THE MINING INVESTMENT AND GOVERNANCE REVIEW (MInGov...

APRIL 2016

THE MINING INVESTMENT AND GOVERNANCE REVIEW (MInGov)

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THE MINING INVESTMENT AND GOVERNANCE REVIEW: METHODOLOGY, APRIL 2016ii

© 2016 International Bank for Reconstruction and Development / The World Bank

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This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they

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THE MINING INVESTMENT AND GOVERNANCE REVIEW: METHODOLOGY, APRIL 2016iii

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THE MINING INVESTMENT AND GOVERNANCE REVIEW: METHODOLOGY, APRIL 2016iv

ABBREVIATIONS & ACRONYMS

AMV Africa Mining VisionCSO Civil Society OrganizationEITI Extractive Industries Transparency InititiaveESIA Environmental and Social Impact Assessment IDA International Development AssociationIFC International Finance CoporationIMF International Monetary FundMInGov The Mining Investment and Governance ReviewNRC Natural Resource CharterOECD Organization for Economic Cooperation and DevelopmentPEFA Public Expenditure and Financial AccountabiliyPIM Public Investment ManagementRGI Resource Governance IndexUN United NationsUSGS United States Geological SurveyWB World Bank

THE MINING INVESTMENT AND GOVERNANCE REVIEW: METHODOLOGY, APRIL 2016v

TABLE OF CONTENTS

1. Introduction 12. Overview 23. Questionnaire 44. Data Sources and Processing 55. Aggregation and Scoring 96. Stakeholder priorities 97. Visualization 10

Appendix 1: Theme, Value Chain Stage, Topics, 11 Indicators and Information SourceAppendix 2: Sources of Guidance on Good 15 Governance and Good PracticeAppendix 3: Sources for Secondary Data 16Appendix 4: Comparator Countries 19Appendix 5: Stakeholder Feedback Form 21Appendix 6: Visualization 22

TABLE OF FIGURES

Figure 1: MInGov Dashboard 3Figure 2: Structure of MInGov 4Figure 3: Interpretation of Numeric Scores 5Figure 4: Interpretation of Topic and Indicator Scores 9

THE MINING INVESTMENT AND GOVERNANCE REVIEW: METHODOLOGY, APRIL 20161

1. INTRODUCTION

The Mining Investment and Governance Review (MInGov) is a response to a demand from a range of stakeholders for a tool that facilitates an understanding of governance, competitiveness, investment and growth issues related to the mining sector. MInGov helps participating countries identify areas to strengthen governance of the sector, attract mining investment, and improve the use of resource revenues for sustainable national development. It also provides succinct, relevant information to investors and civil society in order to inform their decisions on investment, governance, potential growth and other aspects of the mining sector.

The MInGov methodology was developed by Adam Smith International (ASI) and the Natural Resource Governance Institute (NRGI) in close cooperation with the World Bank and experts in relevant fields. It is unique in its comprehensive coverage of both investment and governance issues and in the way it combines the use of primary and secondary data with information gathered through in-country interviews.

Five important points about the MInGov methodology are:

• MInGov measures de jure vs. de facto performance, that is, the extent to which performance in mining governance, investment attraction and the allocation of government mining revenues for broader development measures up to a country’s stated priorities;

• MInGov is designed to be actionable by governments and it is explicitly neither a ranking nor index. The methodology has been designed keeping in mind that developing countries do not want another index based on perceptions - they want actionable measures to improve governance;

• The focus on sector investment and bottlenecks is a core value-adding element of MInGov. It focuses on actionable improvements to the investment and development environment around extractives rather than being an isolated review of mining sector governance;

• MInGov is based on the collection of data via expert review of verifiable objective data, supplemented by secondary sourced data and interview data from in-country participants. Interviews are used to validate and understand de facto realities and it is not based on surveys or polls; and

• MInGov separates and reflects both absolute levels and subjective priorities of governance. Recognizing that what is important in one country is not important in all countries, the MInGov methodology and visualizations allow users to view absolute levels of governance for a particular country and overlay them with country-specific and stakeholder-specific perceptions of what aspects are more important and deserve focus.

The rich dataset collected through MInGov also allows the possibility to explore new ways of structuring the information beyond those presented in this methodology.

1


2. OVERVIEW

To ensure that MInGov provides a comprehensive picture of the mining sector in individual countries, a total of seven themes are explored for each country. Three of these themes (A to C) are assessed across five stages of the Extractive Industries value chain – Contracts, Licenses and Exploration; Operations; Taxation and State Participation; Revenue Distribution and Management; and Local Impact.

A. Policy, Legislation and Regulation. This theme measures the scope and quality (compared to good practice) of mining sector rules.

B. Accountability and Inclusiveness. This theme measures the quality of accountability and transparency practices, the extent to which the public are involved in governance, and the gap between intended (de jure) and actual (de facto) accountability and inclusiveness.

C. Institutional Capacity and Effectiveness. This theme measures the quality of government organizations and their ability to effectively govern, including particularly the extent to which the de jure intent of the rules is applied in practice (de facto).

The remaining four themes include three cross-cutting ones (D to F) and one that assesses the importance of mining (M) in the country of interest. These themes are:

D. Economic Environment. This cross-cutting theme reviews broader economic factors, including cost competiveness, economic stability, the general investment climate, and skills and human capital.

E. Political Environment. This cross-cutting theme measures political risks relevant to the mining sector.

F. Sustainable Development. This cross-cutting theme covers development planning, local supplier development, economic diversification and leveraging infrastructure.

M. Mining Sector Importance. This theme measures the potential for mining led growth.

Each theme is comprised of a number of topics. For the first three themes, the topics are aligned with the stages of the Extractive Industries value chain, but no such mapping exists for the other four themes. The dashboard used in country reports (an example is at Figure 1) provides an overview of the 36 topics (or aspects of performance) that are explored – 15 of which (in the upper part of the colored matrix) are mining-sector specific, 15 relate to cross-cutting themes (shown in the lower part of the matrix), and six capture the importance of the mining sector (shown in the vertical “range” or “min-max” chart on the right-hand side of the dashboard).

