Alain Hausser, Deputy Head of Mission, Mission of Canada to the EU, outlined the fundamental importance of raw materials for Canada and the EU.  

·          In 2008, Canada had investments of $92 billion in domestic raw materials and investments of $110 billion across the world.

·          The EU and Canada have an excellent relationship when it comes to raw materials. This is because we have a common interest, and so Canada welcomes the Commission’s initiative on raw materials.

·          We are concerned by non-market based activities that reduce the ability of firms to obtain raw materials at fair market prices.

·          In 2009, Canada adopted a strategy to support CSR, in which we aim to meet the deadlines developed by the IFC and the OSCE. These aims include information sharing, supporting stakeholders and improving capacities in developing countries. We have developed an ethical foundation and are also working towards enhancing the ability of Canadian countries to withstand environmental risk.

Moderator: Adrian van den Hoven, Director of International Relations of BUSINESSEUROPE, introduced the first panel.

Frank Hoffmeister, Deputy Head of Cabinet of the Commissioner for Trade, Karel De Gucht made the following comments:

·          EU imports of raw materials are around €400 billion. This includes materials on which we are wholly dependant, such as platinum.

·          WTO enforcement of trade rules is exceptional. So we are left with bilateral agreements.

·          The Commissioner is dedicated to tackling the issue of export taxes particularly in countries such as Russia and Ukraine.

·          Export taxes are easy but we do not know where they go.

·          The Commission can offer raw materials suppliers access to the biggest market in the world. Raw materials diplomacy is crucial but we lack enough information on what is going on in certain countries. For example, whether there are real environmental concerns.

Roland Verstappen, Vice President, Arcelor Mittal commented:

·          Raw materials are key for a solid manufacturing industry.

·          Arcelor Mittal is a steel company based in Luxembourg. As we need iron ore and coal for our operation, we have had a raw materials strategy from the beginning. This strategy included a portfolio of iron ore from coal mines. The cost of raw materials is crucial. We obtain 50% of our iron ore from our own mines.

·          The global raw materials market is controlled by a handful of companies. This has an effect on prices and supply.

·          We are the fourth largest iron ore producer. We mine in the Arctic, and in Africa in order to make our business more competitive.

·          The Commission’s communication is the right way to go about increasing access to raw materials. For solid industries with steady supplies of raw materials we need to have transparency and to promote the local community.

·          Export taxes are not the solution. They do not have a clear added value such as positive effects on the supply chain and education.

·          Climate change is a key issue for steel, but if we do not get our raw materials policy right then heavy industry will suffer.

 

Karl Heinz Florenz (EPP, DE) and chair of the EP Raw Materials Group made the following points:

·          He was the rapporteur for climate change policy 2 years ago, and helped to create the climate change committee. This committee helped to bring together colleagues working on the raw materials issue. CO2 is a big problem, but it is only the tip of the iceberg. Without raw materials we cannot build renewable energy infrastructure and technologies. Industry is therefore part of the solution to solve the problem of climate change. More work needs to be done however as there has been little change between the Commission’s 2007 proposal in the 2008 proposal.

Bernd Dittmann, Managing Director European Affairs, BDI-Federation of German Industries commented:

·          Raw materials are a priority for German industry. It is important to address access to raw materials because this is not as easy as it used to be. This is partly due to increased demand. They are necessary for technological industry and without guidance and support industry is unable to solve the problem on its own. It needs a strong political environment on the national and European level.

·          We are currently developing partnerships on raw materials with Kazakhstan. We ensure that there are investment commitments before we decide a deal. As long as we do not know what the MOUs (memorandum of understanding) look like, we cannot make a commitment ourselves.

·          In negotiation, we must be transparent about our demands but there are concerns that this may disclose the company strategies and future investment decisions. This is a critical issue to solve.

San Bilal, European Centre for Development Policy Management, commented:

·          Our purpose is to try to inform the debate between the European and African and Caribbean countries with regard to raw materials development. We have been asked for advice from the African Union as they were afraid that Europe was merely trying to take advantage of their raw materials. The ACP Group has expressed the same fears. Major targets for raw materials are China, Ukraine and Russia but countries of interest in Africa include the Democratic Republic of the Congo (DRC) and South Africa.

·          These countries may have reasons for concern because they have raw materials and are being approached by countries with different strategies. They also have potential resources so if it is not a problem now it may be a problem in the future.

