Politics of Poverty

People need to know details of contracts between governments and companies

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The community of Akatakyieso lies near a gold mining area run by AngloGold Ashanti in Ghana. Most of the farmers in the community lost access to their fields and received inadequate compensation. The mining activity affected the forest surrounding the village, and destroyed their water resources and access to forest products. Villagers are also concerned about the effects that blasting will have on their buildings. Photo: Jeff Deutsch/Oxfam America

After a decade of civil society advocacy, international organizations have introduced new rules that will push more countries and companies to disclose details in contracts around extractive industries. A good start, but we need more.

As the world moves forward with the energy transition, it’s more important than ever that citizens have information about the oil, gas, and mining contracts that governments are signing on their behalf. There was some good news recently, when the International Council on Mining and Metals (ICMM) followed the lead of the Extractive Industries Transparency Initiative (EITI) and took steps to require disclosure of this crucial information.

Oxfam and our civil society allies have long been urging countries and companies to #DisclosetheDeal. We’ve been fighting for contract transparency in the extractive industries for more than a decade, emphasizing the importance of citizens’ and communities’ right to know and right to decide about the natural resource extraction taking place in their backyards. Over time, contract disclosure has increasingly become a global norm, as both international organizations and companies have developed policies on publishing contracts.

Last year, the EITI–an international organization that brings together companies, country governments and civil society to promote transparency in the oil, gas, and mining industry–introduced a provision that requires its 55 implementing countries to disclose all contracts or licenses granted, entered into, or amended from 1 January 2021.

But much more needs to be done.

Oxfam applauds the EITI’s important change, but stresses the need for contracts signed before 2021–which includes the vast majority of contracts for current mining, oil, and gas projects–to also be disclosed; the new rule only “encourages” such disclosures.

The ICMM also Takes a Step Forwardbut Impact May be Limited in the Short Term

Just last week, the ICMM–the industry association for mining companies–announced that it would also require its member companies to disclose all mineral development contracts granted or entered into, everywhere they operate, from 1 January 2021. In doing so, it became the first industry association to adopt a contract disclosure requirement.

This means that ICMM members have committed to make public what contracts they have signed, what taxes they must pay, and when those tax payments are due. With ICMM members accounting for approximately one third of the global mining and metals industry, this is sure to result in many new disclosures. Indeed, many ICMM members are already committed to contract disclosure, and some, like South32 and Orano Mining, have made sure to include direct links to their contracts in their regular reporting, facilitating public access.

While both organizations’ disclosure requirements are an advancement for transparency, they still fall short: they only require companies and countries to disclose future contracts, rather than those already in existence. While it is important that citizens know about new deals going forward, being able to access the details of contracts that are currently in effect–and which will likely be active far into the future (contract terms often extend for decades)–is imperative.

On this front, there is some hope. Part of the EITI disclosure requirements require that any contract that is amended in 2021 or later must be disclosed. This would trigger retroactive disclosure in that it would require the publication of the underlying contract, which itself could date back years or even decades.

ICMM’s new requirements notably diverge from those of the EITI and fall short of this retroactive disclosure, as members don’t have to disclose amendments. (While the organization encourages members to engage in retroactive disclosure, it’s not required.)

Whether or not companies and countries are disclosing contract amendments as they are required or encouraged to do will be an important focus of civil society monitoring going forward.

Contract disclosures offer crucial information on what citizens should receive in exchange for their natural resources

Typically, when governments decide to extract resources (oil, gas, or minerals), they enter into a contract with a company that has the expertise, equipment, and financing to remove those resources from the ground and bring them to market. These contracts form a key part of the legal infrastructure, and offer citizens crucial pieces of information. They can reveal many things; at their most basic level, they can show how much companies should be paying for oil, gas, or minerals, so that through the combination of these other disclosures, oversight actors are able to investigate whether those payments are being made in full.

In addition to financial details, contracts can contain health, safety, and environmental commitments, or social obligations that companies have when operating in countries or communities. They can even require that the impacts on certain populations–such as women or Indigenous peoples–are researched before exploration or extraction, and can mandate the input or consent of such people.

In order for citizens and oversight actors to ensure that companies are meeting the obligations under their contracts, they must, obviously, have easy access to these contracts.

However, for too long, that access has been difficult to come by.

In fact, contracts governing extractive industries are often shrouded in opacity. Despite citizens being the real owners of their countries’ natural resources, they are often unable to see the details of the deals that the government has made on their behalf.

This lack of transparency has had negative consequences the world over.

Secrecy has allowed corrupt government officials to offer overly generous incentives to companies in exchange for kickbacks; engage in unfair bidding or licensure practices; and compromise their nations’ future in various ways. And, resource contracts are also locking countries into deals and policies that are preventing their governments from adequately addressing climate change.

It’s prevented people from having a say over whether they want to trade the deleterious effects of extraction for potential financial gains. And, limited access to information has left little room for people to push for greater benefits from or ownership over their natural resources, as well as companies’ access to and stewardship of their communities.

Pandemic Pressures Demonstrate Why Contract Disclosure Is So Critical

Oil, gas, and mining contracts often contain “force majeure” clauses: provisions that excuse a party from meeting its contractual obligations in light of unforeseen circumstances. Some contracts list the types of circumstances that trigger these clauses, while others include a catch-all provision for events outside a government or company’s control.

In the early months of the global pandemic, oil, gas, and mineral prices fluctuated wildly, and many companies sought to invoke force majeure clauses to renegotiate their contract terms. Renegotiation of contractual terms could potentially allow companies to effectively pass their losses on to citizens of the host country.

It’s especially important right now that people have access to the full details of the contracts, so that they can have a say in what is fair and reasonable as these contracts are renegotiated.


Curious to know what contracts from your country are in the public domain?

Visit the Natural Resource Governance Institute’s resourcecontracts.org to see the 2,747 contracts and related documents that have been disclosed so far.

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