Fifth Columbia International Investment Conference: “Extractive Industries and Sustainable Development: the Challenges of Implementation”

Date: October 27, 2010 9:30am – October 28, 2010 5:30pm
Location: Faculty House, Columbia University, New York



The shared goal of companies, host-country governments and civil society is an investment framework that promotes sustainable development and the mutual trust needed for long-term investments.  The extractive industries face a special need for such trust, given the massive long-term investments that they undertake in poor and potentially unstable countries.

Over 275 participants from 35 different countries from North and South America, Asia, Europe, Australia, and Africa attended the conference, which discussed the challenges of implementing cooperative, transparent, equitable, and efficient FDI in the extractive industries, the elements of successful initiatives, and how success can be scaled up and better implemented in the future to achieve real development outcomes.

Panelists included:

  • Motoko Aizawa, Head of the Policy and Standards Unit, Environment and Social Development Department, International Finance Corporation
  • Jose Alvarez, Professor, NYU Law School
  • H.E. Nahas Angula, Prime Minister, Namibia
  • H.E. Esperanca Bias, Minister of Mineral Resources, Mozambique
  • Peter Brady, Deputy General Counsel, Sustainability, Litigation & Regulatory Affairs, Vale S.A.
  • Albert Bressand, Aristotle Onassis Professor in the Practice of International and Public Affairs, Executive Director, Center for Energy, Marine Transportation, and Public Policy
  • Danielle Brian, Executive Director, Project on Government Oversight
  • Benjamin L. Cardin, U.S. Senator, Maryland
  • Maria Cattaui, Former Secretary General, International Chamber of Commerce
  • Luke Danielson, President, Sustainable Development Strategies Group; Former Director, Mining Minerals and Sustainable Development Project
  • Glenn Denning, Professor, School of International and Public Affairs at Columbia University
  • Tom Dimitroff, Independent Consultant, expert in oil industry negotiations
  • Peter Eigen, Chair, EITI
  • Rev. Séamus P. Finn OMI, Director, JPIC/SRI Ministry, Missionary Oblates
  • Philip Hemmens, Senior Vice President of Safety and Environment, Exploration and Production Division, eni
  • Witold Henisz, Professor, Wharton, University of Pennsylvania
  • Paul Jourdan, Independent Consultant, expert in resource based integrated development strategy
  • Mick Keen, Assistant Director, Fiscal Affairs Department, IMF
  • Kathryn Khamsi, Associate, International Arbitration, Shearman & Sterling LLP
  • Karin Lissakers, Director, Revenue Watch Institute
  • Herbert M’cleod, Office of the President, Sierra Leone
  • Kathryn McPhail, Senior Program Director, ICMM
  • Petter Nore, President of Oil for Development (OfD)
  • Diarmid O’Sullivan, Director of Oil Campaign, Global Witness
  • Jim Otto, Independent Consultant, mining law and economics
  • Srilal Perera, Former Chief Counsel for Legal Claims, MIGA
  • Ted Posner, Partner, Crowell & Moring
  • Peter Rosenblum, Professor, Human Rights Clinic at Columbia Law School
  • Jeffrey Sachs, Director, Earth Instituteat Columbia University
  • Manfred Schekulin, Chair, OECD Investment Committee
  • Thero Setiloane, Executive Vice President of Sustainability, AngloGold Ashanti
  • Meg Taylor, Vice President, Compliance Advisor Ombudsman, IFC
  • Mark Tercek, President and CEO, The Nature Conservancy
  • Louis Wells, Herbert F. Johnson Professor of International Management, Harvard Business School

The conference benefited from the attendance and participation of a number of key representatives from the major stakeholder groups working on the challenges of extractive industries and sustainable development, including high profile representatives from governments, civil society, the private sector, academia, and international financial institutions. The conference format ensured representation of each of those stakeholder groups on the panels, as well as interaction with other participants. The sessions were aimed at fostering a productive and dynamic discussion unconstrained by any formal presentations or guidelines.

The sessions followed a combination of the two processes that are at the core of the conference’s problematique:

  • The investment process for an extractive project, as embodied in an investment contract and its life-cycle, from “winning” the contract through implementation, monitoring, enforcement and dispute resolution.
  • The host country development process, which is profoundly dependent on the investment process in many countries, and yet goes far beyond these investments into the questions of savings and spending on state infrastructure and key public services.

ABBREVIATED PROGRAM  (The full program is available here.)

