Mining for Transparency in this Guava Season: Engaging Quarry Operators in the EITI
By Nazera Abdul-Haqq Policy Coordinator, TTEITI Secretariat
As Trinidad and Tobago weathers this guava and rainy season, the country is looking for every cent and environmental issues, such as severe flooding, seem all the more relevant. With this in mind, would it make sense to keep a focused gaze on an industry that has the power to earn over TT$ 300 million per year? In this rainy season, should the country allow illegal and/or unregulated quarry operations to engage in illegal hillside quarrying and contribute to soil erosion and flooding? As one would imagine, the mining sector in T&T has the potential to significantly add to or take away from the economy.
The sector provides much needed aggregates such as gravel, limestone and asphalt for construction and road building. Royalty payments from quarry operators contribute to the national purse (roughly TT$ 5.3 million in 2016) and the mining sector is a viable source of employment. Any obstacles to revenue collection and production can affect the quality of the roads that we drive on, to the types of buildings that we construct to the amount of royalties that the Government has available to spend on job creation, education and other social services.
Shortfalls in revenue/ royalty collection as well as illegal quarrying and unlicensed quarry operations are just some of the issues facing the local mining sector. While resolving these issues are not without its challenges, both the TTEITI and the Government have been working to reduce these gaps.
Improving Revenue Collection from Mining Companies
Engaging more companies in EITI reporting also brings benefits to the Government and by extension to the country. According to the White Paper on Minerals Policy 2015, the Government does not collect all of the revenues due to it from the mining companies because the system of collecting royalty payments is deficient. Of the total TT$ 132.3 million royalty payments that the government should have gained between 2005 and 2013, it collected only TT$ 13.3 million. The Paper also alludes to a potential gross underreporting of production and royalty payments between 2001 and 2013. EITI reporting therefore provides assurance to the public and the Government that it is receiving its due. In this current tight economic climate, reducing potential leakages is critical because every cent counts.
For fiscal year 2015, the TTEITI engaged Hermitage Limestone Ltd., National Quarries Company Limited, Trinidad Cement Limited and Lake Asphalt of T&T in a pilot project to report under the EITI. Publicly disclosing their royalty payments paid to the Government is a demonstration of their strong value for transparency and their belief in operating ethically and ‘above board’. For fiscal year 2016, these companies along with F.W Hickson have agreed to voluntarily report under the EITI.
On the Government’s end, there were several policy and legislative prescriptions developed in 2015 to help better regulate the mining sector. For example, the Minerals (General) Regulations 2015 introduced higher royalty rates and bond fees for quarry operators. Under the new rates, the government stands to collect significantly more but this depends on the effectiveness of the Ministry of Energy and Energy Industries to collect the royalties owed.
Increasing the number of licensed operators and reducing illegal quarrying
According to data from the Ministry of Energy, there are 91 active mining operators in Trinidad and Tobago – not all of which are licensed to operate. Only 10% of the companies have valid licenses while the vast majority (90%) either operate with expired licenses, are in the licensing acquisition process or are otherwise unengaged from the licensing process.
What harm is there in being unlicensed? Although some unlicensed companies pay royalties, there is no obligation for these companies to contribute to the national purse. Additionally, several environmental problems can arise through unlicensed operations, given that they fall outside of the environmental regulatory system. For example, it becomes difficult for the Environmental Management Authority to ensure that they properly rehabilitate abandoned lands, or that they do not mine in sensitive areas or even affect the water supply.
Nevertheless, the TTEITI successfully coordinated an EU-funded effort to rehabilitate 80 hectares of abandoned state quarry lands with the National Quarries Company Limited and the Ministry of Energy. This is a showpiece for the sector and demonstrates that companies with the right support can undertake this type of work to mitigate against the environmental risks associated with mining.
The Minerals Division of the Ministry of Energy, identified difficulties in the mining license process as the primary reason for the large number of unlicensed operators. The Ministry has sought to overcome this difficulty through training workshops. Moving forward, the MEEI plans to engage in a public communications campaign to make the licensing process easier. It should be noted, however that this is only the perspective of the Regulator. Factoring the perspective and experience of operators is equally valuable and necessary if these challenges are to be mitigated. The TTEITI plans to continue engaging with the quarry operators on these challenges and other pertinent issues.
It is no secret that change is a process that takes time. Despite the season, whether guava or rainy only through incremental steps can long term reform take root. The TTEITI continues to collaborate with the Government, civil society and companies to address mining sector challenges and thereby ensure that citizens receive the maximum benefits from T&Ts mineral resources. For more information on the challenges and opportunities facing the sector, see the EITI Report for fiscal year 2015 at www.tteiti.org.