Project Title

Mining Industry Competitiveness: Improving Productivity and Data to Attract Investment 

Project Year

2016   

Project Number

MTF 02 2016A 

Project Session

Session 1   

Project Type

Standard 

Project Status

Completed Project   
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Project No.

MTF 02 2016A 

Project Title

Mining Industry Competitiveness: Improving Productivity and Data to Attract Investment 

Project Status

Completed Project 

Publication (if any)

 

Fund Account

APEC Support Fund 

Sub-fund

ASF: Mining 

Project Year

2016 

Project Session

Session 1 

APEC Funding

130,000 

Co-funding Amount

16,000 

Total Project Value

146,000 

Sponsoring Forum

Mining Task Force (MTF) 

Topics

Mining 

Committee

SOM Steering Committee on Economic and Technical Cooperation (SCE) 

Other Fora Involved

 

Other Non-APEC Stakeholders Involved

 

Proposing Economy(ies)

Chile 

Co-Sponsoring Economies

Australia; Indonesia; Mexico; Peru; Chinese Taipei; Viet Nam 

Expected Start Date

01/08/2016 

Expected Completion Date

31/12/2017 

Project Proponent Name 1

Constanza Kutscher 

Job Title 1

Strategies and Policy Planning Analyst 

Organization 1

Chilean Copper Commission 

Postal Address 1

Agustinas 1161, 4 piso, Santiago, RM, Chile 

Telephone 1

56-2 23828203 

Fax 1

Not Applicable 

Email 1

ckutsche@cochilco.cl 

Project Proponent Name 2

Not Applicable 

Job Title 2

Not Applicable 

Organization 2

Not Applicable 

Postal Address 2

Not Applicable 

Telephone 2

Not Applicable 

Fax 2

Not Applicable 

Email 2

Not Applicable 

Declaration

Constanza Kutscher 

Project Summary

From 2008 to 2012, the mining industry experienced strong growth in production due to increased commodity prices. Greater production was not accompanied by improvements to productivity, which reduced the economic sustainability and competitiveness of the industry once prices stabilized. In this context, decision makers in APEC economies need better information to create policies that boost mining productivity and attract investment. This project will assess these information gaps, and the demand for data on productivity factors for the mining industry. Such information would help reduce the knowledge gaps and achieve better performance in productivity and sustainability in mining, helping to attract quality investment. The project will conduct three main activities: (1) Definition of productivity indicators to be considered, (2) information collection and analysis, (3) the creation of a repository of information and dissemination of results activity.

Relevance

Relevance - Region: One of the fundamental pillars of competitiveness is productivity. Since 2012, mineral commodity prices, which had risen after the economic downturn of 2008, have fallen again, thereby reducing companies operating margins and their contribution to tax revenues. This new economic environment requires companies to achieve greater production efficiencies, focusing their efforts on improving the use of resources, rather than just increasing the supply to market; a common strategy for the high commodity cycles. Given that mining companies must consider a number of factors before starting or furthering an investment. Governments, companies and communities need reliable databases, populated with actual global mining industry experience, to provide transparent information about factors that influence productivity. With such tools, the investment and approval decision process, and the elaboration of guidelines, laws and public policies that promote and manage the mining industry, could be made easier. The main goal of this Project is to develop a set of productivity indicators and to assess demand for data on productivity for the mining industry, building upon existing commercial and public information. With better data systems, APEC economies will obtain reliable and transparent information about mineral production levels, and the economic factors that contribute to sustainable development of the mining industry.

The potential benefits of this project arise from improvements to the quality and speed of mining investment in APEC economies through provision of information for public policy development and investment analysis. Moreover, the project will promote transparency within the sector and strengthen public-private cooperation and regional integration in APEC economies. 

Relevance - Rank: The project falls in Rank 1 “Projects that demonstrate a direct link to promoting regional economic integration”, especially in category 2 “trade and investment facilitation and liberation”. The Project will enable economies to have better information to cooperate in relation to production, resources use, technology and employment. This could facilitate the development of new investment projects and increase productivity.

The project would also fall in Rank 2, “projects that directly support the APEC Leader’s growth strategy” in terms of growth potential and innovation. The Project could enhance cooperation for innovation and dissemination of best practices in production. 

In regard to the Mining Sub Fund Criteria, the proposed project supports all three requested criteria, as follows: a) Involvement of Private Sector: ABAC has expressed interest in being part of the project’s development process, Chilean industry is already engaged, and we expect to involve most of the Economy Member’s as well. Industries’ experience is a key factor during the process of information gathering, and company trade and investment will benefit directly from improved measurement and dissemination of information on mining productivity; b) Capacity Building within APEC: part of the project’s planned activities include sharing the results (leading to a database) with the members, through activities coordinated with the MTF annual meetings in 2016 and 2017. The main goal of these activities is to bring information to the attendees in order to support better policies to contribute to productivity improvements, enhance competitiveness, attract mining investments, deal with potential issues, and increase the sector’s sustainability; and c) Gender: women’s participation in the work force is an aspect that will be considered and analyzed as part of the indicators. It is crucial to know the level of involvement that women have in mining industry among APEC economies and to assess the contribution of women to productivity.

