Mineral resources for development

Project description

Title: Mineral resources for development
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Kazakhstan, Kyrgyzstan, Tajikistan
Lead executing agency: Ministry of Economy, State Committee on Industry, Energy and Subsoil Use (Kyrgyzstan), State Committee on Investment and State Property Management, Ministry of Industry and New Technologies, Main Department of Geology (Tajikistan), Ministry of National Economy, Ministry of Investments and Development (Kazakhstan)
Overall term: 2015 to 2018

Context
Extractive industries play an important role in the economic development of Kazakhstan, Kyrgyzstan and Tajikistan. These countries depend on foreign investors to be able to exploit the full potential of this sector, yet a number of challenges hinder their efforts to attract such investment. These include inconsistencies between laws, legal uncertainty, a lack of transparency in bureaucratic procedures, fragmented responsibilities and a lack of qualified specialists. The state actors lack the planning, strategy and negotiation skills they need in order to influence conditions in the mining sector so as to attract investment and drive development forward. Local people in the mining areas do not fully understand the process or dynamics of mineral resources extraction, and they are not regularly involved in the decision-making processes for investments.

Objective
The economy in mining areas benefits from transparent state actions geared to the sustainable mining of raw materials.

Approach
The project is active in five areas.

  • Regional public-private dialogue. This consists of a cooperative, transnational discourse between relevant specialists and managers from the public and private sectors, with the involvement also of German private-sector actors. Dialogue events are held in cooperation with the Committee on Eastern European Economic Relations (Ost-Ausschuss der Deutschen Wirtschaft).
  • Development of a market-oriented legal framework. The underlying legal conditions for the mining sector are often still based on the principles of a planned economy. Overhauling the rules and regulations should establish greater transparency and accountability, especially for the allocation of mining concessions.
  • Enhanced conditions for investments in mining. The project is improving the processes and working procedures for those preparing to invest in mining. At the same time it supports the scope of the governments to secure revenue from the mining sector to reinvest in sustainable development.
  • Local development in mining areas of Kyrgyzstan. The project works with Kyrgyz ministries and authorities, as well as private sector actors and civil society interest groups, assisting them in collectively establishing local development strategies for the mining areas.
  • Technology-oriented training for specialists in Kazakhstan. Here, the project supports reforms aimed at establishing a cooperative (dual) vocational training system in the country.

The project promotes the Extractive Industries Transparency Initiative (EITI) at both national and regional levels. It runs workshops for civil servants and civil society representatives on implementing the EITI standards. These explain the new standards and reporting procedures, and describe roles of the national and local governments in Kyrgyzstan, Kazakhstan and Tajikistan.

Results
Specialists and managers from the state bodies responsible for the mining sector now understand better how they can achieve inclusive and sustainable economic development by using government revenues from the extractive sector. State actors are also more aware of the need for structural changes, and they have increased the skills they need to conduct contract negotiations with international raw materials companies.

New mechanisms to support communication with, and participation by the local people in mining areas are being piloted in Kyrgyzstan, while in Kazakhstan, the legal basis has been established for the reform of the vocational training system. The regional approach, combined with the differing levels of development in each country, has prompted important learning and change processes. In particular, the development path taken by Kazakhstan provides a strong model and a good point of reference for its neighbours.

Since 2012, in all three countries and in Germany, the project has organised six regional public-private dialogue events on topics ranging from ‘mineral resource evaluation’ to ‘socially responsible mining’. These events proved to be effective platforms for interaction between governmental bodies, mining companies and international and regional experts.

The Ministry of Economy and the State Committee on Industry, Energy and Subsoil Use in Kyrgyzstan have recognised the need for legal and organisational reforms. The Model Mine Development Agreement (MMDA) is used as a tool for guiding future contract negotiations and for drafting mining legislation. Kyrgyz institutions are also creating a more conducive framework to improve communication with local communities located near mining sites. A new regulation for regional development funds has also been introduced, ensuring that the use of funds from mining enterprises is agreed upon locally and remains integrated in the state budget processes to increase transparency and accountability.

A dual vocational education system has been introduced in Kazakhstan, which now provides training for the mining-related sectors in two mining regions: East Kazakhstan and Karaganda. The project has supported the Kazakh Government and other key players in establishing the institutional and legal requirements for the dual TVET system, adapted to specific conditions in the country. Besides this, the project has organised international exchanges of best practice to assist with the drafting of a market-oriented subsoil use code.

In Tajikistan, the project has agreed with its main partners that the reform of the legal and regulatory framework should include incentives for investment. The project provides advice on the legal reform process, while also supporting the first steps in establishing a key account system for the licensing process, and it is designing a model format for licensing contracts that the government can use as the basis for future licence negotiations.

Contact

David Oberhuber
david.oberhuber@giz.de