Should we be earning more from mining?

 

The Mining sector is a major player often excluded from the extractive sector conversation and whereas oil and gas prices have been fluctuating over the past few years leading to decreased government revenue, the revenues from the mining sector are not being fully captured.

For the second time since implementation of the initiative in Trinidad and Tobago, mining sector revenues have been reconciled as several companies participated in a pilot project. The TTEITI is a voluntary initiative and in the latest report, five (5) mining companies participated, two (2) of which were state owned enterprises. These companies were

Trinidad Cement Limited, Hermitage Limestone Limited, National Quarries Company Limited, Lake Asphalt of Trinidad & Tobago (1978) Limited and F.W. Hickson & Co Ltd. The reconciled figures showed that government recorded collecting a total TT$13.3 million in payments from these companies.

One of the recommendations highlighted by the Auditor is that the process for obtaining a mining licence should be simplified and existing operations brought into a regulated environment. The Auditor also stated that a time bound plan is required for licensing operators and he emphasized on the need for transparency of the licensing process to be examined and published.  These recommendations were based on data received from the MEEI, which stated that of the eighty- two (82) active mining operations in the country, seventy- six (76) operate under expired licences while only six (6) are licensed. If only 7% of the sector is captured in these receipts imagine the figure if all companies were paying royalties.

 

How do we address Mining Sector Challenges?

On one hand while the MEEI Minerals Unit is exploring the use of drone technology to quantify production, there is greater need to invest in systems to better capture revenues.

The T&T EITI Report 2016 highlighted ways to address the issues surrounding the Mining Sector. The 2015 Minerals White Paper provide complementary legislative and policy prescriptions that aim to improve the regulation and performance of the Sector given the range of problems that have consumed the Sector over the past decade. The challenges outlined in the Minerals Policy are: unlicensed operators, impacts on the environment, poor health and safety practices and shortfalls on royalty payments.

Unlicensed mining operations: only 7% of operators are licensed. Environmental Challenges: These include forest degradation, land degradation and destruction to watercourses due to illegal quarrying. Licensees are also required to pay rehabilitation bonds yet the problem of non-rehabilitation of areas quarried has endured over the past several decades.

Poor health and safety practices: Health and safety practices of several operators are well below acceptable standards. Many participants also lack education and training in health and safety standards.

Leakages of revenue out of the sector: Poor collection of royalties and other payments prevents citizens from enjoying the maximum benefits generated by the Sector. To ameliorate this, the White paper states that the Government will adopt a new system of accounting, introduce a new system of verification at each quarry to quantify production and improve the MEEI’s as well as licensee’s capacity for record-keeping.

Based on the recommendations from the EITI Auditor another way to address the challenges surrounding this sector is to review the suggested  the resource level in the Minerals Department in the MEEI so that any planned improvements can be effective in practice. Another area for concern that was highlighted in the Auditor’s recommendations was the current monitoring system used in the mining sector process.

“Government relies upon declarations of production from operators in the absence of weighbridges on sites and adequate resource to monitor production more closely. An appropriate system to monitor production- for example, introduction of public weighbridges on a progressive basis, use of drones to assess production and stockpiles – coupled with an effective monitoring regime, would improve control over operations and could be expected to improve government revenue from the sector.”

–       TTEITI Auditor’s Recommendations pg 114

 While the 2015 White Papers acts as a guide to address the mining sector issues the Minerals Division has also been taking steps to collect unpaid royalties. The TTETIT Steering Committee and Secretariat have been doing their part as well by holding capacity building workshops with the mining sector companies and in mining areas with the intention of including more of the sector in future EITI Reports.

 

For more information on the Mining Sector, Mining Licenses and Royalty payments check out our full report at: www.tteiti.org.tt

 

Written by Gabrielle Rawlins- TTEITI Communications Officer