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Each topic is composed of one or more of 64 indicators. The actual review is performed through a combination of desk research and in-country interviews with sector experts (see Figure 2). Desk research uses both primary and secondary data. Primary desktop data consist mostly of domestic laws, regulations and similar documentation that are being reviewed to determine the de jure governance and investment environment of the mining sector. Secondary data from reputable sources are used mainly in the review of the cross-cutting themes and the mining sector importance theme. In-country interviews with sector experts are primarily used to assess the de facto performance of the mining sector.

The raw data derived from the three information sources is processed, scored and aggregated to provide a comprehensive review of the mining sector in an individual country—with the matrix in Figure 1 providing an overview of the review at the topic level.

FIGURE 2: STRUCTURE OF MInGov

3. QUESTIONNAIRE

All data used for MInGov in an individual country are collected based on a questionnaire that consists of a total of 314 questions. The 314 questions include 132 based on primary desktop sources, 61 on secondary sources and 121 on in-country interviews. In addition, there are 29 descriptive (non-scored) questions. Each question draws on one of the three information sources noted above: primary desktop data, secondary data and in-country interviews. To the extent possible, each question is designed to be fact-based and independently verifiable, actionable by governments, and comparable across countries. Initially the data collected through the MInGov questionnaire for a particular country is made available as an annex in the country report but it will eventually be made available online.

The questionnaire is structured around the topics listed in the dashboard in Figure 1 – with separate sections for each indicator. The table at Appendix 1 lists all 64 indicators in the order in which they appear in the questionnaire, and also how many questions (broken down by information source) are used to develop each indicator. The 15 topics related to the mining value chain have an average of almost three indicators each (the range is two to six indicators per topic).

TOPIC

SUPPORTING INDICATORS

UNDERLYING QUESTIONS AND DATA

Mining Tax Administration and State Owned

Enterprise Governance

State Owned Enterprise Governance

Mining Tax Administration

Primary Data

Primary Data

Secondary Data

In-countryInterview

In-countryInterview


The 21 topics under the cross-cutting themes and mining sector importance have one indicator each; in these cases, topic and indicator have the same name. The questionnaire is also used to capture from primary sources descriptive information (identified as theme X) which is not used to develop indicators but rather provides contextual information for the review teams.

The questions are numbered consecutively and the section numbering in the questionnaire uses the format Tn.m where:

• ‘T’ identifies the theme (A-F, M, and X),

• ‘n’ identifies the value chain stage (1-5 for themes A-C) or topic number (1-7 for themes D-F and M), and

• ‘m’ identifies the indicator number (1-6).

PRIMARY DATA

4. DATA SOURCES AND PROCESSING

The dataset for an individual country consists of a total of 314 data points corresponding to primary desktop, secondary and in-country interview questions in the questionnaire. Data is coded as numerical values according to a scoring mechanism. Figure 3 below provides an overview of the way in which raw data is processed which is explained in greater detail below for the three data sources.

Primary data are used to assess the deviation of current policy from international standards of good practice. Primary data consist of answers to 132 questions collected via desk research. These questions look at the existence and the quality of the different policies, regulations and administrative procedures as stated in writing (“de jure”) across the topics within the framework. In each country under review, experts on mining governance and investment review the relevant and available evidence on the particular topics to provide answers to these questions. Researchers are also required to provide supporting evidence to verify their answer as prescribed in guidance to the questionnaire.

FIGURE 3: INTERPRETATION OF NUMERIC SCORES

Primary Data Secondary Data In-country interviewsScore Interpretation Score Interpretation Score Interpretation

4 Good practice in place 4 Top 75%+ >3.25 – 4.00 Meeting its

own goal

2.5 Good practice partially in place

3 Higher 50%-75% >2.50 – 3.25More than half way

towards meeting its own goal

2 Low 25%-50% >1.75 – 2.50

Working towards meeting its own goal, but less than half way

1 Good practice not in place 1 Lowest 25% 1.00 – 1.75 Not meeting

its own goal

... Data not available or not applicable ... Data not available

or not applicable ... Data not available or not applicable


Based on the information collected, a review is made about how the country’s practice compares to international “good practice”. The Natural Resource Charter provides the main guidance on areas where there is a broad consensus on what constitutes good governance and good policy practice in resource management; further guidance on key topics is drawn from a variety of sources listed in Appendix 2. If a country’s practice is considered to fully reflect good practice, it receives a score of “4” and if there are significant deviations from international good practice the score would be “1”.

The majority of questions look at the existence of particular regulation or requirement for a certain procedure in the mining sector. In these cases, “4” is awarded where this is in place and follows good practice, “2.5” if this is partially in place and “1” if this is not in place (see Figure 3). The questionnaire provides guidance on good practice for each question, which can be further refined based on learnings from a country review. In some cases (for example, when assessing the quality of geological information available) allocating scores is difficult until data from multiple countries is collected and so can be used to clearly define thresholds of good and poor practices. In these cases, the questionnaire provides some guidance for preliminary scoring, but a final score can only be awarded when cross-country data collection is sufficiently advanced.

Example for processing primary data:

Question: To what extent are limits to the discretionary powers of the authority in charge of awarding mining licenses laid out in the law?

Answer: Partial. Yes, there are clear limits to discretion, but these are set out in policies and not in laws.

Good practice: There are limits to the discretionary powers of the authority in charge of awarding mining licenses. The decision to award a license is based on recommendations from an independent advisory board. If the license is denied, the reason is communicated to the applicant.

Evidence provided: Excerpts from relevant legislation and policy.

Score for above answer: 2.5. Good practice partially in place.

The following approach is used to address issues of missing data for questions based on primary data:

• If the question is not relevant in a particular country (for example, if there is no state owned enterprise), the response is labelled “not applicable” and omitted from the country review;

• If the question is relevant but no answer or evidence is found, the response is labelled “information not available,” and is subject to further review as to whether the question and guidance should be altered, dropped, or receive a low score for lack of information; and

• If the question is relevant, but the evidence and answers are non-conclusive, the response is labelled “non-conclusive”, and is subject to further review to determine whether the question should be altered, dropped, or receive a low score for a lack of clear information. Careful consideration is required to determine how many questions can be dropped without weakening a particular indicator. It may be the case that indicators will have to be dropped as a result of insufficient answers to underlying questions.


SECONDARY DATASecondary data is used to assess the mining, economic and political environment for each individual country as compared to peers. Secondary data sources are reputable institutions, including surveys and official statistics. Sources of secondary data used in MInGov are in Appendix 3.

