McGill –ISID Resources Extraction Conference
Public-Private Partnerships for Sustainable Development: Toward a Framework
for Resource Extraction Industries.
Hotel Omni Mont-Royal
March 29th
Keynote Address by Lawrence Kego Masha
Partner - Ishengoma, Karume, Masha and Magai (Advocates)
Ladies and Gentlemen, Distinguished Guests Good Afternoon.
As you have been told my name is Lawrence Masha and I am from Tanzania.
The subject at hand today is one of great personal interest to me because I had
the arduous task of dealing with the relationship between large mining
companies and the communities that surround them at a very close and
personal level for five years straight. Right now I am pleased to say that I have
the pleasure of reminiscing and not dealing with this topic on a day to day basis,
as it gave me many sleepless nights and it has no easy fix. I am sure that this is
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not the first such conference dealing with this topic , nor will it be the last,
especially during this day and age of heightened resource nationalism.
Today, I shall speak to you from my personal experience. It is a bit daunting to
speak to this esteemed audience of experts in the extractive industries, even
moreso because I am not an expert, I simply had the misfortune of being in the
wrong place at the wrong time. For five years I lived the life of trying to balance
the interests of large scale mining companies and the communities that
surrounded them.
There are two things I would like to stress from the outset:
1. Firstly, we should all remember that we are discussing a unique
industry, the extractive industry. It is unique in that whereas it is highly
capital intensive, it is romanticized by the very nature of the
resource….. Gold, Diamonds, Tanzanite etc…
Whereas the Companies …. (Management and shareholders alike) are
looking at the bottom line, the communities that surround the mines
only see the extracted resource and its value on the international
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markets, without a clear understanding of the costs involved in the
extractive process, especially when it was a resource mined artisinally
in the area for centuries prior to the presence of the large scale mine.
2. Secondly, and I believe most importantly it should be noted , or at least
let me say that I believe that it is possible for large scale mines and the
communities that surround them to live in a harmonious and
sustainable environment . Harmony at a mine site is not impossible!
In the year 2006, I was plucked from the comfort of private legal practice and
thrown into the world of policy making totally unexpectedly to become
Deputy Minister for Energy and Minerals for the United Republic of Tanzania.
Although I had willingly campaigned for my President and had run for
Parliament in Mwanza , Tanzania’s second largest city, little did I expect that
at the young age of 35 I would be appointed a Deputy Minister and not just
any deputy minister , Deputy Minister of Energy and Minerals.
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My President had campaigned on a platform whereby if elected, the
government would review the Country’s mining legislation as well as mining
contracts to facilitate a “win – win” situation. It was the perception at the
time by the public at large within Tanzania that mining companies were
unfairly profiting from mining in Tanzania and that the Country at large and
the surrounding communities in particular were being irreversibly plundered
and raped by the presence of the large scale mines in these areas.
I was assigned by His Excellency Dr. Jakaya Mrisho Kikwete, President of the
United Republic of Tanzania to spearhead a review of the mining sector in
Tanzania including the terms of the various mining development agreements
which were in issue. Somehow with my colleagues we were able to do this
and I am pleased to say we did it without me getting any grey hair.
The environment was hostile, especially to me personally. The public did not
trust me because they felt that I was too close to the sector. I was one of
three local shareholders of Tanzania’s largest Tanzanite mine prior to my
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becoming deputy minister, I had also been a legal advisor to numerous
mining companies prior to my appointment.
The Mining Companies on the other hand, initially felt that I would push
them too hard, taking advantage of the years of personal relationships I had
forged while working within the sector.
I on the other hand, was determined to do the best that I could to gain the
respect of all parties involved.
The matters I had to deal with almost immediately were mine incursions at
the North Mara Gold Mine owned by African Barrick Gold (ABG), disputes and
undermining at the Tanzanite One Mine in Merelani, General hostility from
the surrounding communities and their parliamentarians, hostility
from the
press and civil society with regard to the mining sector in general.
What I found to be most interesting was the role of the umpire that I almost
immediately found myself thrust into. More difficulty so , I was an umpire
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with a clear interest in the game (I wanted the sector to flourish)! My key
players all wanted to be protected by me , the umpire. Mining Companies
wanted the comfort from Government that their investments would be
protected and assurances that the Government would stand by their side and
not change the goal posts.
