What we learned: our latest national research

24 February 2021

In 2020, Transparency International’s Accountable Mining Programme published five new country reports. Our global programme has now supported in-depth local research into the corruption risks in mining licensing and approvals across a total of 23 resource-rich countries 

The process of granting mining licences can be complex and complicated. The lack of transparency and accountability creates a process that can be ripe for corruption. 

That’s why Transparency International is connecting a global network of our local anti-corruption organisations in some of the world’s most resource-rich countries to shina light on how mining rights are granted.  

By making this process more transparent, we are empowering communities with the information they need to hold decision-makers to account. By identifying the precise drivers of corruption risks in the process, we are providing practical, evidence-based solutions to government officials and company representatives seeking to make mining a fairer and more sustainable investment. 

This matters because, for a sector as large, powerful and impactful as mining, corruption can have devastating consequences for democratic institutions and government revenue, for the life of people living near mining sites and for the natural environment. 

In our latest research reports, our colleagues in Argentina, Mexico, Ghana, Madagascar and the Kyrgyz Republic have completed a year-long investigation into the process of approving mining rights in their countries, pinpointing where the risks of corruption lie and how to close those loopholes. 

This research comes at a critical time: 

  • Argentina and Mexico’s vast lithium deposits are being eyed by companies hungry to invest in the global transition to renewable energy and clean transport. 
  • Madagascar’s government is busily considering the mechanics of lifting its decade-long freeze on mining applications and reforming its mining law
  • The Kyrgyz Republic has overseen a wave of reforms that have boosted mining sector transparency in the past few years – including a new Law on Subsoil in 2018, streamlining the administrative management of mining sector rights and regulations, and digitising cadastral maps. In 2017 the country joined the Open Government Partnership, and that same year received the EITI Progress Award for its new law on beneficial ownership transparency.
  • The Minerals Commission in Ghana is in the process of transitioning from a manual to a digital licensing process. 

Local Transparency International offices (Chapters) have gained knowledge from engaging directly with close to 200 diverse experts – from community leaders to government officials to industry stakeholders, picking the brains of people with deep inside knowledge and lived experience. 

Key corruption risks highlighted across the five country reports 

As part of the Accountable Mining Programme, the five TI chapters used the MACRA tool to pinpoint weaknesses that exist within their licensing process. These identified vulnerabilities lead to corruption risks, which increase the likelihood of corruption occurring. In doing this project, three broad areas were established as the key sources for vulnerabilities that lead to corruption risks in mining award licence processes across the countries: the context, the award process (law and implementation), and mining-related approvals (environmental and social impact assessment and community consultation). A total of over 85 corruption risks were identified across the five countries. 

Key corruption risk highlights
  • The assessment criteria are not well explained to citizens to help them determine whether an environmental impact report meets the essential requirements.  
  • Many communities affected by mining projects (Indigenous and non-Indigenous) lack the capacity to exercise their rights and make free, prior and informed decisions. 
  • The absence of enforcement systems for laws that encourage and protect whistleblowers act as a disincentive for people to report corruption. 
  • The risk that the terms of reference or the criteria relating to socio-environmental impact assessments are not clear or not made available to the public.  
  • The risk that companies and government officials will take advantage of this lack of capacity to ignore or improperly implement a free, prior and informed consultation process with Indigenous communities and ignore the requirements to engage with non-Indigenous communities. 
  • The risk that people who have knowledge of corruption will not file a complaint because they are not legally protected.
  • The manual processing of applications (face-to-face contact between applicants and officials) 
  • The dominance of political actors in licence award decisions can lead to manipulation of gold mining licence applications.  
  • There are no standard criteria and indicators for meaningful community consultation in the processing of gold mining applications.   
  • The risk that face-to-face processing will create opportunities for the exchange of gifts either to speed up the application process or to gain unqualified favours.
  • The risk that there will be political influence in the processing and granting of gold mining licence applications. 
  • The risk that communities’ legitimate concerns may be ignored, creating opportunities for applicants to bribe their way to resolve grievances and that the principle of Free Prior and Informed Consent will be ignored.
Kyrgyz Republic
  • The formation of tender and auction commissions is carried out by the government and the authorised body, and does not involve the inclusion of independent, expert members. 
  • Civil servants very rarely report violations of the law including, corruption, and those who do report may be prosecuted. 
  • Despite the requirement of the law, licences and licence agreements are not published in the mining registry 
  • When tender assessment panels are used in the awards process, there is a risk that people appointed to the panel do not give independent legal advice and are influenced by their political interests. 
  • The risk that people with knowledge of corruption in the awards process will not report it. 
  • The risk that the licences or details of licences that have been awarded will not be publicly available, making it hard for civil society to scrutinise the legitimacy of the agreement and to monitor and hold companies to account for their fiscal, social and environmental obligations. 
  • The use of special notices from the Council of Ministers and the vague interpretation of the ministerial letter leads to the discretionary awarding of mining permits as oppose to the application of established legal requirements.
  • The law does not make adequate provision to protect those who report acts of corruption (whistleblowers). 
  • Given the patriarchal nature of the Malagasy society (traditional authority), community leaders represent the community in external negotiations. 
  • The unregulated application of the note suspending the granting of new permits incentivizes operators to bribe decision-makers to grant mining permits.
  • The risk that whistleblowers may not be protected by law and will not report corruption means that corrupt actors can act without fear of getting caught. 
  • The risk that companies may exploit the customs of giving compensation to traditional leaders at the expense of vulnerable groups (such as women and young people) in order to facilitate obtaining the consent of the community 
  • Environmental impact assessment (EIA) occurs after the concession is grantedand this leads to a lack of proper review of project implementation process and impacts.
  • Community consultations are not a prerequisite to granting concessions and these are either not done or are done in way that makes their legitimacy questionable.
  • Mining is considered a priority over any other activity (except hydrocarbons and energy transmission). 
  • The risk that there is no verification of accuracy and truthfulness of EIA reports.
  • The risk that negotiations between community leaders and companies may occur behind closed doors and personal interests may be prioritised over the community’s interest.
  • The risk that the process for mining awards is structured to favour the interests of mining companies over the public interest. 