With respect to secondary data a country is assessed in relation to comparator countries, defined as countries in which mining has the potential to be a key contributor to sustainable development. The list of comparator countries (see Appendix 4) was compiled based on the following criteria:

• Mineral production value per capita at least $US50/year;

• The top 10 countries in terms of exploration-to-production ratio in the mining sector; and

• At least 0.5 Million inhabitants (as data on smaller countries is often limited).

Additional adjustments have been made to ensure representation across different regions.

Based on available secondary data, a country receives a score of “4” if it falls within the top quartile (top 25%) of all comparator countries, a score of “3” if it falls within the second highest quartile, a score of “2” if it falls within the second lowest quartile and a score of “1” if it falls within the bottom quartile (Figure 3).

Example for processing secondary data:

Question: Five-year average total debt service to GNI – source is World Bank.

Answer: 5.7 percent of GNI which falls into the second lowest quartile of all comparator countries.

Score for above answer: 2 (low – 25%-50%).

The following approach is used to address issues of missing data for questions based on secondary data:

• If the data is not available or is dated, comparable data is collected where possible;

• We collect new data on questions covered by the Public Investment Management Assessments (PIM) and the Resource Governance Index (RGI) unless new data becomes available prior to MInGov data collection, as those questions cover an important part of the framework, and the data is dated and limited in country coverage; and

• For other sources we use the latest year where data is available (provided it is not more than three years prior to the concerned country review).

If recent data is not available and non-replicable, the affected questions are omitted from a country review; it is possible that some indicators are dropped (left blank) from a country review as a result of insufficient secondary data.


IN-COUNTRY INTERVIEWS

In-country interviews are used to assess the deviation of current practice from de jure practice, specifically the extent to which de facto practice measures up against the country’s own goals. A score of “4” for an interview question indicates that a country fully meets its own goals while a “1” indicates significant shortfalls (Figure 3).

Questions used in in-country interviews are answered by subject-area experts in government, industry, civil society, and some others as follows:

• Government: Key involved agencies, including the Ministries of Mines, Finance, Local Government and Revenue;

• Industry: Mainly companies involved in exploration or mining, and geological and other mining services. Where they exist, interviews are also held with the management of the Chamber of Mines and associations representing artisanal and small scale miners. Usually, the interview is with an individual closely associated with operational and policy matters, such as the company country manager, the person dealing with local employment and content, or the individual responsible for company/government relations;

• CSOs (Community Service Organizations): representatives of national CSOs and local branches of international CSOs involved with the mining/extractives sector; and

• Others: A range of other parties with a direct and informed role in the mining investment and governance are also interviewed. Participants vary by country but they commonly include the Secretariat of the Extractive Industry Transparency, Members of Parliament, employer and labor associations, donors, human rights commission, and independent experts in areas such as legal, mining and public finance.

The raw data from the in-country interviews consists of answers by multiple respondents and for some questions, respondents from different stakeholder groups.

Because MInGov is not a representative survey of stakeholder perceptions, but rather aims to gather verifiable information from informed stakeholders on the difference between the policy and practice of mining governance, the processing of the information gathered in in-country interviews requires careful judgement. Assessors seek out evidence to justify the scoring of individual responses. Scores for individual responses are then aggregated to arrive at the question score that is recorded and used in MInGov analysis.

Example for processing in-country interview data:

Question: In practice, to what extent are limits to discretionary powers in the award of mining licenses followed?

Response required from: Government, Industry.

Answer: A respondent provided examples and evidence of limits not followed, which were not refuted by other respondents or government.

Good practice: Grounds for and extent of discretion are spelled out in legislation, and are applied save in defined, exceptional circumstances.

Evidence provided: An example of a case handled by a legal firm or an extract from a government or expert report could be used as supporting evidence.

Score for above answer: 1.0. Not meeting its own goal.


5. AGGREGATION AND SCORING

Each question irrespective of the type of question receives a score between 1-4, based on the answer provided. The scores to multiple questions are then aggregated into the indicator they comprise. Where there are multiple indicators for a topic, questions are aggregated to create topic scores. At each level, aggregation occurs through simple averages, with each question or indicator receiving equal weight. As a result, each indicator and topic is associated with a score between 1 and 4. The topic scores are then divided into four equal ranges: very high (>3.25-4.0), high (>2.50-3.25), low (>1.75-2.50) and very low (1.0-1.75).

FIGURE 4: Interpretation of Topic and Indicator Scores

ScoreInterpretation of Topic and

Indicator Scores (Other than for Mining Sector Importance)

Interpretation of Scores within Mining Sector Importance Theme

>3.25 - 4.0 Very high Highly significant>2.50 - 3.25 High Above Average>1.75 - 2.50 Low Below Average

1.0 - 1.75 Very low Low significance

N/A Not sufficient information or not applicable

Not sufficient information or not applicable

Topics within the Mining Sector Importance theme measure the stage of mining sector development and the significance of its potential economic impact. For example, for new producers these measures might show a high degree of prospectivity and increasing foreign direct investment, but low revenue, budget and development impact. For mature producers, they could show declining prospectivity but high economic and employment impact. These scores should not be interpreted as measures of good or bad practices, but rather as different measures of significance of the sector compared to peers.

Questions to which the answer is missing or non-applicable in a given country are excluded from further aggregation and do not impact on scores.

The scores of the topics in the matrix are color coded to reflect their scores within the 1 - 4 range (Figure 4 above). Average topic scores under “Mining Sector Importance” are shown on a range or “Min-Max” scale (Figure 1).

6. STAKEHOLDER PRIORITIES

A final piece of information that is gathered during in-country interviews is a structured view of stakeholder priorities based on the 30 topics in the matrix (that is, excluding the Mining Sector Importance topics as they are descriptive features of the mining context).