The Electorate wanted the umpire to protect Tanzania’s natural resource
wealth for the people of Tanzania and to ensure that the “poor Tanzanian
populous” was protected against the exploitative tendencies of the big
mining companies.
Most interesting however was that the fans who had packed the stadium, the
NGO’s, Parliamentarians, the press and civil society all wanted the mining
companies to lose the game and their cheers were ever so loudly heard.
As umpire, I was placed between the rock and the proverbial hard place, as a
representative of a Government wanting to promote foreign direct
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investment and to encourage growth within the Country’s second largest
economic sector, I had to take full cognizance of the views of the electorate
or risk my party losing the next election, yet at the same time one did not
want to be responsible for killing the goose that was laying the “golden egg”.
Thus as was directed by my President, I had to look for a “win - win”
situation; a scenario where the fans at the game would be rooting for both
teams equally; a situation where the key players would play with mutual
respect; a situation where the umpire could be truly impartial.
After becoming Minister for Home Affairs, my belief in this cause was
cemented even further.
How many times could I reasonably be expected to send in a police force to
deal with mine incursions or civil unrest surrounding mine sites, before I
looked as if I was in charge of a foreign occupying force? Was it sustainable
to always use the police as a solution to problems, or was it better to try to
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determine what the underlying problem was, so as to avoid the tensions
between the mines and the surrounding communities? Was it sustainable for
the mines and foreign direct investment in general to have a situation where
the communities surrounding mines were more like a war zone rather than
the stable community environment where one could enjoy working and
raising a family.
I often recalled stories from my father about the great Mwadui Daimond
Mine in Shinyanga Tanzania. Now, I am not so sure that his stories were fully
accurate, but the adoration with which he spoke about the mine evoked a
sense of what a mining community should be.
Everyone wanted to work for the mine, everyone wanted to do business with
the mine, and most importantly everyone wanted to protect the mine. Its
value and the need for its presence were well understood by all members of
the community.
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During my tenure in Government, I visited numerous mine sites….some at the
exploration stage and others at the level of full blown mining. But one visit in
particular has stuck to my mind over the years and that was a visit I made in
September of 2006 to the Tampakan Copper project in South Catabato in the
Philippines.
What impressed me most about this particular project was the approach
which was taken by the project promoters , Sagittarius Mines Inc. in relation
to the engagement of the community and their desire to have community
ownership of the project from its inception. The Company with great
foresight invested in community relations from the beginning of their
exploration programme. They did this not by building the traditional one off
classroom (although they did build a school) , but by actually investing in
sustainable programmes that would outlive the life of the mine in terms of
benefits for the people. Clear thought was put into how best to engage
different target groups within the community ----- women, youth etc…
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During the exploration programme, the Company invested in an agricultural
extension programme so as to teach the local farmers how to farm produce
which would be required by the mine were the mine to become operational.
The farmers were taught how to produce fresh produce at an export quality
standard and were assisted through their local cooperatives to find ready
markets for their goods with local supermarket chains thus generating
sustainable wealth creation for the people of Tampakan. It was intended that
once the mine was fully operational the local farmers would have a ready and
captive market , and the mine would not need to source fresh produce from
outside the community. The villagers had been given a skill which would
forever change their lives.
A local vocational training institute was assisted to develop courses that
would train certified technicians who would be issued with recognized
diplomas in fields that would be required by the mine were it to become
operational.
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Although I spent only a few days in Tampakan, the feeling I got from the local
community was highly encouraging. The community wanted the mine to
succeed, they felt that the mine was an integral part of their future and
community as there was a direct benefit that they saw from the presence of
Sagittarius Mines inc. My observation was that this was the direct result of a
trusting relationship which was nurtured from the time the mine was beign
conceived.
One of the biggest mistakes that I have seen within the mining sector has
been that many CSR Programmes are funded and developed not at the time
of exploration but to the contrary at the time when the mine is operational,
often in my opinion when it is way too late to salvage a relationship which hs
often turned sour.
