International Mining Industry

Matt Hancock Excerpts

Monday 8th September 2014 Commons Chamber

[The Minister for Business and Enterprise (Matthew Hancock)]

I congratulate the hon. Member for Falkirk (Eric Joyce) on securing the second debate on this subject that he and I have enjoyed. I think that his approach—including his emphasis on the role of mining in helping developing economies to trade their way out of poverty and into prosperity—is precisely the same as the approach that the Government take. It should be borne in mind that without the extraction of minerals such as coltan from developing countries such as Ethiopia, Mozambique and Brazil, it would not have been possible for his mobile phone to ring at the start of the debate. That approach is telling and practical, as well as being the right approach and one that we have taken at national and international levels.

The hon. Gentleman observed that some countries had used mining to take themselves out of poverty. He mentioned Rwanda, Zambia and Brazil, but it is also true that Botswana, which became an upper-middle-income country in 2007, was one of the world’s poorest countries when I visited it for the first time in 1996. Its success has been due largely to well-managed mining revenues from diamonds.

The hon. Gentleman spoke about the transformative effects of mining, pointing out that in some parts of the world such transformations are not positive. The success of mineral exploitation is down to governance as much as to physical extraction, low bribery rates, and law and order. The problem of conflict diamonds, for instance, arises when law and order and governance break down. This country has experienced the benefits of mineral extraction under good governance. That began in Cornwall, and evidence of the tin mines still litters the peninsula, but it has also happened in the midlands and the north of England where coal has been extracted, and, of course, in Scotland. The potential boost to economic growth is strong, is recognised, and is due to good governance as much as to the minerals themselves.

We take a cross-Government approach, which includes the Department for Business, Innovation and Skills and, of course, the Department for International Development. DFID has invested more than £50 million in bilateral aid spending on support for trade structures—for instance, building trade capacity and promoting regional integration to help to ensure that the governance is in a good place. The hon. Gentleman rightly emphasised that trade can serve as one of the most powerful functions ever introduced to increase prosperity and remove countries from poverty, but, as has been demonstrated throughout the world—not least in China—DFID also has a role to play in strengthening institutions, and strengthening the structures and the governance under which trade operates. We know, from our experience over the past few decades, of the enormous benefits that that engagement under good governance can bring. Indeed, extractives companies are important partners for us in government, ensuring that we help developing countries to make the most of their riches when they find them under their soil in order to drive up growth. That is the approach we take.

The hon. Gentleman mentioned the extractive industries transparency initiative. This is about progressing towards a common global standard of extractives transparency so that more citizens in poor countries share the benefits from natural resources. We are working with the World Bank, for instance in Mozambique, where we are investing in mining and gas sector reforms. We will support the Government of Mozambique to make sure that the laws on the ground are supportive, that operational standards are good, that health and safety is supported and that geological information systems are helpful. I pay tribute to the work that the hon. Gentleman has done as part of the EITI.

In May last year, the Prime Minister announced that the UK would sign up to the EITI. It is designed to build trust and dialogue between companies, civil society and industry. This is all about putting information into the public domain to promote public debate.

I also want to pay tribute to my hon. Friend the Member for Worcester (Mr Walker), who instigated the Business, Innovation and Skills Committee report into this area. This transparency is important, and many extractive companies are listed or headquartered in the UK and are supportive of the EITI. That stakeholder engagement has been very beneficial. For example, Rio Tinto and Shell sit on the multi-stakeholder board. Furthermore, in taking forward the beneficial ownership rules—pushed by the Prime Minister internationally and in the small business Bill—and in abolishing bearer shares and increasing the accountability of international business, we are acting in support of the direction of travel that the EITI plays such an important role in encouraging.

I note the presence of the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who plays an important role in driving this agenda and helping to ensure that, through engagement and improving policy at a global level, mining and industrial development in developing countries can, through good governance, benefit the whole of those countries.

I reiterate the Government’s support of the EITI multi-stakeholder group, of which the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), is the Government representative. I acknowledge the rapid progress that has been made to date. The UK successfully submitted its candidacy application on 5 August this year. That is a key milestone in taking the EITI forward, and we look forward to the outcome in October of the next international board meeting. By signing up to the EITI, we want Governments to know that the EITI is not just for developing countries but that it is a global standard, and we have a stronger argument to encourage emerging and developing countries to adopt similar rules if we have adopted them here at home.

Finally, I want to reiterate the importance of the trust and transparency agenda more broadly. It matters in mineral extraction, but it also matters across the board: making sure we know who really owns and controls UK companies, which will help us to have a publicly accessible central registry of people with significant control; improving the transparency of corporate ownership; and making sure that the UK is a trusted place to do business and invest.

The UK has a specific role to play in driving this agenda because of the number of global companies headquartered here, and because of London’s role as the pre-eminent global centre of international finance. Therefore, taking steps here in this House of Commons, such as allowing overseas conduct to be used as a basis for disqualification here in the UK and increasing the time limit within which proceedings can be brought following an insolvency, have an impact across the world in driving this agenda forward.

I hope I have assured the hon. Gentleman that the Government recognise the important role of mining companies in developing economies, as well as the role of good, strong governance domestically and internationally in ensuring that bringing prosperity out of the ground through the extraction of minerals has a positive economic impact on the local economy, supports prosperity and ultimately supports what we are all here to do—namely, to improve the well-being of our citizens and other citizens around the world.

Question put and agreed to.