The World Initiative of Mining Lawyers (WIOML) has launched a mining code that is aimed at guiding countries in attracting investment, while securing fair benefits from mineral exploitation within their borders.

According to consulting engineering company SRK Consulting partner and principal consultant Andrew van Zyl, the code provides a good starting point for countries without a code in place.

Van Zyl was a speaker at the recent WIOML conference where the code was launched, and said it also provided a “useful benchmark against which a country could compare its existing code”.

Some of the principles underlying the model code include fair licence allocation, the work-it-or-lose-it principle, the right to mine and the social licence to operate.

“Clearly, the transparent awarding of exploration licences is a key starting point for any national effort to promote mineral development,” he said, adding that this should be done on an objective basis with free and open access. However, Van Zyl added that there might be circumstances under which tendering could be considered.

Mining companies should also be given enough exploration time so there was a reasonable chance of making an economic discovery – the average period for an economic discovery is eight years – followed by a right to mine that is granted on objective criteria that are free of discretion, he noted.

Van Zyl added that a good mining code ensured that exploration operations were able to make ongoing financial commitments if such operations wanted to maintain their exploration rights and, if exploration operations could not meet financial commitments, they should relinquish them so that others might gain access. “The model code also encourages the use of mechanisms for local community engagement to entrench a company’s social licence to operate and recommends that the process for environmental approval should be facilitated through clear criteria and timeframes.”

Applying a clear and reasonable mining code would go a long way towards attracting investors, he said, adding that such a code should be augmented by a culture of constructive collaboration among mining stakeholders – which could gain traction while the global economy waited for commodity prices to improve.

Van Zyl stated that little appetite or ability currently existed to raise the billions in capital required to develop large mining projects. “But there is the time to invest much smaller amounts in the vital but neglected process of forging agreement and trust between miners, governments, communities, nongovernmental organisations (NGOs) and other interested parties.”

He added that the importance of in-depth negotiation well in advance of project implementation – especially when mining projects required complex and costly infrastructural arrangements – was essential.

“Too many projects are rushed into construction when commodity prices are buoyant and are consequently hampered by a lack of local buy-in and insufficient clarity about each player’s respective roles, responsibilities and benefits,” said Van Zyl, adding that, in many cases, the process became fraught with mistrust and brinkmanship, which delayed or even threatened the project altogether.

Van Zyl argued for expert legal, financial and technical input in such discussions at an early stage. “Ideally, these discussions should take place well before a project design is finalised and certainly before any funding is sought. Financing a project will in any event generally be easier where the champion can demonstrate cooperation and consensus among stakeholders.”

This approach would also help build the groundwork for a social licence to mine by facilitating deeper engagement with local communities, the public sector and NGO groups.

“It is vital for mining companies to take the initiative in setting up meaningful discussions, rather than waiting for governments to impose solutions that may not be as effective,” he said, adding that there was plenty of depth to the technical, legal, financial and other skills in mining’s service sectors – and that these had an increasingly crucial role to play in the effectiveness of broad stakeholder discussions.