This is done by asking interviewed stakeholders of the four stakeholder groups to indicate their priorities among these topics, which are listed alphabetically (see Appendix 5). Respondents are asked to identify their top five priorities—with the top priority receiving 5 votes and the lowest 1 vote—and topic votes are aggregated across respondents and for each group of stakeholders. Because the number of topics is large compared to the number of priority topics picked by each respondent, the resulting distribution of votes will be skewed to the right with a mean of (15 * Number of respondents)/30. This mean, together with the standard deviation of the distribution of votes, is then used to categorize topics as follows: high priority topics (those receiving a total number of votes that is more than one standard deviation above the average number of votes per topic), above average priority topics (those receiving a number of total votes that is above but not more than one standard deviation above the average number of votes per topic), low priority topics (those receiving a number of votes that is below or equal to the average number of votes per topic), and zero priority


topics (those receiving zero votes). These intervals are summarized in the table below.Beyond presenting results for each of the stakeholder groups separately, we also aggregate priorities from all respondents using an equal weight assigned to each stakeholder group.

Stakeholder priority data is not linked to questionnaire-based data (in, for example, the matrix). It is used to analyze variations in priorities among stakeholder groups. On stakeholder prioritisation visualization, Appendix 6 explains how the data are presented in a country report.

Stakeholder Priority Category

Zero priority (no votes cast) Low priority Above average

priority High priority

Range of votes cast for the topic 0 0 < votes ≤ μ μ < votes ≤ (μ + σ) (μ + σ) < votes

Note:’σ’ represents one standard deviation while ‘μ’ denotes the sample mean of the distribution of total votes cast across topics.

7. VISUALIZATION

The basic tool for the visualization of MInGov results analysis is the country dashboard (Figure 1). Additional visualizations are necessary to display results and highlight priority areas. A detailed discussion of the way visualizations are treated is included in Appendix 6.

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1. C

ontra

cts,

Lic

ense

s an

d Ex

plor

atio

n

A. P

olic

y, L

egis

latio

n an

d R

egul

atio

n

A1, R

ules

for l

icen

se a

llo-

catio

n an

d ge

olog

ical

dat

a co

llect

ion

A1.1

Cla

rity

of ru

les

for l

icen

se a

lloca

tion,

con

vers

ion

and

trans

fer

100

0

A1.2

Geo

logi

cal d

ata

colle

ctio

n ru

les

10

0A1

.3 M

oder

n m

inin

g ca

dast

re1

00

A1.4

Lic

ense

app

rova

l and

revi

ew ti

mef

ram

es4

00

B. A

ccou

ntab

ility

and

Incl

usiv

enes

s

B1, O

penn

ess,

tran

spar

ency

an

d in

depe

nden

ce o

f lic

ens-

ing

proc

ess

B1.1

, Ope

nnes

s an

d tra

nspa

renc

y of

lice

nsin

g pr

oces

s5

03

B1.2

Inde

pend

ence

of l

icen

sing

aut

horit

y1

01

C. I

nstit

utio

nal C

apac

i-ty

and

Effe

ctiv

enes

s

C1,

Cad

astre

, geo

data

, lic

ense

and

tenu

re m

anag

e-m

ent

C1.

1, C

olle

ctin

g ge

olog

ical

info

rmat

ion

20

7C

1.2,

Sta

te o

f map

ping

and

geo

logi

cal e

xplo

ratio

n4

11

C1.

3, M

inin

g ca

dast

re e

ffect

iven

ess

20

8C

1.4,

Allo

catin

g lic

ense

s eff

ectiv

ely

00

7C

1.5,

Tra

nsfe

rabi

lity

of li

cens

es0

02

C1.

6, M

anag

ing

licen

ses

effec

tivel

y0

09

2. O

pera

tions

A. P

olic

y, L

egis

latio

n an

d R

egul

atio

nA2

, Cla

rity

and

harm

oniz

a-tio

n of

sec

tor r

ules

A2.1

Cla

rity

of le

gisl

atio

n, ru

les

and

timef

ram

es3

00

A2.2

Har

mon

izat

ion

of le

gisl

atio

n an

d go

vern

men

t co

ordi

natio

n3

00

A2.3

Pro

visi

ons

for a

rtisa

nal a

nd s

mal

lsca

le m

inin

g4

00

B. A

ccou

ntab

ility

and

Incl

usiv

enes

s

B2, A

ccou

ntab

ility

of p

ro-

cess

es,

com

pens

atio

n re

-se

ttlem

ent a

nd a

rtisa

nal a

nd

smal

l sca

le m

inin

g vo

ice

B2.1

, Acc

ess

to la

nd, c

ompe

nsat

ion

and

rese

ttlem

ent

30

2

B2.2

Acc

ess

and

acco

unta

bilit

y of

min

ing

legi

slat

ion

and

proc

esse

s2

02

APP

END

IX 1

: TH

EME,

VA

LUE

CH

AIN

STA

GE,

TO

PIC

, IN

DIC

ATO

R A

ND

INFO

RM

ATIO

N S

OU

RC

E

THE

MIN

ING

INVE

STM

ENT

AND

GO

VER

NAN

CE

REV

IEW

: MET

HO

DO

LOG

Y, A

PRIL

201

6 12

Valu

e C

hain

Sta

ge (5

)Th

eme

(7)

Topi

c (3

6)In

dica

tor (

64)

Info

rmat

ion

Sour

ce: 3

14 Q

uest

ions

Prim

ary

(132

)Se

cond

ary

(61)

In-c

ount

ry

Inte

rvie

w(1

21)

B2.3

Arti

sana

l and

sm

all-s

cale

min

ing

voic

e re

pres

enta

tion

10

1

C. I

nstit

utio

nal

Cap

acity

and

Eff

ectiv

enes

s

C2,

Sec

tor m

anag

emen

t an

d in

tra-g

over

nmen

tal

coor

dina

tion

C2.

1, T

imef

ram

es fo

r app

rova

ls0

02

C2.

2, In

tra-g

over

nmen

tal c

oord

inat

ion

10

3C

2.3

Supp

ort t

o ar

tisan

al a

nd s

mal

l-sca

le m

inin

g2

04

3. T

axat

ion

and

Stat

e Pa

rtici

patio

nA.

