This is Big: Mining Industry Body Commits to Contract Disclosure

Last week, the International Council on Mining and Metals (ICMM) announced that its 28 members had agreed a new commitment on contract transparency. This is an important step, both building on the progress made by the Extractive Industries Transparency Initiative (EITI), and responding to longstanding advocacy from civil society organizations around the world to “Disclose the Deal.”
 
The commitment also comes at an opportune moment, signaling one concrete way that governments and the private sector can improve accountability in the extractive industries. It comes against the backdrop of U.S. President Joe Biden’s first Summit for Democracy, the 2021 Open Government Partnership (OGP) Global Summit, and the proposal of an EU Corporate Sustainability Reporting Directive, which NRGI and other Publish What You Pay members argue should include a sector-specific sustainability standard for the extractive industries that would require contract transparency.  
 
Commenting on the ICMM commitment, NRGI president and CEO Suneeta Kaimal said: “Contract transparency is an essential way for companies and governments to be held accountable for the decisions made on behalf of a country’s citizens. With the energy transition spurring a round of new mineral investments around the world, this commitment sends a powerful signal to the rest of the mining industry and to ICMM’s peers in the oil and gas industry that responsible companies have nothing to fear from disclosing their contracts.”
 
What the commitment says and why it matters
 
The new commitment requires ICMM member companies to disclose all mineral development contracts granted or entered into from 1 January 2021. Members are also encouraged to disclose mineral development contracts granted or entered into before that date.
 
With the companies that make up the ICMM representing around a third of the global mining industry, this is a big deal. Moreover, the fact that CEOs are required to personally sign off on new member commitments like this suggests that those at the very top of the industry grappled with the debate on contract transparency and came out on the side of disclosure.
 
In terms of implications for wider uptake of contract transparency among extractive companies, the move brings the total number of oil, gas or mining companies with a public statement or policy on contract transparency up to at least 42. To put that number in context, the last comprehensive count made by Oxfam in 2018 was just 18. 

Company statements of support for contract transparency have been vital to progress on this issue in recent years. They are important because they neutralize fears among government officials in producing countries that too much transparency might scare investors away. There are now at least 49 countries that have officially disclosed an extractive industry contract and 31 with policies that make publication mandatory. 
 
The commitment has been designed to bring ICMM policy in line with the EITI requirement on contract transparency, albeit with one notable caveat. While the EITI requirement applies to all contracts and licenses that are “granted, entered into or amended from 1 January 2021,” the ICMM requirement only applies to contracts that are “granted or entered into” from that date. As Oxfam has highlighted, omitting recently-amended contracts from the requirements means that citizens in producing countries could be left in the dark about new and important changes in the terms of existing contracts governing their national resources.  
 
One way that the commitment goes beyond other company statements and policies is in its focus on the actual disclosure of contract documents. Until now, only six extractive companies have committed to publishing contracts: Freeport-McMoRan, Glencore, Kosmos Energy, Newmont, Rio Tinto and Tullow. (Tellingly, four of these were ICMM members.) With the ICMM announcement, this number now climbs to 30.  
 
As they now look to implement the policy, ICMM companies have just a few good practice examples to draw from. Only five companies to date have proactively published contracts or included links to published contracts in company reporting: BP, Kosmos, Orano Mining, Rio Tinto and South32. (Our contract disclosure tracker includes links to each of these disclosures.)
 
While each of these approaches is noteworthy, Orano Mining uniquely lists any documents that are not public, in addition to those that are—a practice that helps citizens map the full universe of contracts, which is important information lacking in many contexts where contracts are kept secret. Kosmos also deserves a mention for its company policy to publish contracts as part of filings to the U.S. SEC and its helpful contract summaries highlighting important information that can be used for contract modelling.
 
The disclosures we can expect and why civil society action is essential
 
ICMM members collectively operate more than 650 assets in over 50 countries. If each of them follows the spirit of the commitment, not just publishing what they are required to, but also publishing the documents they are encouraged to make public, we would see a highly consequential wave of new disclosures. It would reach beyond EITI countries where the contract disclosure debate is advanced, to jurisdictions, like Russia, Chile and China, where secrecy around mining contracts has until now been standard practice.
 
To ensure that such far-reaching disclosures actually happen, citizens and civil society must do their part to hold ICMM members to their promises. Without external pressure, many companies will do the bare minimum—only releasing the handful of contracts required (those agreed after 1 January 2021). Some companies may also take advantage of loopholes in the commitment to justify the decision to keep further contracts secret.  
 
One potential such loophole was opened by a caveat in the commitment that joint venture companies that are majority owned by ICMM members are only encouraged to disclose contracts. Given that it is common practice to incorporate mining projects as joint ventures in host countries, disclosure will not actually be required for many mines.
 
Another loophole relates to a separate caveat that member companies do not have to publish where governments prohibit disclosure with a law or regulation. The good news is that in these situations, ICMM members have committed to encourage governments to provide consent. The challenge is confirming whether companies actually do this. But civil society actors can help by publicizing the ICMM policy, and inviting companies to speak publicly about their commitment as Total (now Total Energies) did in this interview.
 
Looking to the future, civil society organizations should mark 31 August 2022 in their diaries. That is the date (12 months after the commitment was approved) by which ICMM members must comply with the commitment. If there are any companies that have not disclosed by this date, under ICMM’s “conform-or-explain policy” they must publicly explain the reasons why they cannot. Again, civil society scrutiny will be essential to ensure that only the companies with reasonable grounds for non-disclosure are permitted to take this route.
 
The new ICMM commitment shows that the mining industry has never been more aligned with civil society actors on the importance of contract transparency. Now, as companies move to implement their commitments, civil society scrutiny will be essential to make disclosure a success.