Lessons learned and Recommendations  

No matter the jurisdiction, the history of mining, or the resources being mined, no country has a watertight process of awarding mining permits – in every mining jurisdiction, there are gaps in the process that enable corruption. 

1 – Every country identified the need to strengthen controls against conflicts of interest.  Whether it be revolving doors between public service and company payroll, or a lack of transparency over beneficial owners, political donations and lobbying, all five TI Chapters identified the need for stronger controls and higher due diligence standards to ensure mining permits are awarded fairly and in the public interest.

2 – Information about the social and environmental impacts of a proposed mining project needs to be clear, accurate and accessible to the public. The public plays an important role in defending the best interests of the community and environment, and ensuring decision-makers keep their promises. The community – including all its diverse members with their unique interests and views (including Indigenous people and women) – needs to be equipped with clear and truthful information about project plans and potential impacts in order to play this role. Communities also need to be empowered to engage in the decisions and consultations about new mining projects and expansions in order to ensure decisions are made in the public interest. This issue emerged as a priority in the research of TI Chapters in Ghana and Mexico.

3 – To truly exercise their right to Free, Prior and Informed Consent (FPIC), Indigenous peoples must receive clear, honest and accurate information to make an informed decision about whether to consent to a project before the mining company gets its licence to mine. Also, companies must share accurate and relevant information on the community’s share of benefits from the mining project. It is important that communities receive the information with enough time to process and understand it, and that it is in a form and language that is meaningful to them. Without timely and accurate information, the consent process is vulnerable to manipulation and abuse. This issue of Free, Prior and Informed Consent (FPIC) of Indigenous peoples is a priority for the TI Chapter in Argentina.

4 – Whistleblowers play an important role in exposing corruption and misconductEstablishing effective whistleblower protection mechanisms in law can enable people to report concerns about corruption in the public and private sector. Such an enabling environment that protects those who speak up about corruption can pro-actively work to detect corruption and may also serve as a deterrent to corrupt actors who know their conduct is more likely to be reported. This was highlighted in the research of TI Chapters in Madagascar, the Kyrgyz Republic and Argentina.

5 – Digitisation can be a simple and powerful way to improve transparency in the processing of mining licence applications and reduce the likelihood of corrupt practicesThis includes replacing paper trails and face-to-face meetings with online mining cadastre portals anelectronic application processes. This better ensures the ‘first come, first served’ principle is respected and reduces the risk of bribery that might arise in face-to-face meetings. This digitalisation of the licensing process is a priority recommendation emerging from the research in Ghana.

6 – Efficient coordination between different government departments and agencies is important for sharing information, for clarity around decision-making authority and for efficient and timely processing of licence applications. The absence of coordination creates a more corruption-prone environment where financial and technical criteria are at risk of being ignored by decision-makers and where companies can be induced to make facilitation payments or other bribes to fast-track their application. This was highlighted in the research by TI Chapters in Argentina, Mexico, Ghana.

7 – The institutions responsible for receiving and evaluating licence applications need to have sufficient resources and capacity to perform their functions. In many countries, once government employees have built up their capacity through training and experience, they become attractive hires for the private sector, which typically offers higher salaries. The public sector therefore struggles to retain staff, and the private sector becomes better resourced with experienced personnel. Government officials who lack the right skills and experience are more likely to fail to follow up on important supporting documents or to conduct effective background checks on licence applicants. This also enables dishonest companies to submit fraudulent or deliberately misleading information in response to the financial and technical assessment criteria as they know it is unlikely to be detected by the cadastre/licensing officialsThis issue emerged prominently in the research by the TI Chapter in Mexico.

8 – The importance of judicial review and checks and balances on government decisions on mining awards. Countries must promote a strong and independent judiciary that can hold politicians and government officials to account for their decisions. Countries should also promote clear legal criteria that limit the discretionary powers of the executive arm of government in appointing the heads and members of technical committees. This will ensure that the committee members are chosen for their technical expertise and that the recommendations and advice they provide decision-makers as part of the licensing process is free from political interests and interference. This was a key highlight in TI-Ghana’s research.

9 – Active disclosure of the licence conditions and agreements as well as public access to the mining register is important for enhancing transparency in the mining sector. Missing information on the details of licence agreements limits the ability of citizens to scrutinise the adequacy of the conditions attached to mining licences, and to detect and hold companies to account for any actions that deviate from the fiscal, social and environmental obligations. This was key finding in the research of TI Chapters in the Kyrgyz Republic and Mexico. 

Gender, mining and corruption 

One key difference to the corruption risk assessment conducted this time was the inclusion of gender analyses with the support of a gender expertemployed to help the Programme explore the nexus between gender, corruption and mining. 

When women’s participation is restricted, corruption may be more likely or go undetected. And when it does occur, corruption can have a disproportionate impact on women. For this reason, strategies to tackle corruption will only be truly effective if they address the barriers that hinder women’s participation in decision-making and accountability efforts and mitigate the unique impacts of corruption on women. 

As community members, small-scale miners, local leaders and advocates, women must have their views and voices heard. Only this way will their role in building a more transparent and accountable mining sector be realised and only this way will it be possible to understand and minimise the gendered impacts of mining on women.