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Abstract
After decades promoting highly liberalised mining codes, the World Bank Group has now positioned poverty reduction and environmental sustainability as the fundamental objectives of its involvement in the sector. Within this new approach, local participation occupies a central position, whereby a loosely defined mix of local associations, as well as residents of local communities affected by mining activities, is to have a voice in every stage of a given mining project. Building on the case of Laos, this article investigates both the participatory model promoted by the World Bank and the politics of the model's implementation. The analysis suggests that the involvement of local communities is ensconced within a framework which conceives participatory schemes as a management tool to, first and foremost, circumscribe the risks faced by mining investors. While this represents a clear attempt to mitigate political risk in order to facilitate the larger project of building new liberal markets, it further raises questions linked to the remodelling of political notions of empowerment and representation.
EXTRACTO - Tras décadas de promocionar códigos mineros ampliamente liberalizados, el Grupo del Banco Mundial ha actualmente posicionado la reducción de la pobreza y la sostenibilidad ambiental como los objetivos fundamentales de su participación en el sector. Dentro de este nuevo enfoque, la participación local juega un papel central en el que una mezcla descuidadamente definida de asociaciones locales, así como de residentes de comunidades locales afectadas por las actividades mineras, debe tomar una vocería en cada etapa de un proyecto minero dado. Sobre la base del caso de Laos, este artículo investiga tanto el modelo de participación promovido por el Banco Mundial como las políticas para la implantación del modelo. El análisis sugiere que la participación de las comunidades locales está escondida en un marco que concibe los esquemas de participación como una herramienta de administración para, primero y lo más importante, circunscribir los riesgos enfrentados por los inversionistas mineros. Mientras que esto representa un claro intento de mitigar los riesgos políticos para facilitar un proyecto mayor de construir nuevos mercados liberales, una vez más presenta cuestionamientos relacionados con la remodelación de las nociones políticas de empoderamiento y representación.
Acknowledgements
The author is grateful for the comments provided by Toby Carroll and Tim Hilger on earlier versions of this paper, as well as the anonymous reviewers of the journal Globalizations.
Disclosure Statement
No potential conflict of interest was reported by the author.
Notes
† This paper was presented in an earlier form at the workshop ‘Citizens, Civil Society and the Politics of “Market Building” in Asia’, Lee Kuan Yew School of Public Policy, National University of Singapore, 23–24 February 2012. A modified version has been published in Hatcher (Citation2014).
1 Hereafter, the International Bank for Reconstruction and Development and the International Development Association (IDA) are referred to as ‘the World Bank’ or ‘the Bank’.
2 For a comparative analysis between Laos, the Philippines, and Papua New Guinea, see Hatcher (Citation2012).
3 On the specific roles of the International Financial Corporation (IFC) and MIGA in the industry, notably see Hatcher (Citation2010).
4 See Hatcher (Citation2004) for an analysis of the Malian mining sector as an example of third-generation mining code implementation.
5 Today, mining is understood to be one of the most environmentally disruptive activities that can be undertaken as business (Bebbington, Hinojosa, Humphreys Bebbington, Burneo, & Warnaars, Citation2008, p. 893) and the concept of the ‘resource curse’ is widely acknowledged by all stakeholders in the industry. The term refers to when an abundance of natural resources creates political and economic distortions which increase the likelihood that countries will experience negative development outcomes (Rosser, Citation2006, p. 7). Also see Auty (Citation1993) and Sachs and Warner (Citation1995).
6 For a thorough analysis of the EIR and the World Bank response, see Campbell (Citation2009).
7 It is to be noted that this greater emphasis on the environmental and social consequences of mining activities is part of a greater shift within the Bank as a whole. While the specifics of the changes carried out within the Bank amidst the Wolfensohn presidency (1995–2005) are beyond the range of this contribution, it should be noted that the period marked an all-encompassing shift within the Bank's narrative. From its austere emphasis on the blind pursuit of economic growth, which characterised the 1980s and the better part of the 1990s, the Bank in the last decade embraced a more ‘comprehensive’ way of doing business. ‘Our dream is a world free of poverty’, Wolfensohn declared, and in so doing, he committed the institution, at least discursively, to addressing the social aspects of poverty and to forging closer partnerships with other actors in development, including those within civil society (on the topic, see Hatcher Citation2006).
