UK-Listed Mining Companies

Debate between Jeremy Corbyn and Iain Wright

Wednesday 28th November 2012 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Benton. I still have fond memories of the Committee that considered the Bill that became the Housing and Regeneration Act 2008, which we endured together.

I congratulate my hon. Friend the Member for Falkirk (Eric Joyce) on securing the debate, and my hon. Friends the Members for Islington North (Jeremy Corbyn) and for Hayes and Harlington (John McDonnell), and the hon. Members for Hexham (Guy Opperman) and for Worcester (Mr Walker), on speaking so eloquently on such an important matter.

Hon. Members have spoken with one voice in the debate. The hon. Member for Hexham mentioned UK open-cast mining—I shall come on to that in a moment—and also talked about the importance of increased transparency and better corporate governance, because that improves accountability. There is a strong argument that if mining companies disclosed their payments to Governments on a country-by-country and project-by-project basis, it would be easier to see which companies were paying tax—and in which countries they pay it—who was paying bribes, the circumstances in which local officials or representatives were accepting bribes, and which projects were being waved through. That, in many respects, is the most striking example of what has in the past few years been called responsible capitalism—ensuring that big companies do not pillage and exploit the developing world’s natural resources, but provide mutually acceptable terms of trade, in the interests of all, that can benefit all the populations of mineral-rich nations, rather than just a narrow, privileged elite.

[Jeremy Corbyn]

My hon. Friend must be aware that high-value rare earths and minerals—coltan, diamonds and so on—are often smuggled out of countries such as the Congo, which is possible because they are dealt with in relatively small volumes. Neighbouring countries re-export them and then they are bought by dealers around the world. We will find that the traceable line almost disappears unless we force the countries that host the headquarters of a number of the dealing companies, such as Switzerland, to be part of the transparency process.

[Mr Wright]

I agree with my hon. Friend. A balance needs to be struck, with the UK being the centre of the world’s financial operations through the City of London, between moving unilaterally and providing for a multilateral approach to ensure that we can adopt my hon. Friend’s suggestion.

My hon. Friend the Member for Falkirk mentioned something in which I am particularly interested: ensuring that valuable resources such as rare earths, or minerals in general, are not sold for a fraction of their real market value. There is an argument, as we heard, that if developing nations received the fair market share for those important and valuable resources, the international aid budget could be reduced, because those mineral and resource-rich nations could develop their own economies and societies, and make progress along the value-added chain.

When dealing with reporting and regulatory requirements, critics often say that any additional requirements would be too onerous and would impose additional costs. It is often argued that it would be wrong to increase costs for mining companies at a time when the long-term global boom in commodities is coming to an end. However, an interesting article in The Economist earlier in the year stated that, in 2011, Angola awarded several new deep-water oil concessions to firms covered by the Dodd-Frank requirements with no apparent difficulty. It said that no oil company had cited increased openness as a material risk in its Securities and Exchange Commission filings.

My hon. Friend the Member for Falkirk talked about how hedge funds want improved transparency and reporting requirements because they want, to use his vivid phrase, to know where the money is going. Paul Bugala, a senior analyst for extractive industries at Calvert Instruments, which manages a $13 billion fund, states that such improved disclosure and reporting requirements would help him and the market better to assess political and regulatory risk, and would therefore allow for better investment and stock selection, improving share prices in the sector in the long term.

Companies already collect such data for internal use, so there is a strong argument that such a process would merely make the data public. The additional costs that are often cited would therefore be minimal, if not non-existent. If all companies had to fulfil this additional requirement, no competitive advantage would be lost. The article in The Economist concluded by saying:

“'The expense has been minimal for the few, such as America’s Newmont Mining, that already provide country-level reporting.”

In July 2011, in a speech in Nigeria, the Prime Minister said:

“It is not enough to import labour, extract Africa’s resources and move on. It’s vital that when foreign companies invest in a country, the benefits of that investment reach the African people, so they become less reliant on aid.”

The Prime Minister complimented the United States for introducing legally binding measures to require oil, gas and mining companies to publish key financial information for each country and project they work on. He said in the same speech:

“I'm calling on Europe to do the same. We want to disclose the payments our companies make to your Governments so you can hold your Governments to account for the money they receive.”

Although the Prime Minister made that speech and that pledge 16 months ago, there has been slow progress at a domestic or European level. One of the first replies that the Minister gave in her new job, with her shiny red box, was to state in mid-October that the Government are engaged in EU-level negotiations on transparency laws. She added that the European presidency would soon begin discussions with the European Parliament and the Commission to try to achieve some agreement on improved transparency in the payments that extractive industries make to foreign Governments. I will support her in that.

I appreciate that the Minister is relatively new to her post and her response was made only six weeks ago. However, there had been some movement in the month prior to her appointment. I am not suggesting for one moment that the Minister’s appointment has stalled progress—I hope she will not take offence; it genuinely was not intended—but a Committee of the European Parliament passed a vote in September requiring a European version of the US system through which oil, gas, mining and timber companies should publish their payments to foreign Governments. Will the Minister outline any progress that has been made in the six weeks or so since she answered that parliamentary question, together with any time scales that she is pressing on her European counterparts to reach European-wide agreement?

