Extractives sector development assistance
2013/14 Estimated Outcome: $35.8 million
2014/15 Budget Estimate: $41.5 million
Why we give aid
Population growth, rapid urbanisation and industrialisation have fuelled global demand for metals, minerals, oil and gas, creating rapid growth in investment. The extractives and energy sectors drive trade, economic growth and development in the Indo-Pacific region by creating jobs and boosting government revenues. Yet investment in developing countries’ extractives sectors comes with many challenges. Many resource-rich developing countries perform worse than less-endowed countries on human development indicators.
Australia aims to support developing countries to maximize sustainable benefits from their natural resources, while helping them overcome the challenges. Through engagement in the extractives sector we can assist resource-rich developing countries to strengthen relationships with the private sector, improve governance, revenue management and build technical skills. Continued support in this area is also important for businesses wanting to trade with, and invest in, stable and predictable overseas environments.
How we give aid
We work with multilateral organisations, other government agencies, non-government organisations, universities and the private sector to assist partner governments to maximise the development potential of their extractives sectors. Our activities focus on strengthening the capacity of governments in the Indo-Pacific region.
Multilateral approaches have proven effective to reduce corruption and improve the transparency, accountability and management of extractives related payments, benefitting both host countries and investors:
- Australia provides funding to the Extractive Industries Transparency Initiative (EITI), the Extractive Industries Technical Advisory Facility, and the International Monetary Fund’s work on managing natural resource wealth.
- Australia is a government member of the Voluntary Principles on Security and Human Rights Initiative, practical human rights guidelines to support extractives sector operations.
- As a major diamond producer, Australia is also active in the Kimberley Process Certification Scheme, a joint government, industry and civil society initiative to stem the flow of conflict diamonds.
Important examples of Australia’s results to date through global extractives sector initiatives include:
- The establishment of the International Mining for Development Centre (IM4DC), in partnership with the University of Western Australia and the University of Queensland. By end June 2014 the IM4DC had trained more than 1,800 people from over 50 developing countries through 50 short courses, workshops and study tours.
- Australian mining awards, which build an engaged and influential network of leaders, advocates and change-makers. In 2012, we provided scholarships to 132 students to undertake mining-related courses in Australian universities.
- The Leading Practice Sustainable Development Program for the Mining Industry which has developed fifteen handbooks to address key issues related to sustainable development of the extractives sector. These handbooks have been translated into six languages.
Australia is engaged in extractives sector activities in several countries in the Asia-Pacific region and in Africa. These activities form a critical part of the economic development portfolio of each country or region:
- In Burma, Australia and the UK are co-funding the Natural Resource Governance Institute to support local civil society organisations to improve extractives governance and engage in Burma’s EITI process.
- In Indonesia we are supporting an Indonesian think tank to address extractives sector transparency; supporting Indonesian EITI implementation through the World Bank; and promoting linkages between Australian universities (ANU and Charles Darwin) and local Indonesian Governments to monitor environmental and social risks of artisanal and small-scale mining in SE Sulawesi and NTT provinces.
- In Mongolia we are commencing the delivery of the Australia-Mongolia Extractives Program to increase the benefits for the Mongolian people of the development of the resources sector in Mongolia.
- In Papua New Guinea (PNG) we are assisting to progress PNG’s EITI candidacy and have supported Autonomous Bougainville Government efforts to ensure inclusive consultations on mining policies and negotiations.
- In Africa we continue to support African led initiatives such as the African Minerals Development Centre, as well as skills development, community partnerships and governance reform in a number of countries including Mozambique, Zambia and Tanzania.
DFAT’s future extractives support in the region will build on work undertaken to date, and will explore new directions in the energy sector. There will be a continued emphasis on improving extractives governance, revenue management and benefit sharing. DFAT seeks to collaborate more closely with the private sector, including through sharing infrastructure and services. We will also work with other bilateral donors to ensure our support helps developing countries maximise returns from their largest economic assets to drive their own economic growth and development.
Extractives sector development assistance initiatives
The Australian Government works with multilateral organisations, other government agencies, non-government organisations, universities and the private sector to assist partner governments to maximise the development potential of their extractives sectors. Our activities focus on strengthening the capacity of governments in resource-rich developing countries in the Indo-Pacific region.
This page provides an overview of global initiatives managed by DFAT’s Resources and Energy section. The overall budget estimates for Australian support to the extractives sector includes global, regional and country-specific initiatives. Additional information is available on relevant country and regional program pages.
Extractive Industries Transparency Initiative (EITI)
$18.45 million, 2006-2015
Australia is one of the largest and longest-serving donors to the Extractive Industries Transparency Initiative (EITI). From 2006 to 2015 the Australian Government has committed a total of $18.45 million to support the EITI International Secretariat and the EITI Multi-Donor Trust Fund (MDTF).
The EITI assists countries to gain the maximum benefit from their resource wealth by promoting structures for open and accountable management of natural resource revenues. It is an international coalition of governments, multilateral organisations, companies and civil society. Countries implementing the EITI Standard publish reports reconciling the monies companies pay with those received by governments. There are now 46 EITI implementing countries (up from 17 in 2007), with others preparing to do so.
The EITI-MDTF provides technical and financial assistance to developing countries implementing or considering implementing the EITI. This support includes providing expert advisors and consultants, sharing international best practices, and offering funding grants to governments. Other donors to the EITI-MDTF include Belgium, Canada, Denmark, the EU, Finland, France, Germany, Japan, the Netherlands, Norway, Spain, Switzerland, the UK and the USA.
Countries in the Indo-Pacific region that have benefitted from EITI-MDTF support to date include Indonesia, Mongolia, Philippines, Solomon Islands and Timor-Leste. Australia has also provided direct support to countries with their EITI candidacy processes.
