In 2014, Niger announced it had successfully renegotiated uranium extraction contracts with French state-owned company Areva to secure a greater share of the wealth deriving from their uranium resources. Three years later, an analysis carried out by Oxfam based on data released by Areva calls into question the benefits for Niger in the contract renegotiation.
This analysis was carried out as part of the data extractor program developed by Publish What You Pay.
You can read more about Areva in Niger and more in the English version of “Beyond Transparency: Investigating the Investigating the New Extractive Industry Disclosures.” This report was published by Publish What You Pay France, Oxfam France, ONE, and Sherpa.
Understanding the context: why is Nigerien uranium so important for Areva?
Uranium is a strategic commodity for France. More than 75% of electricity produced in France comes from nuclear power. Most of the uranium used for nuclear combustion in France is supplied by Areva. Up to 1 in 5 lightbulbs in France would be lit up thanks to Nigerien uranium.
For years, civil society organizations have called out Areva for the uneven partnership with Niger. Despite vast resources in uranium, Niger has yet to convert this valuable resource into tangible wealth: the country still ranks second to last in the Human Development Index.
The renegotiation: a game-changer for Niger?
In 2013, Oxfam and ROTAB, a Nigerien NGO – both members of Publish What You Pay – launched a campaign denouncing the unbalanced partnership between Areva and Niger and calling for the renegotiation of the contracts. Oxfam and ROTAB specifically pointed that Areva’s contracts included a sweetheart clause enabling Areva to pay a lower rate of royalty than the applicable regime in Niger. Royalties make up the majority of uranium mining revenues to the Nigerien government.
In 2014, after months of pressure from civil society organizations around the world, Areva and Niger agreed to a new contract without the sweetheart clause. In June 2014, a Strategic Partnership Agreement signed between Areva and Niger stressed that Areva would be subject to the legal royalty regime, raising hopes of a fairer share of the revenues for Niger. This agreement was published on the Journal Officiel- the official gazette of the Republic of Niger where major legal official information are published.
In August 2016, Areva released for the first time the payments the company makes to governments where it mines uranium, as part of new EU regulations. In Niger, it was the first time the public had access to Areva’s payments since the renegotiation took place in Niger. And the results are surprising:
The following excerpt is from an article that was published on the Publish What You Pay International Secretariat site on August 31, 2017. You can read the full post here.
Advocacy backed by data
In November, Mukasri Sibanda traveled to Jakarta to join the inaugural ranks of our “ Data Extractors ” — individual members trained in the technical art of identifying, obtaining and analysing financial information from governments and extractive companies. “I realised that it is important to empower communities with data literacy skills to enable them to drive the change process in the governance of mineral resources,” he said.
He brought this knowledge back to Manicaland Province, where PWYP Zimbabwe began working with existing community organisations, like schools and health centre committees, and instilled them with a powerful new mission. For all the diamonds in their soil, there was no reason their classrooms should lack books and their clinics lack medicines. Cyanide runoff shouldn’t pollute their rivers and kill their cattle. And with all the economic activity mines create, local residents shouldn’t be jobless or forced to illegally pan for diamonds, drawing the wrath of air force helicopters.
By backing residents’ concerns with data, Sibanda said, “we are simply trying to level the playing field.” Ill-informed, angry people are easy for companies and politicians to ignore; a united front of community leaders bearing spreadsheets are far more persuasive. The community organisations have bought into the idea, gathering in mining towns across Zimbabwe to learn about budgets, taxes and corporate social responsibility.
“Normally data is used by civil society and rarely by the communities themselves,” said Darlington Farai Muyambwa, who is the PWYP Zimbabwe’s national coordinator. “For Zimbabwe, this programme has been unique in how it managed to create interest for data at the grassroots level.”
One of those community groups is the Marange Development Trust, which lobbies public officials and companies on behalf of the residents of the diamond-producing region. “Data really helps us to do exactly what we are supposed to do on our own instead of relying on other organisations on our behalf,” said Malvern Mudiwa, the group’s chairman. Recently, for instance, the Trust persuaded local authorities at the Mutare rural district council to share two years of financial reports. The documents were extremely vague: In a district where mining is the principal economic activity, there was no line item for revenue from mineral taxes. PWYP Zimbabwe and the Trust were forced to deduce mining company contributions themselves, revealing that the local government has “never received a cent of tax revenue from the mining companies,” Mudiwa said.