Pol

icy,

Leg

isla

tion

and

Reg

ulat

ion

A3, T

ax p

olic

y, in

stru

men

ts

and

stat

e ow

ned

ente

rpris

e ru

les

A3.1

, Tax

pol

icy

and

inst

rum

ents

90

0A3

.2 R

ules

for a

uditi

ng, b

ase

eros

ion

and

profi

t shi

fting

60

0A3

.3 S

tate

ow

ned

ente

rpris

e go

vern

ance

rule

s2

00

B. A

ccou

ntab

ility

and

Incl

usiv

enes

sB3

, Min

ing

taxa

tion

and

stat

e ow

ned

ente

rpris

e fin

anci

al

man

agem

ent

B3.1

, Acc

ount

abilit

y of

min

ing

taxa

tion

20

2B3

.2, S

tate

ow

ned

ente

rpris

e fin

anci

al m

anag

emen

t3

02

C. I

nstit

utio

nal

Cap

acity

and

Eff

ectiv

enes

s

C3,

Min

ing

tax

adm

inis

tratio

n an

d st

ate

owne

d en

terp

rise

gove

rnan

ce

C3.

1, M

inin

g ta

x ad

min

istra

tion

21

13C

3.2,

Sta

te o

wne

d en

terp

rise

gove

rnan

ce1

04

4. R

even

ue D

istri

butio

n an

d M

anag

emen

tA.

Pol

icy,

Leg

isla

tion

and

Reg

ulat

ion

A4, P

ublic

fina

ncia

l m

anag

emen

t reg

ulat

ion,

in

clud

ing

reve

nue

shar

ing

A4.1

, Pub

lic fi

nanc

ial m

anag

emen

t and

reve

nue

shar

ing

30

1

A4.2

, A4.

2 M

acro

fisca

l man

agem

ent r

ules

and

st

abiliz

atio

n1

00

B. A

ccou

ntab

ility

and

Incl

usiv

enes

sB4

, Bud

get t

rans

pare

ncy

and

acco

unta

bilit

y, a

nd

publ

ic in

tegr

ity

B4.1

, Bud

get t

rans

pare

ncy

and

acco

unta

bilit

y0

10

B4.2

, Pub

lic in

vest

men

t int

egrit

y4

01

C. I

nstit

utio

nal

Cap

acity

and

Eff

ectiv

enes

s

C4,

Bud

get i

mpl

emen

tatio

n an

d m

acro

fisca

l m

anag

emen

t effe

ctiv

enes

s

C4.

1, B

udge

t im

plem

enta

tion

07

2C

4.2,

Lar

ge-s

cale

pub

lic in

vest

men

t0

06

C4.

3 M

acro

fisca

l man

agem

ent a

nd re

venu

e st

abiliz

atio

n eff

ectiv

enes

s0

02

5. L

ocal

Impa

ctA.

Pol

icy,

Leg

isla

tion

and

Reg

ulat

ion

A5, P

olic

ies

to m

itiga

te

envi

ronm

enta

l and

soc

ial

impa

ct

A5.1

Com

mun

ity im

pact

, con

sulta

tion

and

corp

orat

e so

cial

resp

onsi

bilit

y3

00

THE

MIN

ING

INVE

STM

ENT

AND

GO

VER

NAN

CE

REV

IEW

: MET

HO

DO

LOG

Y, A

PRIL

201

6 13

Valu

e C

hain

Sta

ge (5

)Th

eme

(7)

Topi

c (3

6)In

dica

tor (

64)

Info

rmat

ion

Sour

ce: 3

14 Q

uest

ions

Prim

ary

(132

)Se

cond

ary

(61)

In-c

ount

ry

Inte

rvie

w(1

21)

5. L

ocal

Impa

ctA.

Pol

icy,

Leg

isla

tion

and

Reg

ulat

ion

A5, P

olic

ies

to m

itiga

te

envi

ronm

enta

l and

soc

ial

impa

ct

A5.1

Com

mun

ity im

pact

, con

sulta

tion

and

corp

orat

e so

cial

resp

onsi

bilit

y3

00

A5.2

Rul

es fo

r env

ironm

enta

l and

soc

ial i

mpa

ct

man

agem

ent

120

0

A5.3

Rul

es fo

r fina

ncia

l sur

etie

s fo

r dec

omm

issi

onin

g1

00

B. A

ccou

ntab

ility

and

Incl

usiv

enes

sB5

, Hum

an ri

ghts

, em

ploy

men

t equ

ity a

nd

envi

ronm

enta

l tra

nspa

renc

y

B5.1

, Hum

an ri

ghts

and

em

ploy

men

t equ

ity6

05

B5.2

, Env

ironm

enta

l and

soc

ial i

mpa

ct tr

ansp

aren

cy1

01

C. I

nstit

utio

nal

Cap

acity

and

Eff

ectiv

enes

s

C5,

Com

mun

ity c

onsu

ltatio

n an

d en

viro

nmen

tal a

nd

soci

al im

pact

man

agem

ent

C5.

1 Im

pact

and

com

mun

ity c

onsu

ltatio

n0

05

C5.

2 En

viro

nmen

tal a

nd s

ocia

l im

pact

man

agem

ent

effec

tiven

ess

00

9

C5.

3 Eff

ectiv

enes

s of

sur

etie

s fo

r dec

omm

issi

onin

g0

01

N.A

.D

. Eco

nom

ic

Envi

ronm

ent

D1,

Bus

ines

s an

d in

vest

men

t env

ironm

ent

D1.

1, B

usin

ess

and

inve

stm

ent e

nviro

nmen

t0

90

D2,

Min

ing

infra

stru

ctur

e D

2.1,

Min

ing

infra

stru

ctur

e0

50

D3.

Div

ersi

ty a

nd s

tabi

lity

of

natio

nal r

even

ues

D3.

1, D

iver

sity

and

sta

bilit

y of

nat

iona

l rev

enue

s0

20

D4,

Mac

roec

onom

ic s

tabi

lity

D4.

1, M

acro

econ

omic

sta

bilit

y0

30

D5,

Eco

nom

ic g

row

th a

nd

savi

ngs

D5.

1, E

cono

mic

gro

wth

and

sav

ings

03

0

D6,

Ski

lls a

nd h

uman

cap

ital

D6.

1, S

kills

and

hum

an c

apita

l 1

60

D7.

Hum

an h

ealth

D7.

1, H

uman

hea

lth0

30

N.A

.E.

Pol

itica

l En

viro

nmen

tE1

, Exp

ropr

iatio

n ris

k E1

.1, E

xpro

pria

tion

risk

24

0E2

, Pol

itica

l sta

bilit

yE2

.1, P

oliti

cal s

tabi

lity

03

0E3

, Pre

dict

able

min

ing

and

tax

polic

yE3

.1. P

redi

ctab

le m

inin

g an

d ta

x po

licy

10

2

E4, C

ontro

l of c

orru

ptio

nE4

.1, C

ontro

l of c

orru

ptio

n0

10

N.A

.F.

