NRCan a Key Player in the Extractive Industries Transparency Initiative

By Terence Martin

July 2010

Mining revenues are important to the economies of many developing countries.

Natural Resources Canada (NRCan) is playing a key role in a major international initiative that can help developing countries improve the transparency of their resource revenues.

In some resource-rich areas of the world, the immense wealth arising from oil, gas and mining activities can lead to corruption and armed conflict. To help mitigate these unwanted results, the Extractive Industries Transparency Initiative (EITI) provides for third-party validation of revenues, taxes and royalty payments between governments and extractive industries. This involvement helps citizens hold their governments accountable for resource revenues.

Voluntary Initiative Promotes Transparency

“This is a voluntary initiative that can help countries to manage their resource revenues in a more accountable and transparent way,” says Mark Pearson, Director General of the External Relations Branch in NRCan’s Science and Policy Integration sector, who leads Canada’s participation. “This can make these revenues available for economic and social development and not be lost to corruption. It also contributes to investment certainty for energy and mining companies operating in those countries.”

NRCan’s Leadership Role

Canada is an EITI “supporting country,” which means that it helps promote more effective resource revenue management by providing policy advice and technical assistance to host country governments.

Canada is currently an EITI Board member for 2009–2010. In this role, Canada also represents the Non-European supporting countries’ constituency, a grouping that includes the United States, Japan and Australia.

As a key component of the federal government’s Corporate Social Responsibility strategy, Canada’s engagement with the EITI also draws on experiences and expertise outside and within the federal government.

“We work with a broad range of key stakeholders involved with the initiative, including representatives from the extractive industries, investment associations and civil society organizations as well as our federal partners, including the Department of Foreign Affairs and International Trade (DFAIT), the Canadian International Development Agency (CIDA) and the Department of Finance,” says Mark. “NRCan’s technical and scientific expertise is also brought to bear in developing Canadian positions on the EITI.”

Almost 30 Countries Now on Board

The initiative was launched in 2002 by then-British Prime Minister Tony Blair at the World Summit for Sustainable Development in Johannesburg, South Africa. To date, almost 30 countries have been accepted as candidates, including countries in Africa, the Middle East, South Asia and South America. Once accepted as a candidate country, a two-year deadline is set for the validation of company payments and government revenues. With two-thirds of candidate countries undergoing the final governance assessment process, this is a critical time for the EITI.

Contributing Canadian Expertise to the Corporate Social Responsibility Conversation

“Canada has a wealth of experience with responsible natural resource governance,” says Mark. “Supporting the EITI gives Canada a tremendous opportunity to advance transparency in resource-rich, developing countries across the globe while sharing best practices on transparency efforts here at home.”

Canada is sharing this expertise with the EITI Board. On the margins of the March 2010 GLOBE conference in Vancouver, NRCan hosted an outreach session on the EITI that targeted participants from government, industry and civil society to discuss Canadian experiences with the initiative. Outcomes from the session were presented at a recent EITI board meeting in Berlin. In this way, Canada is sharing its own best practices on transparency with the rest of the world.

“The Government of Canada is committed to the initiative and has provided funding and expertise,” says Mark. “As a leader in the global mining and exploration industries, we can continue to contribute in a positive way toward advancing corporate social responsibility, both at home and abroad.”

G8 Leaders recently reaffirmed their commitment to the EITI at the G8 Muskoka Summit in June 2010 by urging candidate countries to complete the EITI implementation process as a mechanism to enhance governance and accountability in the extractive sector. They also welcomed the ongoing research and advocacy of international NGOs and local civil society as an important contribution to reducing the opportunities for conflict in the management of natural resources.

To find out more, visit the EITI Web site.