Search

Begin New Search Topic Natural Resources Publishing Institution Natural Resource Governance Institute

1. Resource-Backed Loans: Pitfalls and Potentialloan

Author:
David Mihalyi, Aisha Adam, and Jyhjong Hwang
Publication Date:
02-2020
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Through “resource-backed loans” (RBLs) countries access finance in exchange for, or collateralized by, future streams of income from their natural resource wealth. The authors of this report reviewed countries’ past experiences with RBLs across sub-Saharan Africa and Latin America from 2004 to 2018. They identify risks and opportunities RBLs pose and provide recommendations for countries considering taking RBLs in the future. The researchers identified 52 RBLs, 30 of which were taken by countries in in sub-Saharan Africa and 22 in Latin America. They are distributed across 14 countries in the two regions. Thirty-eight were lent by Chinese policy banks, seven are from commodity traders, four are from other Chinese state-owned enterprises, one is from Korea Exim, one is from Nigeria and one is from Russia's Rosneft. Forty-three of the loans are backed by oil, six by various minerals, two by cocoa, and one by tobacco. The total loan amount represented in the dataset is $164 billion, of which $66 billion went to Africa and $98 billion to Latin America.
Topic:
Natural Resources, Finance, Resource-Backed Loans, and Revenue Management
Political Geography:
Africa, Sudan, Brazil, South America, Venezuela, Nigeria, Angola, Ghana, Ecuador, Guinea, South Sudan, and Congo

2. Beneath the Surface: The Case for Oversight of Extractive Industry Suppliers

Author:
Robert Pitman and Kaisa Toroskainen
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Large oil, gas and mining projects are usually associated with a few big names such as Shell, Exxon, Rio Tinto, Gazprom and Codelco. These are rights holders—companies that receive licenses from host governments to extract resources. Typically, however, lower-profile companies do much of the work to take natural resources out of the ground. These are suppliers—companies that provide the goods and services that make extraction happen. They range in size from multibillion-dollar international conglomerates to specialized or local firms that may only have a handful of employees. This report makes the case for greater oversight of extractive industry suppliers. It explains the economic significance of extractive industry suppliers and identifies the main stakeholders involved in supplier governance. It considers policy areas where the impacts of poor supplier governance play out and reviews how governments, rights holders, state-owned enterprises (SOEs) and suppliers are beginning to share information on the economic impacts of suppliers, how these disclosures feature in global transparency and reporting initiatives and what more can be done.
Topic:
Corruption, Natural Resources, Tax Systems, Coronavirus, Industry, COVID-19, and Revenue Management
Political Geography:
Global Focus

3. Building a Sustainable Electric Vehicle Battery Supply Chain: Frequently Asked Questions

Author:
Patrick Heller, Ethan Elkind, and Ted Lamm
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The global transition from fossil fuel-powered vehicles to electric vehicles (EVs) will require the production of hundreds of millions of batteries. The need for such a massive deployment raises questions from the general public and critics alike about the sustainability of the battery supply chain, from mining impacts to vehicle carbon emissions. Growing demand for the mineral inputs for battery production can provide an opportunity for mineral-rich countries to generate fiscal revenues and other economic opportunities. But where extraction takes place in countries with weak governance, the benefits expected by citizens and leaders may not materialize; in some cases extraction might even exacerbate corruption, human rights abuses and environmental risks. Many EV proponents and suppliers are aware that supply chain governance problems pose a challenge to the evolution of the EV industry, but outstanding questions remain about how these challenges materialize. This brief, jointly published by UC Berkeley School of Law’s Center for Law, Energy & the Environment (CLEE) and the Natural Resource Governance Institute (NRGI) provides basic information on the EV battery supply chain and key battery minerals, such as cobalt and lithium, and addresses the following questions: What does the supply chain for EV batteries comprise? How do carbon emissions from EVs compare to traditional internal combustion engine (ICE) vehicles? What are the most significant challenges in managing the mineral extraction necessary for the EV supply chain, and what sustainability and human rights initiatives apply?
Topic:
Civil Society, Corruption, Government, Human Rights, Natural Resources, Governance, Regulation, Legislation, and Supply Chains
Political Geography:
Global Focus