Sus

tain

able

D

evel

opm

ent

F1, D

evel

opm

ent p

lann

ing

F1.1

, Dev

elop

men

t pla

nnin

g5

05

THE

MIN

ING

INVE

STM

ENT

AND

GO

VER

NAN

CE

REV

IEW

: MET

HO

DO

LOG

Y, A

PRIL

201

6 14

Valu

e C

hain

Sta

ge (5

)Th

eme

(7)

Topi

c (3

6)In

dica

tor (

64)

Info

rmat

ion

Sour

ce: 3

14 Q

uest

ions

Prim

ary

(132

)Se

cond

ary

(61)

In-c

ount

ry

Inte

rvie

w(1

21)

F2, L

ocal

sup

plie

r de

velo

pmen

t F2

.1, L

ocal

sup

plie

r dev

elop

men

t4

24

F3, I

nves

tmen

t pro

mot

ion

(div

ersi

ficat

ion)

F3

.1, I

nves

tmen

t pro

mot

ion

(div

ersi

ficat

ion)

30

2

F4, L

ever

agin

g in

frast

ruct

ure

F4.1

, Lev

erag

ing

infra

stru

ctur

e4

02

N.A

.M

. Min

ing

Sect

or

Impo

rtanc

eM

1, G

eolo

gica

l pro

spec

tivity

M1.

1, G

eolo

gica

l pro

spec

tivity

0

30

M2,

Min

ing

fore

ign

dire

ct

inve

stm

ent

M2.

1, M

inin

g fo

reig

n di

rect

inve

stm

ent

01

0

M3,

Sig

nific

ance

of s

tate

pa

rtici

patio

n M

3.1,

Sig

nific

ance

of s

tate

par

ticip

atio

n4

00

M4,

Sig

nific

ance

of m

inin

g re

venu

eM

4.1,

Sig

nific

ance

of m

inin

g re

venu

e0

20

M5,

Bud

get s

hare

of m

inin

g re

venu

eM

5.1,

Bud

get s

hare

of m

inin

g re

venu

e0

20

M6,

Eco

nom

ic a

nd

empl

oym

ent s

hare

of m

inin

gM

6.1,

Eco

nom

ic a

nd e

mpl

oym

ent s

hare

of m

inin

g3

20

Des

crip

tive

Topi

csN

o. Q

uest

ions

(Prim

ary

Sour

ce)

X.1,

Lic

ense

s an

d Ex

plor

atio

n—de

scrip

tive

info

rmat

ion

3X.

2, M

inin

g Po

licy,

Law

and

Reg

ulat

ions

—de

scrip

tive

info

rmat

ion

5X.

3, M

inin

g Ta

x P

olic

ies

and

Tax

Inst

rum

ents

—de

scrip

tive

info

rmat

ion

9X.

4, P

ublic

Fin

anci

al M

anag

emen

t and

Rev

enue

Sha

ring—

desc

riptiv

e in

form

atio

n5

X.5,

Env

ironm

enta

l and

Soc

ial I

mpa

ct M

anag

emen

t—de

scrip

tive

info

rmat

ion

4X.

6, S

usta

inab

le D

evel

opm

ent—

desc

riptiv

e in

form

atio

n3


APPENDIX 2: SOURCES OF GUIDANCE ON GOOD GOVERNANCE AND GOOD PRACTICEFrameworks of mining governance

African Mining Vision (AMV)Natural Resource Charter (NRC), 2nd edition and country benchmarking methodologyWorld Bank Extractive Industries Value ChainWorld Bank’s Framework for Extractive Industries Governance Assessment (FEIGA)

Methodologies of evaluating mining governance

Resource Governance IndexNRC country benchmarking methodologyAMV Country Mining Vision Guidebook

Voluntary and mandatory principles

EITI StandardEquator PrinciplesIFC, Environmental and Social Performance Standards Performance StandardsLima Declaration of Guidelines on Auditing Precepts, International Organization of Supreme Audit InstitutionsOECD Action Plan on Base Erosion and Profit ShiftingSantiago Principles on Sovereign Wealth FundsUN Guiding Principles on Business and Human Rights Reporting Standards

Policy manuals

Columbia Centre on Sustainable Investment, A Framework to Approach Shared Use of Mining-Related Infrastructure (2014)EI Sourcebook, Geodata for Development – A Practical Approach (2012)IBA, Mining Model Agreement (2011)IFC, Ranking of Investment Promotion Agencies –Global Investment Promotion Best Practices (2012)IM4DC, Transfer Pricing in Mining: An African Perspective (2014)IMF, Guide on Resource Revenue Transparency (2007)IMF, Fiscal Transparency Code (2014)IMF, Fiscal Regimes for Extractive Industries: Design and Implementation (2012)IMF, Fiscal Frameworks for Resource Rich Developing Countries (2012)IMF, Administering Fiscal Regimes for Extractive Industries (2014)IMF, Investing in Public Investment: An Index of Public Investment Efficiency (2011)ISLP, Mining Contracts – How to Read and Understand Them (2014)OECD, Action Plan on Base Erosion and Profit Shifting (2013)OECD, Guidelines on Corporate Governance of State-Owned Enterprises (2005)OECD, Transfer Pricing Comparability Data and Developing Countries (2014).OECD, Thin Capitalisation: A Background Paper for Country Tax Administration (2012)Public Expenditure and Financial Accountability (PEFA), Guidelines (2011)WB, Diagnostic Framework for Assessing Public Investment Management (2011)WB, Doing Business (2014)WB, Increasing Local Procurement by the Mining Industry in West Africa (2012)WB, Mineral Rights Cadastre (2009)WB, Mining Royalties: A Global Study of Their Impact on Investors, Government and Civil Society (2006)WB, How to Improve Mining Tax Administration and Collection Frameworks – A Sourcebook (2013

THE

MIN

ING

INVE

STM

ENT

AND

GO

VER

NAN

CE

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IEW

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Dat

aset

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Uni

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Link

Publ

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re

and

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Prog

ram

(P

EFA)

PEFA

Vario

usEx

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ssm

ent

Scal

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est)

to D

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Yes

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Min

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Hig

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is d

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ww.

