MAC: Mines and Communities

Industry expects mining standards to tighten

Published by MAC on 2004-02-23

Industry expects mining standards to tighten

By Rebecca Bream and Kevin Morrison in London, Financial Times

February 23 2004

The World Bank is likely to adopt more stringent environmental and social standards for any oil and mining projects it supports, say industry insiders, even though many tougher recommendations from the recent review of extractive industries are expected to be rejected.

Mining companies have raised concerns that tighter regulations will raise the cost of exploration, and by extension the cost of commodities, but many accept the need to rehabilitate mining's tarnished reputation.

Mining and oil companies are angry that a long-running extractive industries review, commissioned by the World Bank and led by Emil Salim, former Indonesian environment minister, recommended that the bank stop investing in oil, gas and coal projects in the developing world. The report also said local communities should give consent before a project went ahead.

Mining that uses toxic chemicals, such as cyanide in the processing of gold, or produces waste products that need to be contained, as in coal mining, are most likely to be affected by any raising of environmental standards in the developing world.

Companies are already used to complying with these standards in developed mining regions such as Canada and Australia.

A group of African mining ministers issued a joint statement during an industry conference in Cape Town earlier this month saying that the EIR's recommendations "could have a negative impact on the development of the continent's mineral sector". Mining, they said, was a key source of income and a potential way out of poverty. Bankers at the conference also said tighter environmental regulations could stifle investment in the sector.

The World Bank has already indicated that the main EIR recommendations will be rejected, but many mining companies think the broader issues of environmental and social responsibility will inevitably filter into World Bank policy and have started preparing accordingly.

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