During my five years of dealing with communities which surround mines one
thing which was always consistent was the cry by communities surrounding
mines to see an immediate economic benefit on the part of the communities
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as whole as well as the members individually. The questions which were
often asked were:
 Why are all the service providers all foreign?
 Why were simple labourer positions being filled from outside the
community
 Why are they not buying fresh produce locally?
The procurement experts within the Mines always had very good replies.
 Quality
 Bulk Procurement from Head office
 And my personal favourite “we will look into it”
In many societies, including Tanzania , procurement at mine sites
smacked of expatriate cronyism (in all fairness, most probably unknown
to the Corporate headquarters of most mining companies).
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Supplies which were procured locally more often than not were supplied
by westernized Tanzanians like myself who had become friends with
mine officials due to a common liking for the same British Premier
League Team, while having no direct link to the mining community in
question.
The presence of one or two such locals on a suppliers list has often
satisfied the queries of head office and Government, but not often the
cries of locals on the ground. In my considered opinion it does not
suffice to state that local villages do not have the capacity to supply
goods and services to the mining companies that come to their areas.
Mining Companies must invest directly as part of their exploration
budget in the communities that surround the mines so as to enable the
communities surrounding mining concessions to participate in varying
levels in the secondary wealth creation opportunities resultant from the
presence of a mine. Feel good projects such as schools, building of
dispensaries etc… are all good, yet they do not always touch the
immediate needs of those who are the most destructive to the
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harmonious and sustainable relations of the communities surrounding
mine sites.
To put it simply and in plain English, people want jobs and people want
money in their pockets ; To quote James Carville, Bill Clinton’s famed
campaign strategist, “It’s the economy
stupid”, it’s all about the
economy!
Having said what I have said, I do not wish to be understood as having
absolved Government of its obligations and role in the development of
skills, infrastructure etc…
It is clearly the duty of Governments’ at a
National Level to ensure that they produce mining engineers, mineral
economists etc… or in the case of Tanzania to ensure that the geology
department at the University of Dare s Salaam or Zanzibar is well
equipped to train the best geologists in the World. At a national level
this must be done.
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However it can not be ignored that many mines are situate in highly
remote areas which are simply not on the immediate developmental
radar of poor Countries such as Tanzania, and accordingly mining
companies should take it upon themselves to engage communities and
government alike to facilitate the presence of the necessary skill subset
required for the operation of a mine within a local community .
Now , I know that there are some CFO’s who would cringe at the thought
of making a substantial investment in community relations at the
exploration stage. CSR budgets are often calculated after knowing what
the cost of developing will be, the grade of the ore, cost of production
and the life of the mine. This is all well and good , what I would like
those CFO’s to calculate is this example of events that took place in
relation to one of ABG’s sites as follows :
 In 2008 due to incursions at a single mine site, losses of USD
7,000,000 are incurred in a single day.
 May 16th, 2011 , 5 villagers are shot resulting in ABG’s share
price falling by 5% in day.
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 Today a 14Km wall is under construction to surround the mine
Wouldn’t the losses incurred coupled with the money spent have been
better utilized if 1/3 or a ½ of the amount above had been spent as an
investment in the Community surrounding the mine.
My interaction with mining communities has led me to believe that
the residents of these communities are not interested in handouts
what they want is to participate in the wealth generation of the mine
so that they can determine their own future and developmental path.
Whereas it is true that many of the communities in question do
require schools, hospitals, running water and roads just to name a
few, the reaction that I have noted over the years in situations where
there is no wealth generation and these services have been provided
to communities has been as follows:
 They built the roads not for us , but to get their product to
market.
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 They gave us water because they had to get water to the mine
site.
 Amongst the unemployed youth, ---- I am too old for school and
I am not sick --- what do I need a hospital or a school for?
Mining Companies have to realize that when mining communities do
not feel a financial benefit from the presence of a mine, the
indigenous members of the community become resentful and
opportunists come in to take advantage. Cheap populist politics and
community based activism take over, more often that not sponsored
by NGO’s from the West who just hate the extractive industry .
I can not say that I have a solution to the issues at hand, that is why
you are all here… all I have tried to do is give you my perspective…an I
wish to thank you for listening to me.
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