8 There exists a rich critical political-economy literature on the topic. See notably Cammack (Citation2003), Carroll (Citation2010), Fine, Lapavitsas, and Pincus (Citation2001), Gill (Citation1995), and Soederberg (Citation2004). Soederberg (Citation2004) refers to the New International Financial Architecture, a class-based strategy that forces the Global South to accede to the neo-liberal rules of free market mobility. Cammack (Citation2003) points towards the ‘completion of the world market’, while Gill refers to the ‘political project of attempting to make transnational liberal, and if possible liberal democratic capitalism, the sole model of future development’ (Citation1995, p. 8).
9 Such as the Resettlement and Indigenous Peoples; effective public consultation and disclosure (1998); HIV/AIDS's guide for the Mining Sector (2004); and Sustainability in Emerging Markets (2002). World Bank OP 4.01 Environmental Assessment (1999); World Bank OP 4.12 Involuntary Resettlement (2002); World Bank OP 4.10 Indigenous Peoples (2005); World Bank OP 4.11 Physical and Cultural Resources (2006); IFC Policy on Social and Environment Sustainability (2006); IFC Performance Standards on Social and Environmental Sustainability (2006); IFC Guidance Notes: Performance Standards on Social and Environmental Sustainability (2007); IFC Health, Safety and Environment Guidelines (General—2007 and Mining—2007).
10 As stated in the Lao ‘National Socio-Economic Development Plan’.
11 As of 2009, only 50% of the country area had been geologically mapped (1/200,000).
12 As of 2009.
13 Lane Xang means ‘one million elephants’ in Laotian.
14 Sepon was established by Rio Tinto in 1999, and it was then bought by Australia's Oxiana one year later, although Rio Tinto kept a 20% share. Minerals and Metals Group was formed in June 2009—when China Minmetals Non-ferrous Co., Ltd acquired key assets of OZ Minerals. The latter was itself formed in July 2008, when Oxiana merged with Zinifex Ltd. Listed on the Hong Kong Stock Exchange, Minerals and Metals Group Limited is primarily controlled by shareholder China Minmetals Corporation (with 71.72%) and by public shareholders (with the remaining 28.28%). From an operational standpoint, Sepon is run by the Australians since Minerals and Metals Group was created through the purchase of Australia-based OZ Minerals by Minmetals Resources in 2009.
15 Via its subsidiary Pan Mekong Exploration Pty Limited.
16 According to ‘Phu Bia Strikes Gold’ (Citation2012), the company launched a pre-feasibility study in June 2012 and production could start in late 2015.
17 The project is run by Ord River Resources and China Nonferrous Metal Industry's Foreign Engineering and Construction Company (NFC) (managed by Sino Australian Resources—SARCO).
18 The NEM further allowed for farmers to own land and freely sell crops, for the elimination of almost all government-fixed prices, and for a higher degree of management independence from state-owned enterprises. The latter also lost their monopoly status along with most subsidies (UN, Citation2010, p. 8). The NEM was expanded throughout the following decade.
19 Law No 04/97/NA on Mining (12 April 1997). Implemented by Decree in 2002.
20 Examples of royalty rates for different minerals: iron 3%; copper 4%; lead 3%; zinc 3%; tin 3%; gold 5%, silver 4%; platinum 5%; sapphire 5%; ruby 5%; emerald 5%; potash 3%; and gypsum 3% (Department of Geology and Mines, Citation2006). Additional fees apply such as rental fees which range from US$0.5 to US$1 per ha/year for general surveys and exploration, and from US$3 to US$12 per ha/year for preparatory mining (Feasibility and Construction Phase). In terms of import and re-export facilities, foreign investors shall pay an import duty on equipment, means of production, spare parts, and other materials used at a maximum rate 1% of the imported value (Department of Geology and Mines, Citation2006).
21 For example, the 1997 Mining Law allowed royalty rates to fluctuate between 2% and 5% of sales depending on mineral commodities.
22 The Law was made publically available only in late 2009.
23 Approved in May 2011 (and ended in 2012), the Project (P122847) committed US$10 million.
24 See World Bank, Technical Assistance Project P122847.
25 The terms of the new Mining Law do not retroactively affect licences and agreements that were effective prior to the new Law.
26 There is no automatic right under the Mineral Law, allowing an investor who holds an exploration licence to exploit mineral resources if a commercially viable deposit is discovered in the exploration area.
