ICMM makes new commitment on contract transparency and publishes members’ 2020 tax contribution

This new commitment requires members to disclose contracts they have committed to, what taxes they must pay and when payments are due. Members are also encouraged to disclose mineral development contracts granted or entered into before that date.

The commitment builds on ICMM’s existing membership requirement on ethical business practices and sound systems of corporate governance through the disclosure of tax and royalties as set out in ICMM’s Mining Principles. This new commitment is part of ICMM’s Transparency of Mineral Revenues Position Statement, representing a leadership position that is aligned to the Extractive Industries Transparency Initiative (EITI)’s existing requirements on contract transparency.

ICMM has also published the tax contribution of its members. In 2020, members reported total payments of US$23.7 billion, this represents an effective tax rate of 39.7%, an increase of 5% on 2019. This increase is a result of lower profitability in 2020, driven by a decline in commodity prices. This latest report, which was produced by PwC, found that between 2013 and 2020 ICMM members have paid over US$185 billion (corporate income tax of US$119.1 billion and royalties of $66.4 billion) to tax authorities across the world.

Rohitesh Dhawan, CEO, ICMM, said: “Contract and tax transparency are two critical components of a safe, fair and sustainable mining and metals industry, representing two sides of the same coin. The former allows citizens to understand what should have been paid, and the latter enables them to see what has actually been paid. Underpinning this is consistent, transparent disclosure, which is why ICMM has also published its annual Tax Contribution Report for 2020.

“Transparency and openness are at the heart of ICMM’s efforts to maximise the contribution of mining and metals to sustainable development. I am proud of this commitment and hope that it energises us all to continually seek ways of supporting development through disclosure."

Rt Hon. Helen Clark, Board Chair of EITI, added: “We welcome this commitment from ICMM member companies. Contract disclosure has been a requirement for EITI implementing countries since 1 January 2021. With both countries and companies now committing to their publication, we hope to see accelerated progress in this vital area of transparency. Publishing contracts is a powerful weapon against corruption, enabling contracts to be compared, and creating a level playing field for business. Transparency incentivises governments to arrange fair contracts with reputable companies, drafted in a way that is consistent with the country’s legal framework, and deters officials from concluding contracts that are disadvantageous or result in personal gain. In the context of the energy transition, contract transparency will also enable governments and stakeholders to assess how the extraction of raw materials will influence their ability to reach climate change targets. These are strong reasons to support contract transparency, and we would encourage other companies in the extractive sector to follow the lead of ICMM members.”

Maria Lya Ramos, Extractive Industries Global Program Associate Director, Oxfam, commented: “If citizens of resource-rich countries are able to scrutinise the decisions made by governments on their behalf, those decisions are more likely to be to their benefit. We congratulate ICMM on committing to contract transparency, and we hope that ICMM members will go beyond the requirement by publishing contracts entered into prior to 2021, as encouraged, as these disclosures will empower local stakeholders impacted by current projects and build greater trust between governments, companies, communities and civil society.”

Suneeta Kaimal, President and CEO, Natural Resource Governance Institute (NRGI), concluded: “Contract transparency is an essential way for citizens to hold companies and governments to account to ensure decisions are made in the public interest. With the energy transition spurring a round of new mineral investments around the world, this commitment sends a powerful signal to the rest of the mining industry and to ICMM’s peers in the oil and gas industry that responsible companies have nothing to fear from disclosing contracts. Governments of resource-rich countries that want to attract responsible companies should take note.”

Read the article online at: https://www.globalminingreview.com/finance-business/24122021/icmm-makes-new-commitment-on-contract-transparency-and-publishes-members-2020-tax-contribution/