It seemed to me that the Prime Minister’s speech in Nigeria suggested that he wanted country-by-country reporting. The Minister’s parliamentary answer of six weeks ago seemed to confirm that stance. When the International Development Committee investigated tax in developing countries, it recommended:

“The Government should enact legislation requiring each UK-based multinational corporation to report its financial information on a country-by-country basis.”

In their response to that recommendation, the Government dismissed the idea of unilateral positioning on this matter, stating that they merely support mandatory reporting requirements at the EU level. I can understand that approach but, as I said in response to an intervention from my hon. Friend the Member for Islington North, what is the correct balance between moving in a unilateral fashion—given our financial importance in the world with the City of London—and moving at a European level? Is there anything that the UK and the Minister can do outside the EU? I would be interested to hear her opinion of the appropriate policy balance.

One of the areas of today’s debate has been the extractive industries transparency initiative, about which my hon. Friend the Member for Falkirk and the hon. Member for Worcester spoke particularly eloquently. As we have heard, the EITI was established a decade ago by the UK Government with the clear and specific aim of addressing corruption in the extractive industries. As the hon. Member for Worcester said, the UK has never signed up to EITI, despite being at the forefront of founding the organisation, so that seems to be a mismatch.

When the then Under-Secretary of State for International Development, the hon. Member for Eddisbury (Mr O'Brien), gave evidence to the International Development Committee investigation that I mentioned, he said that the UK’s reason for not signing up to the EITI was that we as a country are not “resource-rich”. I have looked at statistics from the Office for National Statistics, and disregarding the City of London’s position in terms of UK-listed mining companies, 16.4% of the UK total economic production constitutes mining and quarrying. That seems fairly resource-rich to me, given that we also have North sea oil. Will the Minister comment on that? Does she agree with the then DFID Minister? Does she not agree with the suggestion made today that the UK, as the founder of EITI, should lead by example? Does she agree that the UK’s joining would encourage other countries to join? Does she also agree that as this country is the world’s acknowledged centre for financial services and accountancy standards, and at the forefront of world-class corporate governance, and given that the City of London is the headquarters for so many multinational mining corporations, the UK should and could send out a powerful message by joining the EITI?

In response to the investigation, the Government said that they welcomed the strategy review of the EITI, which is looking at developing a broader standard for consideration by the EITI board, with a view to possible introduction in 2014. Has the Minister any thoughts on the criteria that would need to be met as part of the strategy review that would satisfy her enough to recommend to her DFID counterparts that EITI membership should be sought?

My hon. Friend the Member for Hayes and Harlington mentioned the London Mining Network. Has the Minister seen the network’s report on UK-listed mining companies and the case for stricter oversight? It is incredibly interesting reading. Will she comment on whether the Government would be amenable to the eight recommendations put forward in the report on such matters as the reporting of non-compliance with IFC and OECD standards, as well as ensuring—we have heard about this many times in the debate—that the FCA has powers to enforce section 172 of the Companies Act 2006 with regard to corporate reporting requirements relating to environmental and social impacts?

That report also raises interesting points about the reporting requirements of companies listed on the alternative investment market. I fully accept the differing reporting and regulatory requirements between AIM-listed companies and those listed on the FTSE 100, but it would be interesting to hear the Minister’s thoughts on the Government’s policy on whether AIM requirements for mining companies should be changed.

The hon. Member for Hexham talked about open-cast mining in his constituency and made the important point that the north-east was at the centre of mining. It has a rich heritage and helped the industrial revolution to come about. He mentioned two important points that I hope the Minister will address, including about individuals who want to sue mining companies because of what might be happening in their communities. Is the Minister concerned about the effect of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which makes it virtually impossible for any UK citizen to seek redress in such a respect?

The hon. Gentleman also mentioned planning and, quite rightly, the importance of the green belt in the planning system, and he cited what the Secretary of State for Communities and Local Government said in a speech in September. Will the Minister address the comments made by the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), in the past 24 hours, when he said—I paraphrase—“Let’s just build over the green belt”?

Academies Bill [Lords]

Debate between Jeremy Corbyn and Iain Wright

Thursday 22nd July 2010 Commons Chamber

[Mr Wright]

I thank the Minister for confirming that. My fundamental concern about this aspect of the Bill remains the same, namely that it seems to be a very centralising Bill. It diverts the relationship away from a school thinking about local stakeholders, and having a good, constructive partnership and collaborative arrangement with local people, pupils, staff and so on, and towards having a direct relationship with the Secretary of State. I thought that was contrary to what the coalition Government would want to do with regard to empowering local people. In that respect, I remain unhappy.

[Jeremy Corbyn (Islington North) (Lab)]

Is there not a problem with the lack of accountability of the Secretary of State? The Secretary of State effectively approves the transfer of funds between the local authority and the academy, in one way or another. If there is a dispute, it is resolved by the Secretary of State, who gave his approval in the first place. There is no obvious transparency in the system, as far as the Secretary of State is concerned, and it is not obvious where one goes if either party simply does not accept the Secretary of State’s decision.

[Mr Wright]

I certainly agree with my hon. Friend. The Secretary of State has made it clear that he is keen to expand academies as quickly as possible, so he has a vested interest in making sure that that happens. Then there is the decision on the transfer of surpluses; as my hon. Friend says, the Secretary of State is the final judge and jury on that issue. There is an inherent conflict of interest between various bodies, and I am concerned about that. There is a general concern about the complete lack of consultation with local stakeholders on the provisions, and I remain concerned about that.