4. A Race to the Bottom and Back to the Top: Taxing Oil and Gas During and After the Pandemic

Author:
David Manley, David Mihalyi, and Colin Fleming
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Earlier this year as people around the world responded to the coronavirus pandemic, their demand for oil tumbled. At the same time, OPEC and Russia initially failed to agree to coordinate supply cuts. Consequently, the price of a barrel of Brent crude oil fell from $60 in December 2019 to $20 in April 2020. As of this publication, the price is $43. If the price stays low, and if oil executives expect the price to remain low, companies may lobby governments to reduce taxes and other costly regulations. Payments to governments are often larger than costs for a company, so there is pressure on governments to reduce taxes to keep projects viable. This briefing considers the following key questions: Where will the oil price go next? What is the impact on currently operating projects, undeveloped projects, and those that are yet to be discovered? How should governments respond in changing oil and gas taxes? Will governments try to “race to the bottom,” but then lose a race back to the top? Key messages: There’s no certainty over future prices. Some rise is likely in the next few years, even if an energy transition results in a structural decline in the oil price in the longer-term. Governments must consider this uncertainty and probable rise when taxing oil and gas. Tax breaks on most currently operating projects are likely a waste of public money. Some governments may be pressured into reducing tax on projects awaiting development. But they must identify which projects would become viable with lower taxes, and which do not need a tax break. If in doubt, governments should consider whether a project that needs a tax incentive really will provide value for the country. For most countries, relative to total oil and gas produced, the production from projects that could be delayed or cancelled is small. But not so for the “new producer” countries like Senegal and Guyana. Changing taxes to make a country more attractive has the most impact before companies have invested – e.g., in attracting investment in licensing rounds. But setting low taxes now could force a government to raise taxes later if prices rise again. If a tax break is unavoidable, governments could use a “sunset clause” to limit the duration of the tax break. Ideally, governments should set progressive tax regimes that respond to changes in profit. But as many taxing authorities struggle to measure profit, governments could set simpler tax regimes based on sales revenue or prices – but must prepare to change tax rates in the future, and be prepared for the repercussion for a government’s credibility with investors. Governments should disclose contract terms detailing tax changes, tax exemptions, incentives and estimated break-even prices of projects to help government auditors, local think tanks, and the public check and support tax policy decisions.
Topic:
Oil, Natural Resources, Gas, Tax Systems, Commodities, Coronavirus, and Revenue Management
Political Geography:
Global Focus

5. Massive and Misunderstood: Data-Driven Insights into National Oil Companies

Author:
David Mihalyi and Patrick Heller
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
National oil companies (NOCs) produce the majority of the world’s oil and gas, pumping out an estimated 85 million barrels of oil equivalent per day. Within their home countries, NOCs influence the degree to which billions of people benefit (or suffer) from their countries’ hydrocarbon assets. Many of these companies manage multi-billion-dollar portfolios of public assets, execute complex projects across their territories and at sea, employ citizens in the tens or hundreds of thousands, and perform a range of public services from providing energy to building infrastructure. Despite their importance, NOCs are poorly understood thanks to weak and uneven reporting, sparse research, and an absence of publicly available comparative data.
Topic:
International Affairs and Natural Resources
Political Geography:
Global Focus

6. Resource Governance Index: From Legal Reform to Implementation in Sub-Saharan Africa

Author:
Natural Resource Governance Institute
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
This report explores common resource governance successes and challenges in sub-Saharan Africa, taking advantage of the rich dataset and wealth of evidence documentation provided by the Resource Governance Index. While the authors detect common trends across the region, there is also great diversity between and within countries. It also documents examples of good practices from which officials in other countries can learn. The authors conclude with the suggestion that policymakers, parliamentarians, civil society, media and regional institutions focus more on narrowing the implementation gap, which will help to restore trust between government, communities and investors and thus strengthen sustainable management of natural resources. Creating space for public debate, strengthening capacity of public institutions and oversight actors, addressing lack of political will and learning from past legal reforms are possible solutions to address the implementation gap.
Topic:
International Affairs and Natural Resources
Political Geography:
Global Focus