·          Export taxes could be a pragmatic way of developing a lot of revenue for African countries but, instead of saying that it does not want export taxes for its commercial industry, Europe has been saying that export taxes are not beneficial for Africa’s own good. Europe can therefore be accused of double talk. It could be clearer about its economic interests.

·          To what extent is the Commission’s policy linked to the interests of industry? Is it coherent to have European and member state strategies?

 

Karl Heinz Florenz (EPP, DE) admitted that there is a lot of EU legislation that prohibits export but argued that major breakthroughs had been made on CO2 diplomacy, WEEE, the electronic waste directive, deals also with the illegal export of raw materials.

·          We want to provide access to markets with frameworks, but not unnecessary legislation.

·          We are trying to bring the different issues together.

 

San Bilal commented:

·          We are not in favour of export taxes but would prefer that the EU says that it is acting in its own interests.

·          Policy coherence for development requires the engagement of other actors.  It remains to be seen whether the EEAS will do this.

·          Certain issues like the Extractive Industries Transparency Initiative (EITI) and the Generalised System of Preferences (GSP+) are not on the table for discussion.

Roland Verstappen (Vice President, Arcelor Mittal) asked why the panels were split because the issues are linked.

·          CSR is important to get a competitive edge. Countries are asking what we can do to give help and added value for local people.

·          We are a member of EITI. We convinced the Liberian government to adopt EITI. We are still analysing the Dodd–Frank Act and whether it should apply to all countries. In principle, we are supportive of transparency.

·          China produces half the steel in the world, but the EU’s comparative advantage is sustainable mining.

 

Bernd Dittmann made the following points:

·          Vertical integration is a reality for companies like Arcelor Mittal. We have also concluded bilateral investment agreements with many countries.

·          In Angola, there are many Chinese companies because they may offer better conditions than the European companies. We need political acceptance of the importance of raw materials diplomacy if we are to promote European industry.

·          Germany used to have mining industries/vertical integration but this has since declined.

 

Frank Hoffmeister went on to say that:

·          We do not have many good cards vis a vis the Chinese. Disregard for environmental and labour conditions will not help them.

·          We are working on EU agreements on investment protection.

·          Private investment agreements are protected by international agreements. This protects the investor.

·          The Commission will announce its proposals on the reform of the WTO GSP in May.

 

 

Moderator:  James M. Small, Executive Director, CEUMC, emphasised the differences between the 2007 and 2008 Commission statements on raw materials, which moved sustainable mining to the front of the document. Enhancing good governance and transparency is essential for sustainable growth, he said.

 

Patrick Chevalier, Natural Resources Canada, Government of Canada commented:

·          Canadian investments outside of Canada are starting to exceed investments in Canada.

·          Europe has a need for raw materials and therefore mining. We have therefore created an environment to encourage this market.

·          A level playing field is not enough to ensure European access to raw materials. Vertical integration is a solution. Mining was dropped in the early 90s when materials prices dropped but reintroducing direct investment into mining could be a solution.

·          Canada was one of the first to produce sustainable development policies. There is much attention given to taxes and royalties, but side stream benefits of mining are often overlooked. Clusters of industries can often be developed around mining throughout the 15 to 20 year operating life of mines. These industries can include services and electricity.

·          We have developed the IGF on mining minerals and sustainable development with South Africa. This includes funds for rehabilitation and the maintenance of social dialogue with local communities. We have created a policy template for good governance and developing capacity in the mining sector. Developing countries, however, are complaining that they lack the capacity for mineral mining codes.

·          We have introduced a CSR strategy in the Canadian government based on IFC and OSCE guidelines. This ensures that companies understand what their obligations are in countries where local administration is weak creating better returns in the long term.

·          We aim for a holistic/systemic approach that will, in time, ensure good governance, a sustainable approach and access to materials.

 

Jonas Moberg, Head of the International Secretariat, Extractive Industries Transparency Initiative (EITI) said:

·          The EITI is a coalition that relies on support from many different organisations. It is very much alive and has not replaced by the Dodd-Frank Act.

·          Companies, civil society and governments are on the board of the EITI.

·          There are many problems in the countries that we mine in. We therefore ensure that there is an in country process in all 35 countries that implement the EITI.

·          If we want secure supply then we need to intervene. Transparency costs very little, and I would argue that it does not reduce our competitive advantage. Companies comply with transparency and do not have a problem with it. 10 companies are members of the EITI. This commitment requires a long-term perspective.

·          The EITI is in the interests of the countries and companies that produce raw materials, and civil society. Qualitative FDI is now being demanded by countries producing raw materials.