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Inte

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Yes

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Hig

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Inde

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Surv

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ediu

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tp://

data

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orld

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nce

Stat

istic

s Ye

arbo

ok

IMF

2014

Offi

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Dat

aVa

rious

No

Yes

Min

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l, ec

onom

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envi

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Hig

hht

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ft/gf

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Busi

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R

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ld B

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2016

Expe

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ays,

nu

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Yes

Yes

Econ

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igh

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doin

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ines

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ross

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ank

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Expe

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APPENDIX 4: COMPARATOR COUNTRIES

Comparator countries are those where mining has the potential to be a key contributor to sustainable development. They were selected based on the following criteria:

• Mineral production value per capita at least $US50/year;

• The top 10 countries in terms of exploration-to-production ratio in the mining sector; and

• At least 0.5 Million inhabitants (as data on smaller countries is often limited).

Additional adjustments were made to ensure representation across different regions.

In the below list of comparator countries, the * symbol denotes countries where there may be differences in mining legislation across provinces/states.

• Afghanistan• Algeria• Argentina*• Armenia• Australia*• Bolivia• Botswana• Brazil• Bulgaria• Burkina Faso• Canada*• Chile• China*• Colombia• Congo, Dem. Rep.*• Cote d’Ivoire• Dominican Republic• Ecuador• Egypt• Eritrea• Ethiopia• Finland• Gabon• Ghana• Greece• Guatemala• Guinea• Guyana• India• Indonesia• Iran, Islamic Rep.• Ireland• Jamaica• Kazakhstan• Kenya• Kyrgyz Republic

• Lao PDR• Lesotho• Liberia• Madagascar• Malawi• Mali• Mauritania• Mexico• Mongolia• Morocco• Mozambique• Myanmar• Namibia• Nicaragua• Niger• Nigeria• Papua New Guinea• Peru• Philippines• Poland• Russian Federation• Senegal• Serbia• Sierra Leone• South Africa• Sweden• Tajikistan• Tanzania• Tunisia• Turkey• Uganda• United States*• Uzbekistan• Venezuela• Zambia• Zimbabwe


APPENDIX 5: STAKEHOLDER FEEDBACK FORM

Mark Top Priorities1-5 Topic

Accountability of Processes, Compensation, Resettlement and Artisanal and Small-scale Mining VoiceBudget Implementation and Macrofiscal Management Effectiveness.Budget Transparency and Accountability, and Public IntegrityBusiness and Investment EnvironmentCadastre, Geodata, License and Tenure ManagementClarity and Harmonization of Sector RulesCommunity Consultation and Environmental and Social Impact ManagementControl of CorruptionDevelopment PlanningDiversity and Stability of National RevenuesExpropriation RiskHuman HealthHuman Rights, Employment Equity and Environmental TransparencyInvestment Promotion (Diversification)Leveraging InfrastructureLocal Supplier DevelopmentMacroeconomic StabilityMining InfrastructureMining Tax Administration and State Owned Enterprise GovernanceMining Taxation and State Owned Enterprise Financial ManagementNational Growth and SavingsOpenness, Transparency and Independence of Licensing ProcessPolicies to Mitigate Environmental and Social Impact Political StabilityPredictable Mining and Tax PolicyPublic Financial Management Regulation, Including Revenue SharingRules for License Allocation and Geological Data CollectionSector Management and Intragovernmental CoordinationSkills and Human Capital AvailabilityTax policy, Instruments and State Owned Enterprise Rules

Other priorities not listed above

Priorities in Assessing the Mining Investment and Governance EnvironmentCompleted by a Representative of Government / Mining company / Civil Society / Other (indicate which)


APPENDIX 6: VISUALIZATION

A number of standard visualizations have been developed to portray data analysis from MInGov. The main ones that are used in country review reports are described below. Over time, these may be adjusted for greater effectiveness.

APPENDIX 6, FIGURE 1: THEME LEVEL SCORES (MIN-MAX CHART)

APPENDIX 6, FIGURE 2: VALUE CHAIN STAGE SCORES (MIN-MAX CHART)

1. Contracts, Licenses and Exploration

2. Operations

3. Taxation and State Participation

4. Revenue Distribution and Management

5. Local Impact

1.00 1.75 2.50 3.25 4.00

REPORT VISUALIZATIONThe basic tool for the visualization of MInGov results analysis is the dashboard (Appendix 6, Figure 1). Each cell of the matrix represents a topic that is composed of one or more indicators and a number of questions. Matrix cells are color coded based on the aggregated topic score. In addition to the matrix, the dashboard includes the theme Mining Sector Importance visualized by a range or min-max table on the right-hand side.

With a min-max chart, the reader can see a theme or value chain perspective. The chart shows the average score of the respective indicator level (diamonds). The range of indicator scores (minimum and maximum) is depicted by the bars.

An example of country-level results at theme level is in Appendix 6, Figure 1. Results for the five value chain stages are in Appendix 6, Figure 2. A min-max visualization can also provide details of topics or indicators in one view; Appendix 6, Figure 3 shows results for the 36 topics covered in MInGov. A similar chart is available at the indicator level. Such range charts may be prepared for any set of questions, indicators or topics in which there is particular interest (such as the handling of artisanal and small scale mining issues, or State-Owned Enterprise performance and governance).

