CONNEX Hosts Webinar on How Governments Could Engage with Mining Companies During COVID-19 and Beyond

CONNEX Hosts Webinar on How Governments Could Engage with Mining Companies During COVID-19 and Beyond

On July 7th, the CONNEX Support Unit hosted a webinar with a panel of experts to discuss issues concerning how governments should engage with mining investors during the COVID-19 pandemic and beyond.

 

Günter Nooke

 

In opening the webinar titled “Engaging with Mining Companies during Covid-19 and beyond”, Günter Nooke, Personal Representative of the German Chancellor for Africa, noted that the Covid-19 pandemic is both a health challenge and an economic crisis, which is directly impacting countries around the world.

 

“In the mining sector, the prices of commodities have declined further, and many mines had to close,” he said, adding: “This has reduced revenues coming to governments and it has impacted how mining companies are planning.”

 

It is against this backdrop that the CONNEX Support Unit convened the panel of experts moderated by Louis T. Wells, Herbert F. Johnson Professor of International Management at the Harvard Business School. The panel was comprised of Nicola Woodroffe, Senior Legal Analyst, Natural Resource Governance Institute; Susan Maples, Counsel, Curtis, Mallet-Prevost, Colt & Mosle LLP; Fabien Nkot, Senior Advisor to the Prime Minister of Cameroon; and Natty B. Davis, Former Minister & Chair of the Inter-Ministerial Concession Committee, Liberia.

 

Representatives of governments, multilateral institutions, regional organizations, development partners and civil society organizations participated in the webinar.

 

The theme running through the webinar was the importance of diligent preparation on the side of the government, including taking pro-active measures to review existing contracts, laws and regulations under which companies could request modifications, adjustments or even release from their contractual obligations.

 

Panelists underscored the importance of governments pro-actively reviewing contracts to be aware of all rights, duties and obligations. They specifically pointed out that it is important to review what force majeure clauses cover, as they may in fact not include epidemics as listed events that could trigger them. Even if they include epidemics, it must be clear that the event is what is directly preventing the company from fulfilling its obligations.

 

The importance of being diligent in reviewing other provisions, such as public international law, most-favored nation clauses, and how they affect contractual obligations of companies was also highlighted. Panelist noted that governments should endeavor to meet with companies and mutually look for solutions that will allow companies to keep operating without endangering lives or releasing companies from their contractual obligations.

 

Regarding contractual obligations, the panel noted that moments of crises are not the time to consider revisions of tax rates, royalties and other fiscal provisions, as such moments of uncertainty do not allow for clear-headed decision-making that will affect government revenues into the future. Governments were further urged to also take the opportunity to review existing agreements and draw lessons for future agreements, especially regarding how future agreements will deal with the different issues that are coming up during the pandemic.

 

In response to an audience question regarding the opportunities for governments, the panel noted that, when a company requests concession from governments during the COVID-19 period, it might present an opportunity for the government to review the historical performance of the company with regards to its obligations which might spotlight other issues for engagement.

 

In cases where companies approach governments for a renegotiation of their obligations, governments should consider engaging outside expertise in order to protect their interests. Where governments may require support in doing so, they could reach out to initiatives such as the CONNEX Support Unit, which provides legal and technical assistance to governments whenever they negotiate large-scale investment agreements.