·          Governments may implement the EITI out of enlightened self-interest (to prevent corruption, instil trust), or because they are encouraged by the international community.

·          Works such as the Paradox of Plenty and the Plundered Planet have contributed much to these developments.  

·          Transparency makes corruption more difficult, and enables greater accountability and builds trust with local communities.

·          In the World Bank value chain, we are the multi-stakeholder group that provides oversight of each of the stages.

·          Transparency is not however sufficient, nor is it an end in itself.

 

Richard Morgan, International Government Relations Advisor, AngloAmerican commented:

·          AngloAmerican always tries to engage with the public before an operation. This gives us a social licence to operate. We mine gold, diamonds, platinum, and iron ore in South America, Australia and Finland.

·          Long-termism is critical for a mine. For example, money is needed for when the mine leaves.

·          Countries are better off not nationalising because of the other benefits that mining can bring such in terms of jobs and health. One of our programmes has created over 15,000 jobs alone. This gives us credibility that is more than just an add-on, which is possibly how CSR is perceived.

·          We need to address issues such as health, jobs and climate change without just slapping a carbon tax on them.

 

Giorgio Cocchi, Deputy Head of Unit, European commission’s DG Development said:

·          Our development policy is concerned with raw materials.

·          We focus on transparency infrastructure and investment. Commission communications of 2008 and 2011 focussed on strengthening both the institutional side and the investment environment.

·          The European Development Fund is a flexible instrument that supports Africa and the ACP area. Each country has its own programme. Before deciding whether we can support mining in Swaziland, for example, we need to find out whether the government has agreed on standards with us.

·          We have excellent contacts with the African Union (AU) Commission. Cooperation on raw materials was included in the action plan. The AU has also adopted a mining vision for member states. These two policy instruments are going in the same direction. There are opportunities for cooperation as the European Investment Bank has a huge portfolio on mining and sustainable development. We, however, need to be careful of public perception as this is a very sensitive area.

·          The Commission is a member and financial supporter of the EITI. A review of sustainable development policy is underway. There will also be a policy communication on working with the private sector and we are trying to define our innovation capacity.

·          We will also produce a reform of the transparency directive and a communication on CSR. In addition to this, there will be discussion in G20 on raw materials and transparency.

·          We have big expectations of EITI and want to support it, but we do not have a solution for how it is implemented.

·          As for conflict minerals, we are currently waiting for a revised transparency communication by the end of the year, so we do not yet know the details. My guess, however, is that we can only address the formal part of the market.

 

Richard Morgan went on to say that:

·          AngloAmerican works in non-EITI countries, but declares what it earns. For example, we pay $1.2 million in tax in South Africa.

·          There is opportunity to argue that sustainability has its own benefits.

·          To clarify, in the DRC we are mainly involved in exploration and not mining.

 

Jonas Moberg said that:

·          35 countries are signed up to the EITI and we have a reasonable expectation that all companies working within them are transparent.

·          There are provisions in EITI that relate to the free participation of civil society. 

·          Transparency is a much bigger issue for the oil and gas industries than the mining industry. EITI is compulsory for companies operating in EITI countries whereas the Dodd-Frank Act is voluntary.

·          EITI is implemented by governments but companies and other organisations support the EITI through money and political support. The EU does not implement the EITI. Albania and Norway are the only European countries that implement it. Most countries, including the Commission, support it.

 

Patrick Chevalier added:

·          There is discussion as to whether it is the role of governments to have a conversation with their citizens, or that of industry. EITI is part of that discussion. It is important that there are systems within companies that are still transparent no matter where they operate.

·          He would prefer the term non-regulatory, not voluntary, for the Dodd-Frank Act. Despite this, the growing competitiveness of the industry often makes compliance with transparency rules an expectation.

 

 

Mattia Pellegrini, Member of the Cabinet of Commissioner of Enterprise Antonio Tajani concluded:

·          Commissioner Tajani is soon to provide a communication on raw materials. At the same time Commissioner Barnier is working on an initiative on price. President of the Commission Jose Manuel Barroso is trying to connect these two proposals for greater efficiency. The G20 is also working on a similar idea.

·          As for export restrictions, we should add a stipulation to the GSP (the unilateral tariff reduction to developing countries) to exclude countries that impose export restrictions, such as China.

·          Development is the second pillar. EITI funding has been increased because this is an important means to develop the African economy.

·          The Action Plan for 2011 to 2013 included a chapter on raw materials. Access to trade should be linked to raw materials.