27 World Bank Technical Assistance Project for Capacity Development in Hydropower and Mining Sector (P109736).
28 For example, the Lao Business Forum held in June 2008 drew nearly 300 participants from business, government, and donor representatives (World Bank, Citation2008, p. 38).
29 More specifically, the Environmental Protection Law notably requires EIAs and the protection of natural resources, biodiversity, and cultural and historic sites.
30 For further details, see Gibson and Rex (Citation2010, p. 16).
31 As of 30 June 2011, it had the following reserves: 0.7 million tonnes of copper, 0.9 million ounces of silver, and 0.2 million ounces of gold (Minerals and Metals Group [MMG], Citation2013).
32 It started gold production in January 2003.
33 The EIR observes that:
In addition to the 5 volume Environmental and Social Impact Analysis, 16 targeted studies were commissioned, a Public Consultation and Disclosure Plan; a Resettlement Action Plan; and a Community/Indigenous Peoples Development Plan were submitted) and meetings were conducted with the government, communities, and NGOs. (Citation2003a, p. 29)
34 On the topic, notably see EIR (Citation2003a) and World Rainforest Movement (Citation2004).
35 The Board of Directors of the World Bank (US$270 million) and the Asian Development Bank (ADB) (US$107 million) approved loans and guarantees for the project in 2005.
36 The majority (95%) of the generated power has so far been earmarked for Thailand, and the remaining 5% for local consumption (USGS, Citation2012, p. 16.1).
37 For a thorough analysis of the case of NT2, notably see Goldman (Citation2005), Hirsch (Citation2002), and Lawrence (Citation2009).
38 NT2 is owned by Lao Holding State Enterprise (25%), Electricity Generating Public Company Limited (25%), Electricité de France International (35%), and Italian–Thai Development Public Company Limited (15%).
39 There were, after all, over 200 consultations and workshops conducted for the people both in the preparatory work and during the implementation process.
40 NT2 was expected to be financed with a 30% equity from the shareholders and 70% international loans and guarantees from the World Bank, the ADB, the European Investment Bank, the Agence Francaise de Developpement, export credit agencies, and commercial banks (Lawrence, Citation2009, p. 85).
41 For a thorough analysis of the diverse participatory and assessment processes which took place during the early phase of NT2, see Hirsch (Citation2002).
42 As stated in Article 44 of the country's 1991 Constitution (revised in 2003): ‘Lao citizens have the right and freedom of speech, press and assembly, and have the right to set up associations and to stage demonstrations which are not contrary to the laws’.
43 Media personnel are appointed mostly from within the Party and all publications must be approved by the Ministry of Information and Culture (Freedom House, Citation2012).
44 There were a total of 85 residents interviewed for the survey, with a variety of age groups, genders, occupations, and ethnic groups. Only villagers who had been affected by mining operations were selected for the survey, so that their opinions on the mining industry could be assessed (Marley-Zagar, Citation2012, p. 8).
45 Other anecdotal incidents were reported such as the one in Palay village (Borikhamxay province) in 2012, when approximately 100 villagers were reported to have become ill after inhaling the vapours of a chemical spilled from a truck on its way from a mine site in Vientiane Province (Marley-Zagar, Citation2012).
46 The five-year project will run in partnership with the Department of Mines, in order to aid capacity building with regard to formulating regulations, supervising, and inspecting mining projects (Marley-Zagar, Citation2012).
47 See World Bank (Citation2010b).
48 The Index is a measurement tool of perceptions of public sector corruption.
49 Government of Laos, ‘Notification PM/13’, 6 November 2012.
50 The moratorium was briefly lifted in April 2009 and rapidly reinstated in July of that year.
51 For example, Amanta Resources Ltd would have been granted rights over a concession located in Luang Namtha province, while Shandong Sun Paper Co. Ltd. would have been granted a concession for a eucalyptus plantation in Savannakhet province.
Additional information
Pascale Hatcher is Associate Professor at the College of International Relations, Ritsumeikan University (Japan). She has published in leading international journals such as Journal of Contemporary Asia, Revue Tiers Monde, and the Canadian Journal of Development Studies, as well as with leading academic publishers such as Palgrave, Routledge, and L'Harmattan. Her most recent publication, Regimes of risk: The World Bank and the transformation of mining in Asia (Palgrave-MacMillan, 2014), investigates the role of the World Bank Group in promoting new mining regimes for resource-rich country clients.