7. Wild Growth: An Assessment of Erdenes Mongol

Author:
Andrew Bauer and Dorjdari Namkhaijantsan
Publication Date:
06-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Erdenes Mongol is Mongolia's most influential state-owned mining enterprise. It was established in 2006 to represent the government of Mongolia's interests in strategic mines, manage mineral licenses and promote the mining sector. In recent years Erdenes Mongol has evolved into a complex conglomerate with interests in many sectors, including unconventional oil and gas, roads, hospitality, power generation, steel, and asset management. The company's expansion represents an implicit government choice to invest in specific sectors rather than others, such as education, healthcare or renewable energy. Erdenes Mongol does not publish financial information on most of its subsidiaries and joint ventures. However, many are unprofitable. Those that are profitable, such as the Tavan Tolgoi coal project, have yet to pay any dividends to the state treasury. The Government of Mongolia may wish to consider several reforms, such as: (1) Enacting a new state-owned enterprise or Erdenes Mongol-specific law; (2) Clarifying the company's financial and governance relationship with subsidiaries; (3) Performing project-by-project market assessments in order to determine which assets to purchase and sell; (4) Developing clear criteria and an open process for appointment and dismissal of board members and managers; and, (5) Requiring greater public disclosures and audits, especially of subsidiaries and joint ventures.
Topic:
Natural Resources, Business, Mining, and Trade
Political Geography:
Mongolia and Asia

8. Beyond Revenues: Measuring and Valuing Environmental and Social Impacts in Extractive Sector Governance

Author:
Nicola Woodroffe and Tim Grice
Publication Date:
09-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Oil, gas and mining projects can generate substantial revenues for host countries. At the same time, extractive activities generate a range of other positive and negative economic, environmental, social, political, institutional and cultural impacts. Host countries must weigh the economic benefits of extractive projects against their environmental and social impacts. However, environmental and social impacts are often assessed in separate processes and by separate institutions from those assessing financial revenues and the modeling, measuring and reporting of these impacts is rarely integrated with financial impacts.
Topic:
Environment, Oil, Natural Resources, Governance, Gas, and Mining
Political Geography:
Global Focus

9. Assessing Tunisia’s Upstream Petroleum Fiscal Regime

Author:
Thomas Lassourd and Carole Nakhle
Publication Date:
09-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
The authors of this paper examine Tunisia’s upstream petroleum fiscal regime, in consideration of the government’s stated policy priority of reversing a decade-long decline in reserves and production. Although the country’s “Jasmine Revolution” led to improved civic rights and the country is a strong regional performer on the Natural Resource Governance Institute’s (NRGI) Resource Governance Index, foreign investment has dropped since 2011, in part because of regulatory ambiguity and political instability. Tunisia’s proven oil and gas reserves are very small, especially by regional standards. With limited geological prospects, the existing context is not conducive to oil and gas investment, especially for exploration. Tunisia offers different contractual arrangements and fiscal regimes: a concession-based system, which often involves joint ventures between the state-owned company, ETAP, and international oil companies and production sharing contracts. This paper analyses the various arrangements and fiscal instruments, focusing primarily on production sharing contracts, which have become the dominant contractual forms for foreign investors and do not require any public (ETAP) capital investment. The government of Tunisia publicly discloses all contracts and concessions.
Topic:
Oil, Natural Resources, Gas, and Fiscal Policy
Political Geography:
North Africa and Tunisia

10. Unpacking Decentralization: Improving How States and Regions in Myanmar Issue Artisanal and Small-Scale Mining Permits

Author:
Sebastian Sahla and Hosana Chay
Publication Date:
10-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Recent reforms in Myanmar’s mining sector have given greater powers to states and regions. Following regulatory changes in 2018, the responsibility for issuing permits for artisanal and small-scale mines has shifted from the capital Nay Pyi Taw to state- and region-level boards. Decentralization could be an opportunity to improve governance of Myanmar’s mining sector. Most artisanal and small-scale miners currently operate without permits. By reducing the physical distance that they need to travel to get a permit, decentralization could make it easier to operate legally. Legal title could strengthen livelihoods while helping the government to monitor mining activities. Decentralization in mining is also part of a broader shift to empower subnational stakeholders. It is an important element of Myanmar’s political transition and attempts to end decades of civil conflict. However, there are major challenges around how the government is implementing decentralization. States and regions have new responsibilities but not necessarily the experience and skills to fulfil them effectively. As a result, decentralization could drive mismanagement and corruption, exacerbate environmental and social impacts, and generate conflicts with large-scale mining. The authors of this report find that at present the potential benefits of decentralization could go unrealized.
Topic:
Natural Resources, Mining, and Decentralization
Political Geography:
Southeast Asia and Myanmar