Mining Institutions

1. What are mining institutions and why do they matter?

When a country has mineral resources that it wants to develop, it must create a policy and legal framework to guide this development. But the legal framework is not enough. A government institution is required to implement this policy, law and regulations.  This can take the form of a government department, ministry, agency, authority, or commission.  Some jurisdictions have set up a state-owned mining enterprise (SOE) that has some regulatory responsibilities, also.

These different types of mining institutions have somewhat different roles and reporting arrangements. How a government decides to set up its institutional arrangements to govern the mining sector depends on its overall economic policy. For example, a government that wants to ensure neutrality in licence allocation decisions may choose to separate its licensing function into an independent agency or authority. Or it may decide to include all regulatory functions under a senior public servant who reports to a Deputy Minister. Some jurisdictions may leave management of social, labour and environmental impacts to the government bodies set up to manage these issues for all industrial sectors. Others may choose to share the management of mining impacts between the mining regulator and other government departments.

For more information on legal frameworks governing the mining industry, explore the Extractives Hub Mining Legislation & Regulations topic.

Functions of a mining authority

The principle functions that a mining institution must include are licensing, inspection and provision of geodata. In addition to these, many modern mining institutions include functions related to mineral policy and mining sector promotion. Many mining institutions have chosen to include functions to manage social and environmental impacts. These are usually quite specific to the mining sector and require staff with experience in managing these impacts, even if there is a separate environmental authority that deals with over-arching environmental impacts.  In countries where there is a large artisanal and small scale mining sub-sector, there can be a discrete function dedicated to managing this level of mining.  All mining institutions require a group that provides corporate services. These would include Administration (including Information Technology), Finance  and Human Resources. Most mining institutions include all the following functions but they may vary in how they divide up the responsibilities both internally and with other government bodies.

Functions of other institutions in the mining sector

In addition to the mining authority that is responsible for promoting and regulating the mining industry, other government institutions usually have regulatory responsibilities, also. These most often include government bodies charged with collecting mining revenue and with managing the impacts of mining on the environment and on people. The most significant other government departments (OGDs) in most countries include Environment, Finance, and Labour. The institutions charged with Land Management, Energy and Water Affairs may also have regulatory responsibilities that affect the mining sector.  In some countries, local government or traditional authorities have a role to play in terms of land allocation, mostly for artisanal mining.

It is important for a government to clarify institutional arrangements that regulate the mining sector. This is one of the country risk factors that international mining companies evaluate when deciding on where to place their mineral investment. If there are overlapping or duplicating responsibilities between institutions, it may take mining companies a considerable amount of time to achieve regulatory compliance. Governments also need to ensure that their institutions are sufficiently strong to be able to handle large mining investments. Some countries may be unprepared for a large increase in financial inflows, such as the case of the anticipated growth in Guinea’s bauxite industry some years’ ago. While the country holds 28% of the global bauxite reserves, it has lacked sufficiently strong institutions and infrastructure to develop these resources. Institutions also have to be sufficiently resourced to negotiate terms and conditions on a level playing field with a global mining industry that has substantial legal, financial and technical resources at its disposal.

International institutions relevant to the mining sector

At the international level, a number of institutions have been involved with the mining sector for a variety of purposes:

  • The International Finance Corporation Mining Group provides equity and loan financing for mining companies to build projects that follow sustainable development principles. The Corporation contributes funding along with technical expertise. When the IFC is involved in a mining project, it applies its social, environmental and labour standards to the mining operation. This ensures that best practise standards in management of mining impacts are followed.

  • The World Bank has funded the development of many mining administrations, as well as mining and related legal frameworks worldwide. It has prepared guidelines for social and environmental safeguards, involuntary resettlement, and community development planning models for mining affected communities. It has also developed a site dedicated to the support of the artisanal mining sector.

  • The United Nations system has affected the performance of the mining sector through its work on sustainable development, human rights, peace, involuntary resettlement, migration, labour and trade. Many countries have signed international protocols that commit them to following good international practise in many of these areas.

Other international institutions including the International Council on Mining and Metals, the Organisation for Economic Cooperation and Development, and the Prospectors and Developers Association of Canada have developed performance-based guidelines throughout the minerals value chain for the exploration and mining sectors.