Guinea's New Mining Code Heralds Good Governance

Guinea's National Transitional Council (CNT) approved on 9 September a new Mining Code that includes several key "best practices," including requirements for the publication of contracts, detailed measures to help prevent corruption, and rules promoting transparency in the award of new contracts.

The code was developed through extensive consultation with the public, local and international civil society, international donors and the private sector. Revenue Watch provided comments to the government, and is encouraged to see in the final law provisions for good governance that meet with, and advance, international best practice.

The new code gives Guinea the opportunity to break from the past by making the mining sector accountable to the Guinean people. As everywhere, however, the mere inclusion of strong provisions in the law is not on a guarantee of good governance. The government must be vigilant in applying the code and in maintaining an environment of openness with citizens and fair treatment of investors.

1. Good Governance Provisions within the Code

The commitment to publish all mining contracts represents a major step toward transparency in the mining sector. Making all contracts public will allow the public to analyze the impacts of the contracts that have been signed in the past. That in turn will help the government assess the benefits from these agreements and pursue review of contracts that do not provide an equitable return to the state.

Contract transparency will also reinforce the incentives for the government to make itself accountable to the population and to sign agreements that comply with the law, generate strong returns and protect the rights of citizens. Finally, contract transparency will greatly aid the effective enforcement of contracts: Where the obligations of the state and the private sector are known to all, a larger and more focused set of eyes can monitor compliance and support effective administration. To put this provision into action, the government will need to create a dedicated Internet site linked to the Ministry of Mines and includes copies of all the agreements.

The code's formal commitment to the principles of the Extractive Industries Transparency Initiative (EITI) sends a strong message that Guinea is committed to being a leader in the global effort to follow international best practice for transparency of mineral revenue. Beyond binding the government to EITI, the code requires all mining companies working in Guinea – even those from countries that have not committed to EITI – to respect the Initiative's principles and processes.

Every company active in Guinea's mining sector will be required to sign a code of good conduct, which represents a powerful symbolic step in favor of good governance. In signing this code of conduct, the companies will publicly commit not to engage in corrupt practices or those that damage accountability. If effectively enforced, this will increase the risks for any individual or company that would engage in such practices, by creating another mechanism for public pressure.

The corruption monitoring plan that every company will be required to develop in collaboration with the government can help ensure follow-through on the commitment to prevent corruption. It will require companies to remain vigilant against corrupt acts by their staffs and agents, to report and take steps to mitigate any suspicious activities, to cooperate with the government in any investigations of suspected corruption, and to take proactive measures such as training personnel in how to avoid corruption.

It also sends a strong signal that the government recognizes that corruption has played a powerful and unfortunate role in the management of the sector and that Guinea seeks to change the culture of doing business in mining.

The National Mining Commission (Commission Nationale des Mines) is a new monitoring body whose creation can serve as additional protection against arbitrary or corrupt decision-making in the award, renewal, transfer, and cancellation of mining contracts. The commission will be composed of representative of various key government ministries as well as Guinea's unions and civil society. The commission will review decisions made by the Ministry of Mines regarding mining titles, and will issue an opinion on whether those decisions meet legal requirements and promote the interests of the country.

The procedures for the award, renewal, transfer, and cancellation of mining titles are clear and transparent, and should provide awards to be based on clear criteria, and for companies to understand what is expected of them. These provisions limit the risk of arbitrary decision-making in the award of contracts. Effectively administered, they can improve Guinea's reputation for respect of the rule of law and can effectively link the interests of the country to the interests of investors.

The code requires that any mineral deposit whose potential is well-established and attractive to international investors must be awarded by a competitive tender. This will give Guinea a better chance of maximizing the public revenues generated by these deposits, as competitive tenders create incentives for bidding companies to offer the maximum fiscal package for the opportunity to exploit the resource. It will also make it more likely that only companies with sufficient financial and technical means to develop these world-class deposits will secure contracts, and thus reduce the risk of prime properties being awarded to speculator companies that seek to sell titles to the highest bidder rather than investing in exploration and development.

2. Process of Formulating the Code – Participation of Guinean Civil Society

After the promulgation of a first draft of the code, in early 2011, the government conducted extensive consultations on various drafts with mining companies, the international community and Guinean civil society. In its analysis of the last version of the code, the leading coalition of Guinean mining-sector NGOs affirmed that civil society was regularly consulted throughout the process of revisions to the code (PWYP Guinea), and that many of their critiques were taken into account in the final version. This extensive consultation represents a strong signal of the government's commitment to more accountable management of mining.

3. The Importance of Proper Enforcement

Though formal approval of the code represents a step toward greater accountability in the mining sector, the legislation itself represents little if it is not effectively enforced. Failures to enforce provisions of the 1995 Mining Code have been among the most serious obstacles to good governance in Guinea: When the law is not applied, no matter how progressive its provisions, it confers few benefits.

It is vital that the government live up to the commitments established in the new code, and put into practice this new era of responsible sector management.

Thus it is not enough to point to a law saying contracts should be published – the state must take steps toward publication as soon as is feasible. The commitment to EITI must be put into practice, with government support of Guinea's validation process and a deep commitment to reinforcing the initiative, which was significantly delayed during the period of transitional rule.

Similarly, the provisions on the Code of Good Conduct, the anti-corruption plan, and the rigorous and transparent process for awarding and managing contracts must be enforced consistently. Both the government and civil society have a responsibility to closely monitor application of the code, to ensure that its great promise becomes reality.

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