Report: The Role of Host Governments

By Environmental Governance Programme (EGP)

This study is the Phase Two of an ongoing research project to improve understanding about the rise in conflict associated with mining operations around the world, particularly in developing countries. This study is conduced by UNDP, the Canadian International Resources and Development Institute (CIRDI) and the Swedish Environmental Protection Agency.

This publication includes summaries of a literature review, a quantitative analysis of a global database on conflict incidents, a field case study conducted in Ghana and a discussion on policy implications for governments. It also draws upon four field case studies from Phase One of this research, conducted by Andrews et al. (2016), which investigate specific conflict incidents at mine sites in Tanzania, Madagascar, Peru, and Bolivia.

The purpose of the Phase Two research is to better understand the role of host governments in conflict creation or prevention, and on this basis to provide possible actions for governments to consider conflict transformation, mitigation and prevention.

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Key Messages

The quantitative analysis presents a robust investigation of data associated with recorded conflict incidents from around the world, examining the occurrences and likelihood of conflict in 98 countries at both the national and property levels, as a function of country-level macroeconomic indicators, quality of governance indicators, foreign ownership, mineral endowment and on-property reserves. Salient observations with regards the role of government in enabling or preventing conflict may be summarized as follows:

Conflict associated with mining activities decreases with increasing quality of economic, legal and social development institutions.
In all countries, regardless of whether they are developed or developing countries, host governments have capacity limits with respect to the number of companies they can regulate effectively at any given time.
At the country-level, the conflict incidents tend to increase when the total number of mining companies increase and the ratio of foreign mining companies to total mining companies increase.
These country-level effects, change in response to differing levels of country governance quality; that is, decreasing scores of country governance quality correlate with increasing numbers of conflict incidents when ratios of foreign mining companies to total numbers of companies increase and when total amounts of country mineral reserves increase.
While the quality of country governance is a modifier of mining conflicts in both developed and developing countries, the relationship is more significant for developing countries. This implies that in developing countries, a decrease in conflict likelihood will depend on both government-driven regulatory controls at the country level as well industry-driven social development initiatives at the local level. On the other hand, in developed countries, where standards of regulatory monitoring and enforcement are already relatively high, the mitigation of conflict risk is more effectively addressed through the introduction ofcompany initiatives at the property level.
While developing countries need to achieve better governance quality in order to lower the risk of conflicts associated with mining activities, progress in this complex area will require considerable time and effort. However, the collective results of the quantitative analysis suggest a strategy which host governments may apply in the interim. This strategy would involve:

Limiting the total number of operating companies to match the governance capacity of the host country;
Maintaining a low ratio of foreign companies to total number of companies;
Empowering and resourcing local government institutions;
Ensuring that mining companies possess the ability and experience to implement high-quality social development programs and thus maintain stability in rural areas;
Being extra vigilant about how properties with large reserves are managed.

Refugee camp near Mogadishu, Somalia. Photo: iStock.com/sadikgulec

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Report: The Role of Host Governments

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