By Miles Litvinoff, Publish What You Pay - United Kingdom
This post originally appeared on publishwhatyoupay.org on September 11, 2017
The London Stock Exchange’s (LSE) Alternative Investment Market (AIM) was launched in 1995 for smaller and growing international companies looking to raise capital for expansion. AIM describes itself as “the most successful growth market in the world”. The UK government has sung its praises. Lesser known than the LSE’s Main Market where larger, more established international companies’ securities are traded, AIM has over the years helped more than 3,700 companies raise more than £100 billion.
Approximately 200 oil, gas and mining companies trade on AIM. Although generally smaller than LSE Main Market companies, AIM companies have grown over the years. AIM extractive companies’ combined market capitalisation runs into the billions of pounds, which can make them significant actors relative to the size of host country economies where many citizens are still desperately poor. They operate in 40 developing and transition countries, including 22 lower- and lower-middle-income countries as defined by the World Bank, and in all the BRICS.
Fraud and corruption
The LSE recently asked for views on proposed changes to the AIM rules, including rules of corporate governance. Investigations by Global Witness, Rights and Accountability in Development (RAID) and others have revealed significant cases of fraud, corruption and other abuses involving AIM extractive companies. The risks involved are acknowledged by the UK government: “The absence of good governance and the lack of transparency around [payments to governments] reduce the positive impact that extractive industries can have on economic development … [and] negatively impacts on, and increases the risk for, … companies and investors active in the extractives sector through civil unrest and poor business environment.”
Publish What You Pay UK responded to the recent LSE consultation by proposing that all LSE AIM-traded oil, gas and mining companies be required to annually report their payments to governments following the same rules that apply to the 90-plus LSE Main Market-traded and large private UK-registered extractive companies now disclosing their payments each year under UK law. AIM extractive company reporting should meet the same requirements. The UK regulations’ £86,000 disclosure threshold, applied per single payment or series of related payments, will prevent AIM extractive companies from being unreasonably burdened by having to report inconsequential payments.
Benefits of transparency
Benefits would be considerable. First, there would be consistency in addressing investor and reputational risk. The LSE already requires extractive companies to disclose payments to governments of more than £10,000 on applying for admission to AIM, as well as to annually report estimated reserves and resources. Regular payment reporting by AIM extractive companies will help citizens hold their governments to account for revenues received, better inform investors and improve the UK’s, the LSE’s and AIM’s reputation for corporate governance.
The LSE’s discussion paper recognises AIM investors’ need to fully understand the businesses in which they invest and the associated risks. Payment to government disclosure helps investors make informed decisions and promotes confidence in the market. This is why large numbers of European and North American institutional investors and fund managers support both the EITI and mandatory public country-by-country project-level reporting.
AIM needs to maintain appropriate levels of corporate governance as its traded companies grow in size and as expectations regarding corporate accountability rightly become more demanding. With a current average market capitalisation of approximately £50 million, AIM oil, gas and mining companies are far from small in the eyes of ordinary people, and not all AIM companies will plan to graduate to trading on the Main Market. These factors make it inappropriate to apply fewer transparency requirements to AIM extractive companies than to their Main Market counterparts.
Public country-by-country project-level reporting is increasingly accepted as the industry norm. As Tom Butler, chief executive of the International Council on Mining and Metals (ICMM), said in early 2017: “[T]he global trend is in the [pro-transparency] direction. The train has left the station. It is driven by investors and other stakeholders and the desire of the industry to maintain its social license to operate. One way to maintain that is for everyone to see that the taxes and other payments the mining industry makes are applied sensibly to the development of the country.”
No UK institution should be encouraging a race to the bottom in terms of corporate transparency standards.
It is high time, then, for the LSE to extend annual payment disclosure beyond Main Market-traded extractive companies to AIM-traded ones. In the UK government’s words: “Shareholders, investors, employees, competitors, civil society groups, the media and other external stakeholders view companies’ disclosure of payments … as an example of principled leadership. … Regular … [r]eports on payments and revenues can improve the creditworthiness of both companies and countries.”
Read PWYP UK’s submission to the AIM Rules Review 2017.
By Aaron Sayne, Alexandra Gillies, Andrew Watkins, Natural Resource Governance Institute
This post originally appeared on resourcegovernance.org on April 6, 2017
Oversight actors can detect and prevent corruption in the oil, gas and mining sectors if they ask the right questions. Corruption schemes can be complex and opaque, yet clear patterns and similar signs of problematic behavior do exist across resource-rich countries.
To find these, we examined over 100 real-world cases of license or contract awards in the oil, gas and mining sectors in which accusations of corruption arose. The cases come from 49 resource-producing countries.
Based on this work, we developed a list of 12 red flags of corruption in extractive sector license and contract awards, with real-world illustrations for each. This list can provide a concrete, practical tool for many types of actors, not least:
Download the full report on resourcegovernance.org
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