As Mineral Sector Develops, So Does Threat of Rising Inequality

During a two-day international mining conference in Phnom Penh this week, Saleem Ali, a professor of environmental studies at the Uni­versity of Vermont, spoke about the dangers and opportunities Cam­bodia’s mineral sector faces as it enters a crucial stage of its development. In an interview with The Cambodia Daily’s Simon Marks, Mr Ali explained what both mining companies and the government must accomplish in order to avoid an oligarchy enriched by natural re­sources, and how to achieve an equitable distribution of the wealth generated by the sector.

Question: This is the first mining conference of its kind in Cambodia. From an environmental perspective what were the main points and questions that have come out of the event?

A – The main issue is to discover whether there are win-win opportunities there from both sustaining the environment and developing the mineral sector. Initially people want to present the low-hanging fruit and say of course we can do both, we can do it in a responsible way. My job is really to be more nuanced than just the win-win opportunities, which the industry will always present.            I am not willing to say that we can just preserve without looking at economic issues. But many times if you ruin the environment you are actually damaging economic potential down the road and that’s what the government has to appreciate. A lake or a forest in its form as it is, is a resource. Don’t think that it’s not a resource because it’s not being extracted. It’s already providing livelihoods whether its fisheries for a lake or its non-timber forest products… You can actually put a dollar value on that if that’s what it takes.

What’s really important is that when the government is planning for a mining project it takes in to account the cost benefit analysis within that context.

Q – Cambodia’s environmental record in the past has been heavily criticized. Do you get the feeling from the conference that the government is ready to listen to advice?

A – The country to its credit has instituted a very large percentage of its land as protected areas. A fourth of Cambodia’s land is protected and some are conservation lands… That’s quite phenomenal if you compare it to Thailand where it’s only 15 percent. On that level Cambodia should be applauded that it has all these conservation lands. And they have been willing to work with NGOs.

If you look at their partnerships three years ago, they partnered with Oxfam and they worked on gold mining together. A lot of times that doesn’t happen in developing countries…But clearly when the rubber meets the road if people have been given incentives, hard cash and a very short time frame, there are going to be some who are corrupted by it.

Q – Do you think that corruption has a role to play in how well the environment is protected here?

 

A – Absolutely. If you’re going to have an environmental impact assessment that results in a permit and then someone says we’ll give you the permit in exchange for renumeration…. That can happen of course.

That’s why Cambodia’s willingness to join the Extractive Industries Transparency Initiative down the road – they haven’t yet agreed to be a candidate country but I think within the next year or two they will – that will have a good impact on the environmental side too because transparency helps with environmental performance.

Even though the transparency is usually framed much more in terms of just revenue transfer it directly helps with environmental performance.

 

Q – If the mining sector isn’t managed effectively what sort of dangers will the environment face?

 

A – The main issues with natural resources of this kind is that they can inject a certain amount of cash and much greater inequality in the country. And with a country that has a legacy of revolutionary resistance based on inequality, that’s a matter of concern. You don’t want an oligarchy to develop, which further estranges the rural population and that can unfortunately lead to conflict, which we have seen in many parts of sub-Saharan Africa. That’s the real concern. There will be wealth transfer. Someone is going to benefit from all the money, but how that wealth transfer permeates across society is dependent on the institutions that are created to manage it, whether its sovereign wealth funds or tax regimes that are able to channel money back to the local government and then on to the community.

Q – Are there any examples from around the world where a developing mining sector has been developed in a positive fashion?

A – In Botswana where the government was able to channel the money to the people so they [would have] free health care and education for the whole country all because of diamond mining. You can do it but you need good leadership. You need the transparency, you need the democracy, which they have here luckily… In other cases where you don’t have that you can have a situation like Congo, which is a disaster, where basically genocide and civil war has been going on for the past two decades…I just hope that [Cambodia] in terms of the functionality of these new projects appreciate that. But I’m not one to throw the baby out with the bath water. I definitely think there is a right way to mine. But plan ahead, take your time, don’t rush through it. There are times when a mining contract can take ten years to negotiate but the resource is not going anywhere. You’re not growing sugar cane or some other cash crop where every year you’re loosing money if you don’t grow.

Q – At what point does government responsibility stop and the onus falls to private companies to ensure that standards are adequately enforced?

A – Companies respond to regulation. They will say that we want voluntary enforcement but good companies will realize that regulation actually levels the playing field because that way you won’t have some bad operator getting a concession…But you want regulation which spurs innovation. So if the company has a bright idea to clean up and do something in an efficient way you want to encourage that…Let us make no mistakes about it, companies are not going to make efforts voluntarily, they do it usually because there is some kind of framework or structure. They’re not philanthropic organizations, let’s face it.

Q – As mining activities take off in Cambodia, how should companies act as they advance from exploration through to exploitation?

A – There [should] be some kind of ongoing monitoring. Don’t just rely on the assessment because the assessment is a document, which is prepared by the developer… Even though there is supposed to be discussion there will always be a conflict of interest. The environmental assessment is a process where the document is just one part of it. It needs to be deliberative, you need civil society in there, you need the feedback, you need the threat of litigation. That’s the whole point of a democracy…. That’s how you need to think of it – as a collective, deliberative process…. The government actually has more leverage than they often realize in the developing world and they need to play their cards right. They shouldn’t be intimidated by threats.

Q – At the end of two days at the conference, what have you seen and learnt? Is there a positive future for Cambodia’s mining sector?

A – There is a promise that you have a fairly deliberative process here. Meeting the ministry people, they are willing to engage. They have stayed through much of the conference. They seem keen on learning from other lessons so I’ve been impressed overall with the government officials… External scrutiny [and] international organizations coming in and observing in developing countries should not be perceived as a threat. They should be considered as a way by which the international community is trying to hold their own players to account because the people who are giving the bribes are the companies. So they’re not just shaming the government, they are shaming the companies just as much. It’s a collective culpability.

 

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