N. Dorjdari, Coordinator of the National Resources Governance Institute of Mongolia, answers MMJ’s questions on the draft model agreement between local communities and mining companies. How do you find the Hogan Lovells draft of a model agreement on cooperation between a local community and a mining company?The agreement seeks to cover many issues that crop up between communities and mining companies. It describes the companies’ obligations to local economic development, scope for local citizens’ participation in the project, environmental issues, cultural heritage protection, etc. Aspects already dealt with in existing laws do not have to figure afresh in any agreement on companies’ cooperation with local communities. A major example of this is the issue of environmental protection.
Did you miss any major issue liable to come up?No. I rather think the draft can do without issues already mentioned and regulated through provisions in other laws in force, or through other agreements a company has to sign with the government. Costs related to the implementation of the agreement should not be exempted from the revenue tax, as that point is there in the detailed agreement on the project.
Do you think it is difficult to draft an agreement between such disparate parties, and do you also think that communities, especially at the soum level, have the capacity to make a success of such a wide-ranging agreement?We have around 1800 companies owning mining-related licences, working, of course, at different levels and in different spheres. Given that number, I think it will be helpful to have fewer issues in the agreement. I have already said that all duplications should be omitted.
Some responsibilities a company has to take during operations, such as relocating affected citizens and providing them compensation, should not form part of any agreement with locals.
Some measures should be taken to enhance the negotiating capacity of locals as also of their implementing skills.
At which level do you think the agreement should be most effective – the soum or the aimag?This should be kept open. Big companies like OT can have an agreement with both the soum and the aimag, as it already has. But for small and medium companies, the soum governor is a better choice, as the soum is where the mining operation will have its most impact.
Neither an aimag nor a soum should become too dependent on the local agreement for their development. That would be counterproductive in the long run.
With the law barring direct contribution to a local development fund, how can a company spend money on local development measures?I think some areas are left open for companies to give money for, for example, healthcare, education, and culture. What is forbidden is giving a donation to state organizations, especially administrative ones. NGOs operating in the area can take donation from the companies, but such arrangements should be transparent.
Incidentally, the draft has a reassuring provision on transparency. Many agreements are likely to be made, and transparency will be a major concern, especially in recording data. It is essential for citizens to participate in such exercises actively and in an informed manner. One good thing is that local citizens have by now got quite some experience of organising meetings and discussing issues.
A cooperation committee will monitor how the agreement is implemented, evaluate results and review feedbacks and suggestions from citizens. This committee will have 2 members each from the company, the local government, and civil society, but the last 2 will be nominated by the local governor. This means 4 of the 6 members will be appointed by the governor. Do you think this will rightly reflect citizens’ interests and views?In such matters the governor is not usually taken to represent citizens. That is the job of the CRK which should thus be more active in all things to do with the agreement. It is very important to ensure civil organizations’ participation is. They should be able to choose their representatives in the committee in an open meeting. It also has to be made clear whether all NGOs will be considered‘civil society organizations’.
Is it right to offer a model agreement, or does this impinge on citizens’ freedom of thought and action?It is not compulsory to follow the model, which merely sets out necessary things. A local community can certainly improve their skills to formulate the text of an agreement and negotiate its terms. The draft helps both citizens and companies to understand their respective rights and duties, and the modalities of implementation and monitoring. This avoids possible risks of either side or both sides being difficult and arbitrary, and allows them more freedom. In this context, it was an absurd thing to include in some agreements provisions barring citizens from publicly criticising the mining project and from takng any steps to obstruct it.