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Living under a 'resource curse'

By Andrew Hewett - posted Tuesday, 2 October 2007

Recent profit announcements from Rio Tinto, BHP Billiton and other mining majors riding the wave of demand for minerals from China and India suggest the ride isn’t likely to be over any time soon. However, not everyone is benefiting from riding the mining wave.

With sustained record high commodity prices, more and more mining companies are scouring the world seeking their fortunes in Asia, the Pacific, Latin America and Africa. All this is good news for investors and the Australian Treasury which announced a massive federal budget surplus last week due, in part, to Australian mining tax revenues.

While many are no doubt benefiting from the mining boom, spare a thought for some of the communities in developing countries in which some less reputable mining companies now operate. It’s clear many local communities have been left to wonder where the benefits of the mining boom have gone as they suffer under the so-called “resource curse”.


Mine-affected communities often experience increased conflict and hostility, as was seen at the Australian-owned Tolukuma mine site in Papua New Guinea last year when disgruntled landholders attacked and burnt down the community relations office.

Other communities have had their environments destroyed as a result of mining companies who, having abandoned the environmental standards of their home countries, have polluted rivers and oceans with heavy metals such as lead and mercury. Placer Dome (now Barrick Gold Corporation), poisoned the waterways of Marinduque island in the Philippines, offered inadequate compensation and then shut up shop absolving itself of any further responsibility.

Such abysmal corporate behaviour can rob people of livelihoods, inflame poverty and ride rough shod over people’s human rights.

A first line of defence for irresponsible companies is that they merely operate under the laws of the host country. However the reality is that many of the developing countries in which mining companies increasingly operate have both weak laws governing mining standards and limited capacity to enforce the law. The result is often little or no respect for the rights of affected communities.

One solution to such poor practice would be to create an independent Mining Ombudsman to look into overseas cases where the Australian mining sector has acted irresponsibly. This is neither a new nor radical idea.

Many Australian industries are subject to the investigations of an ombudsman such as the telecommunications, banking and financial as well as energy and water sectors. These complaints systems ensure that people adversely affected by these industries have a means of redress and can protect their rights. To date, people of local communities whose basic human rights are impacted by the Australian mining industry have not been afforded such protection.


In the absence of an official complaints mechanism accessible by these communities, Oxfam Australia established a Mining Ombudsman to investigate complaints of human rights abuses. The Mining Ombudsman has documented the impacts of mines on local communities in developing countries and the findings demonstrate the need for an independent grievance process.

Moreover, the Ombudsman model has demonstrated the benefits of a complaints mechanism capable of assisting corporate-community collaboration in remote areas where Government services are often practically absent, such as the Tintaya mine in Peru, and more recently with the Tolukuma Mine in Papua New Guinea. These interventions assist in addressing grievances while reducing the likelihood of further human rights abuses.

The Mining Ombudsman idea is catching on, with its potential to be of assistance to those whose environment is being polluted, to victims of human rights abuses, to states and to companies being recognised in Canada recently. All the Canadian players - government, civil society and industry participants - agreed that an ombudsman model “was the best way to advance CSR compliance in the extractive sector”.

An Ombudsman for the Australian mining industry could provide a competitive advantage, increase the mining industry’s transparency and force less ethical companies to improve their practices. It would enable companies to be more accountable to communities affected by mining, benefiting both the communities and the industry.

With the good times rolling on for Australian mining companies, it’s time to establish an Australian Mining Ombudsman. In this age of massive resource wealth the Australian mining industry and the Government can certainly afford it.

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About the Author

Andrew Hewett is Executive Director of Oxfam Australia.

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