A. Policy, Legislation and Regulation

B. Accountability and Inclusiveness

C. Institutional Capacity and Effectiveness

D. Economic Environment

E. Political Environment

F. Sustainable Development

1.00 1.75 2.50 3.25 4.00


APPENDIX 6, FIGURE 3: VALUE CHAIN STAGE SCORES (MIN-MAX CHART)

Contracts, Licenses and Exploration

Rules For License Allocation and Geological Data CollectionOpenness, Transparency and Independence Of Licensing

ProcessCadastre, Geodata, License and Tenure Management

Operations

Clarity and Harmonization Of Sector RulesAccountability of Processes, Compensation, Resettlement and

Artisanal and Smallscale Mining VoiceSector Management and Intragovernmental Coordination

Taxation and State Participation

Tax Policy, Instruments and State Owned Enterprise RulesMining Taxation and State Owned Enterprise Financial

ManagementMining Tax Administration and State Owned Enterprise

Governance

Revenue Distribution and Management

Public Financial Management Regulation, Including Revenue Sharing

Budget Transparency and Accountability, and Public IntegrityBudget Implementation and Macrofiscal Management

Effectiveness

Local Impact

Policies to Mitigate Environmental and Social ImpactHuman Rights, Employment Equity and Environmental

TransparencyCommunity Consultation and Environmental and Social Impact

Management

Economic Environment

Business and Investment EnvironmentMining Infrastructure

Diversity and Stability of National RevenuesMacroeconomic Stability

National Growth and SavingsSkills and Human Capital Availability

Human Health

Political Environment

Expropriation RiskPolitical Stability

Predictable Mining and Tax PolicyControl of Corruption

Sustainable Development

Development PlanningLocal Supplier Development

Investment Promotion (Diversification)Leveraging Infrastructure

Mining Sector Importance

Geological Prospectivity and PotentialForeign Direct Investment in Mining

State Participation in MiningSignificance of Mining Revenues

Budget Share of Mining RevenuesEconomic and Employment Share of Mining

1.00 1.75 2.50 3.25 4.00


A key visualization in a country report is one that presents a value chain stage or theme showing performance by the composite topics and indicators (see Appendix 6, Figure 4 for an example). The visualization includes the score for each variable included as well as the color coding of their performance as used in the matrix and elsewhere in a country report.

As described in sections 4 and 5, stakeholders interviewed in-country are asked at the end of the interview to list what they regard as the most important topics for a strong mining investment and governance environment. The purpose of this is to get information on what stakeholders as a whole and for individual stakeholder groups (from government, industry, CSOs and “others”) regard as priorities so as to better understand areas of possible common interest – and where there may be little overlap in priorities.

Reported priorities are weighted by the degree to which they are indicated (see Appendix 6, Figure 5). To visualize this weighting, the matrix structure is mapped so that cell dimensions reflect the weight assigned based on the perceived importance of the underlying indicator (weightings have been squared to accentuate visual differences between weightings): larger cells represent topics of perceived greater importance. Cell color coding is maintained as in the matrix.

APPENDIX 6, FIGURE 4: PERFORMANCE OF THE LOCAL IMPACT STAGE

Value Chain Stage 5 – Local Impact (2.75)Theme Topic Underlying indicator

Policy, Legislation and Regulation

(2.77)

Policies to Mitigate Environmental and

Social Impact (2.78)

Community Impact, Consultation and Corporate Social Responsibility (1.83)

Rules for Environmental and Social Impact Management (2.50)Rules for Financial Sureties for Decommissioning (4.00)

Accountability and Inclusiveness

(2.65)

Human Rights, Employment Equity and Environmental

Transparency (3.28)

Human Rights and Employment Equity (2.56)

Environmental and Social Impact Transparency (4.00)

Institutional Capacity and Effectiveness

(2.53)

Community Consultation and Environmental and

Social Impact Management(2.18)

Impact and Community Consultation (2.40)Environmental and Social Impact Management Effectiveness (1.64)

Effectiveness of Sureties for Decommissioning (2.50)Note: The score for each theme is the average of scores of the five value chain stages in that theme. The score for the value chain stage is the average of the three topics within that stage (which are shown in this figure). The score against the topic is the average of the scores of the underlying indicator scores; the indicator scores are the average of the scores of their underlying questions. The color coding is the same as in the matrix. Intervals for scoring performance are as follows: Very low (1.0-1.75); Low (>1.75-2.50); High (>2.50-3.25); and Very High (>3.25-4.0), where a higher score corresponds to better governance and capacity.

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WEBSITE VISUALIZATION

The MInGov website will include additional visualizations to those in country review reports (as well as those in country reports). For example, there will be a range of visualizations on the website that will compare performance between one or more countries against selected indicators, topics, themes or value chain stage. Two options for comparing theoretical such scores of two countries are below (Appendix 6, Figures 6 and 7).

APPENDIX 6, FIGURE 6: COMPARING COUNTRIES AT A THEME LEVEL AND VALUE CHAIN STAGE (RADAR CHART)

4.00

3.25

2.50

1.75

1.00

Local Impact

Country A

Country B



Operations

Licences and Exploration






APPENDIX 6, FIGURE 7: COMPARING COUNTRIES AT A THEME LEVEL AND VALUE CHAIN STAGE (BAR CHART)

Similar radar and bar chart visualizations can also be applied, for example, to compare “de jure” and “de facto” results. Bar charts can also be applied to a larger number of indicators, e.g., comparing multiple indicators between two or more countries. The radar chart is more intuitive to compare smaller numbers of indicators.

While comparisons of relative performance in selected areas are possible between countries, MInGov is neither a ranking nor index. This is a core property of the methodology and a key differentiator from other reviews, surveys and reports. However, comparing data from country analyses will facilitate the identification of countries that are similar in terms of mining sector importance, governance by value chain stage and cross-cutting theme, stakeholder priorities, and so on, and so could help stakeholders develop options to strengthen sector governance, investment and impact.

Once MInGov data collection for a particular country is repeated, time comparisons are possible. Appendix 6, Figure 8 offers an idea of how performance of indicators (or questions, themes, value chain stages or topics) could be compared over time through the use of “spark lines.” Since a higher number of time series needs to be explored at the same time, a small multiples approach has been selected. If only few time stamps exist, they could also be shown in a table. For larger time series with more time stamps, the original data can be hidden.

Licenses and Exploration

Operations



Local Impact





1.00

Country A

Country B

1.75 2.50 3.25 4.00


APPENDIX 6, FIGURE 8: TIME COMPARISON (USING MATRIX COLOR CODES AND SPARK LINES)

2015 2016 2017

Contracts, Licenses and Exploration 2,4 3,0 3,2

Operations 2,7 2,8 3,5

Taxation and State Participation 2,6 2,6 2,6

Revenue Distribution and Management 2,5 2,8 2,9

Local Impact 2,5 2,8 3,6

Sustainable Development 2,5 3,4 3,3

Economic Environment 2,8 3,9 3,9

Political Environment 2,6 3,5 2,2

Mining Sector Importance 2,1 2,1 2,1

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THE MINING INVESTMENT AND GOVERNANCE REVIEW (MInGov...

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