October 27, 2010, Wednesday

Session I: Reaching a better bargain

This session looked at the institutional environment governing extractive industry projects, including the formal regulatory framework, embodied primarily in laws and contracts (though also including treaties and local law), as well as informal community and societal institutions. Among other issues, this panel explored:

  • What are the benefits and limitations of putting more resources in legislation, contracts or informal understandings? What might a flexible fiscal regime that balances predictability with increasing governmental and societal capacity and uncertainty look like?
  • What are the key elements of a mutually fair, beneficial and sustainable project? And what formal and informal institutional structures and processes lead to such projects?
  • What might innovative approaches to investment promotion such as cost-sharing and infrastructure development by host countries look like?
  • How can community and country-wide institutions complement their formal counterparts in a manner than enhances the economic, environmental and socio-political sustainability of extractive industry projects, and when is the optimal time for the onset of developing these informal institutional structures?

Keynote address: “Breaking the resource curse through transparency” by Benjamin L. Cardin

Session II: Ensuring countries and companies get what they bargained for

Reaching the optimal bargain does not ensure that the mutual obligations and responsibilities will be effectively and fully implemented and monitored during the lifecycle of the investment. Thus, this session investigated:

  • Are there institutional gaps in the coordination of contract implementation and legislative enforcement that could result in less than optimal fulfillment of these obligations by government and companies?
  • In what areas is there a greater need for better contract monitoring and enforcement, by whom and how?  Environmental compliance?  Project development and approval?
  • How can corresponding government and company departments (e.g. governmental environmental regulators and companies’ environmental engineers) work more closely to ensure a coordinated approach internally on each side and mutually by both parties?
  • What are the strengths and weaknesses of reporting frameworks (for example, GRI, EITI, industry reporting indicators) that would be useful to monitor contract implementation?

Session III: Limiting disputes and achieving better resolutions

Disputes are, for many projects, an unavoidable part of the life-cycle of the contract; and, depending on the dispute resolution process, they can cause much damage in terms of reputation and profitability of the government and/or company.  Among the issues assessed in this panel were the following:

  • What are the most common causes of disputes?
  • How can contracts and arbitration be made more flexible to maintain the long-term relationship?
  • What dispute resolution models tend to achieve mutually agreeable outcomes to both sides?
  • How should (and could) sustainable development criteria be considered in dispute prevention and resolution?
  • Can a company build a comparative advantage on promoting renegotiation rather than arbitration?

October 28, 2010,  Thursday

Session IV: Beyond the contract and contracting parties: integration of extractive industry investments into local communities and the regional economy

It is a challenge both for investors and governments to optimize the contribution of extractive projects to the sustainable development of the local communities and the national or international communities affected by the extractive projects. The issues raised by this panel included:

  • How can resource rich countries and extractive companies maximize the development impact of mega projects, e.g., through forward and backward linkages, training, infrastructure development, and integrated local development plan? What constraints exist and how can we move beyond them? What are examples of success?
  • Who should finance infrastructure and training? What are the tradeoffs between state, private sector, World Bank, and sovereign development financing and how can countries and companies decide which option is best in the myriad situations they face?
  • What challenges have governments and companies encountered in the promotion of regional trade, infrastructure and development frameworks? Are there any regional legal frameworks, policies or treaties in the area of extractives that are models for others?
  • What forms of community relations and stakeholder engagement strategies generate the best designed community development initiatives that yield the highest payoffs for communities, government, and investors?

Session V: National planning for the optimal benefit of extractive resources

A successful, mutually beneficial relationship of governments and extractive industry companies requires a long-term development plan for the country, to ensure that the country and the population benefit from the resource extraction. This session considered:

  • How should long-term development plans consider extractive industry investments? What special considerations should resource-rich countries take into account? What role can companies play in development planning?
  • What role can resource funds play in long-term development planning? What lessons have been learned from past experiences with natural resource funds?
  • How can we ensure stakeholder representation in the management of resource funds and in long-term planning? How can we limit political influence (keeping politics out of development)?

Introductory remarks by H.E. Minister Natty B. Davis

Session VI: Integrated implementation: moving to specific next steps

This last panel focused on synthesizing lessons learned from the previous panels and generating specific next steps toward the implementation of an integrated development approach for governments and companies. It dealt with the challenging solutions of designing a comprehensive framework for extractive industries committed to sustainable development and of measuring success of an integrated development strategy on both the company and government sides.

Remarks by H.E. Minister Katiuska King Mantilla.