainable development.
The World Bank set up an Extractive Industries Review Team in September 2001 to hold consultations with stakeholders, comprising governments, corporations and civil societies. Consultation is focused on understanding the views of the stakeholders on the WBG's role in extractive industries and identifying areas of consensus and dissenting views in this regard. On the basis of this understanding the WBG will then make recommendations on its future policies, programs, projects and processes in this sector.
Oil, gas, coal and mining activity will continue to grow to meet increasing demand. This will lead to more exploration and exploitation of mining resources in developing countries and countries in transition. Most of these activities take place in remote areas with indigenous communities and fragile ecosystems.
Governments of these countries consider this an opportunity to attract extractive industries to promote development. Businesses are attracted by the possibility of obtaining profits from these ventures.
The WBG is supporting governments to reform national laws, policies and institutions to promote investment and development of extractive industries in developing countries. Through capital investment of international finance corporations (IFCs) and risk financing through multilateral investment guarantee agencies (MIGAs), both part of the WBG family, the WBG have significantly affected extractive industry development in developing countries over the last 15 years.
Close to 4 billion people today live in 56 countries with mining resources. Among them 1.5 billion people live on less than US$2 a day. In Indonesian provinces where oil, gas, coal and mining industries are operating, a large proportion of people are still poor, such as in Aceh, Riau, South Sumatra, East Kalimantan or Papua.
In addition to poverty, concern has also been raised by civil societies all over the world with regards to negative impacts of extractive industries on the environment. In Indonesia, the remains of open pit mining in Singkep, Bangka, Biliton and Sawahlunto have left dirty footprints in our ecological systems.
While there are views and opinions that exploitation of oil, gas, coal and mining resources can contribute positively to poverty eradication and sustainable development, there are also numerous studies that point in the opposite direction. It is not surprising that WBG deems it important to post the question in one of the many documents: "Treasure or Trouble? Mining in Developing Countries."
Since last year regional consultations have been held on extractive industries for Latin America and the Caribbean, Eastern Europe and Central Asia and Africa to resolve this issue. The Asia Pacific Consultation will be held in Bali, Indonesia, at the end of April.
This meeting is a follow-up to the World Summit on Sustainable Development in Johannesburg last September that placed poverty eradication in the mainstream of sustainable development.
Sustainable development embraces economic, social and environmental sustainability. The economy needs to sustain growth while safeguarding nature's life support system and ensuring poverty eradication.
The basic question for this regional consultation is whether oil, gas and mining industries can promote sustainable development and whether they are compatible with WBG's mission of poverty eradication through sustainable development. Concrete examples of WBG projects operating in Asia-Pacific will be raised, such as the MIGA-guaranteed Lihir gold mine project in Papua New Guinea, and IFC participation in the SEPON mine project in Laos.
Problems in oil, gas and mining industries have a technical dimension, as to how to cope with disposal of waste in the sea, artesian and small-scale mining, issues of air pollution affecting climate change. And issues of governance, corruption, transparency, social and environmental accountability and revenue management.
Oil, gas and mining are industries that provide huge sums of earnings for the corporations, governments and public at large. However it also leaves behind a deep footprint of environmental degradation and social ills. If we are marching forward in the 21st century on the path of sustainable development, it is of crucial importance not to repeat mistakes of conventional development.
It is necessary to explore new venues and new paradigms to focus extractive industries on poverty eradication while sustaining the environment. This is the challenge faced by not only the World Bank Group but also by the government and industries.
A review of the World Bank's role in extractive industries will be conducted in the Asia Pacific Consultation Workshop, to be hosted by the Extractive Industries Review Team in Bali on April 26 to April 30.