Extractive Industries Technical Advisory Facility (EI-TAF)
$4.9 million, 2012-2016
The Extractive Industries Technical Advisory Facility (EI-TAF) is a multi-donor trust fund administered by the World Bank. Australia is a major donor to the fund, having contributed $4.9 million since 2012. Our support makes up almost 20 per cent of the facility’s total operating budget. Other donors to EI-TAF are Belgium, Canada, Norway, Switzerland, and the International Finance Corporation.
EI-TAF provides short-term assistance to developing countries to help them understand, negotiate and analyse the complex financial, legal, environmental and related technical aspects of mining agreements. It has also developed the EI Source Book, an online resource that provides developing countries with technical information and practical options for addressing oil, gas and mining sector development issues.
As of June 2014 the majority of grants provided (75%) had benefitted African countries. In the Asia-Pacific region Papua New Guinea, Pakistan and Solomon Islands have sought EI-TAF assistance. The EI-TAF complements support provided by the EITI Multi-Donor Trust Fund , which is restricted to EITI implementing countries, and is also administered by the World Bank.
IMF Topical Trust Fund on Managing Natural Resource Wealth
$5 million, 2011-2015
The IMF Topical Trust Fund on Managing Natural Resource Wealth (MNRW TTF) delivers technical assistance to resource-rich developing countries for improved macroeconomic and fiscal management. Australia is a lead donor, providing $5 million from 2011 to 2015. Australia is Chair of the MNRW TTF Steering Committee in 2014-15. Other donors to the fund include the European Commission, Kuwait, the Netherlands, Norway, Oman and Switzerland.
Technical assistance is provided through the MNRW TTF on a demand-driven basis, under five areas of assistance:
- extractive industries fiscal regimes
- extractive industries revenue administration
- macro-fiscal policy and public financial management specific to resource-rich countries
- natural resources-related financial asset and liability management
- statistics for natural resources.
For each activity, the MNRW TTF funds a series of short-term technical inputs and expert advice to guide an identified reform process. In the Indo-Pacific region Laos, Mongolia, Papua New Guinea, Solomon Islands, Timor-Leste and numerous African countries have sought assistance through the IMF MNRW TTF.
International Mining for Development Centre (IM4DC)
$31 million, 2011-2015
The International Mining for Development Centre (IM4DC) was established in 2011 with funding from the Australian aid program. It draws on Australian expertise and experience in the mining sector, and is delivered through a partnership between the University of Western Australia and the University of Queensland.
The IM4DC provides education and training, fellowships, research, and advice in order to build knowledge, skills and institutional capacity within resource-rich developing countries. It aims to support developing countries to manage their natural resources well, maximize the opportunities from resource production, and minimize undesirable impacts. Core themes are governance and regulation, community and environmental sustainability, and operational effectiveness across the mining lifecycle.
By the end of its third year of operation, in June 2014, the IM4DC had trained more than 1,800 individuals from over 50 developing countries through 70 short courses, workshops and study tours. It had also completed 50 research projects.
Leading Practice Sustainable Development Program for the Mining Industry
The Leading Practice Sustainable Development Program for the Mining Industry (LPSDP) promotes sustainable development and industry self-regulation through proactive adoption of leading practice principles. The program was launched in 2006 and is administered by the Department of Industry. DFAT funds the translation of these handbooks to distribute to partner governments.
The LPSDP provides practical guidance to the mining industry through handbooks and workshops. Such resources assist with the implementation of leading practice, and offer the mining industry and other stakeholders the opportunity to improve their social and environmental performance.
An underpinning principle of the program is to encourage, within the mining industry, a shift in approaches and attitudes, as well as in the practices and technologies available.
Natural Resource Governance Institute
$1.9 million, 2012-2014
The Natural Resource Governance Institute (NRGI) helps people benefit from their countries’ oil, gas and mineral wealth by promoting accountable and effective resource governance. Formed from the merger of the former Revenue Watch Institute and the Natural Resources Charter, NRGI focusses on bringing a strong evidence base for the field via data, research and analytical work. Working with civil society, governments, parliament, private sector and media, NRGI enables reform dialogue and constructive policy advocacy. NRGI has head offices in London and New York, and regional hubs around the world servicing priority countries including DRC, Ghana, Guinea, Indonesia, Mongolia, Myanmar, Nigeria and Tanzania.
The Australian Government is a financial member of the Natural Resources Charter, and has funded NRGI work relating to developing country implementation of the Extractive Industries Transparency Initiative (EITI). This work included a multi-country analysis of the new EITI standard and co-funding NRGI activities with the UK in Myanmar, and with Canada in Mongolia.
The Kimberley Process
The Kimberley Process (KP) is a joint government, industry and civil society initiative to stem the flow of conflict diamonds – rough diamonds used by rebel movements to finance wars against legitimate governments.
Australia is currently the sixth largest producer of diamonds by weight and value in the world. In September 2014, Australia hosted a review visit (KP compliance check) of Australia’s diamond industry. In conjunction, a study tour organised by the International Mining for Development Centre shadowed the review visit to build skills in diamond industry governance and develop a wider network of trained review visit members.
Voluntary Principles on Security and Human Rights
The Voluntary Principles (VPs) are a set of guidelines that provide a practical human rights framework for the security operations of companies working in the mining, oil and gas industries. They are a useful risk management tool that increases companies’ competitiveness while advancing human rights.
Australia is an active member of the Government Pillar. Australia is currently drafting its National Plan for the Voluntary Principles and will work with other government departments, industry and civil society to implement the plan.