Objectives

The main objective of this project is to increase the competitiveness of APEC economies, increasing their productive efficiency, through the dissemination of key industry information in an economy level. The longer term impact is to strengthen economic growth, investment, trade and business capacity, delivering development benefits for communities and resources for expanding industries. To achieve this objective, it is important to (1) ensure participation of as many APEC economies as possible, for the sample to be representative, and (2) create a repository of information with all the information collected. 

For the study, we will consider the production of base metals (copper, zinc, lead, tin, nickel, aluminum, molybdenum, and cobalt), iron ore, and precious metals (gold, silver, platinum, and palladium). For the indicators we will consider, in the first instance, mine production, use of energy (electricity and fuel), work force (including percentage of women), and non-current assets (properties, plants and equipment). All this information will be considered as an average of every economy. The data reflects the main variables that explain productivity in mining and the repository of information is also able to incorporate various definitions of metal mining industry among economies. While valuable as a single analytical product, the repository of information will aim to attract public and private financing to become a long term product to serve the needs of APEC economies. This project is a onetime experience, however, it would be considered to develop a second phase depending on the success of this one, and update the repository of information deepening the quantity and quality of information. By doing this, in few year the economy members would have more and better information to use to develop policies and for industry to take proper decisions on investment.

Alignment

Alignment – APEC: The project supports Bogor Declaration, para 8, (1994) to develop more effectively the human and natural resources of the Asia-Pacific region while reducing economic disparities and facilitating trade and investment.

A key development challenge for APEC is to increase knowledge about leading policies and practices, including how input resources are utilized, such as energy, personnel, assets or commodities. Information from mining projects around the globe can be incorporated to close gaps between different economies and increase the contribution of economies to the industry’s performance all over the region.

The project supports the Mining Policy Principles agreed by the Ministers Responsible for Mining (specially number i, iii, and iv), and in the Strategic Plan, as the basis for the MTF, by pursuing policies that enhance sustainable production, promoting market transparency, and fostering investment certainty in the APEC mineral sector. The success of this project will depends on the quantity and quality of information collected, and how this translates into ongoing commitment to dialogue and data sharing. The more economies that participate, the more representative and reliable the data.

Alignment – MTF Forum:

Cooperation between MTF members to compare information among various economies will deliver APEC mining sub-fund objectives and APEC major targets, providing transparent information for decision and policy makers, delivering better data to the mining market, involving both private and public sector in the search of economic growth.

TILF/ASF Justification

The project will support the capacity building needs of mining developing economies of APEC by providing valuable information about the industry that will improve their knowledge, and improve transparency between the economies. 

Having a repository of information of productivity indicators will especially help APEC developing economies for two main reasons. First, many of the APEC developing economies do not have records of their own production efficiency (use of energy, work force, use of current assets per ton of mineral produced, for example), and so, they do not have basic data to create public policies. The creation of this repository of information will set a starting point for many APEC developing economies, who will begin recording information about their production to compare themselves through time. Second, once APEC developing economies have the information gathered, they will be able to compare themselves with the rest of the APEC economies, thus, the repository of information will serve as a comparison point to define what are their strengths and weaknesses.

The Project Overseer will work to ensure as much participation from as many APEC developing economies as possible. They will be advised on how to take registers on their productivity and they will be also asked to prioritize what information is relevant for their purposes. During MTF 2016, those economies were introduced to this project and provided with an explanation of the support they will get from the PO. 

This improvement in knowledge would help mining APEC economies (both developed and developing) to facilitate trade between each other, especially with regard to services and technology use. APEC economies will have the knowledge to identify what their weak and strong processes are, and take actions to improve or enhance them.

Beneficiaries and Outputs

Outputs: The project will include two meetings with the competent APEC economies: a) One before the project is developed, during 2016, and also through the QAF, APEC economies will have the chance to give their opinion on the project’s guidelines and propose other indicators, and b) again after the project is developed for results dissemination by delivering the report electronically. 

For the sample to be representative, the project will need as many APEC economies as possible, ideally all the mining economies should participate in the project. The project consists of developing a repository of information with relevant information about mining (mining indicators). The report will include:

- The methodology with the structure of the survey

- The set of indicators considered

-  The repository of information with the results per APEC economy 

For the research, we will consider the production of base metals (copper, zinc, lead, tin, nickel, aluminum, molybdenum, and cobalt), iron ore, and precious metals (gold, silver, platinum, and palladium).

For the indicators we will consider, in the first instance, the following indicators for all the metals named above:

1) Mine production (quantity of metal produced)

2) Mine production (processed ore)

3) Use of energy (electricity use)

4) Work force (hours actually worked: own employees and contractors)

5) Percentage of women in work force

6) Non-current assets (property, plant and equipment)

Every indicator named above will be divided by the corresponding metal (mine production of ore and metal) to normalize it. These indicators can change according to the comment that APEC economies will make. 

All this information will be considered as an average of every economy. The data reflects the main variables that explain productivity in mining, and the repository of information is also able to incorporate various definitions of metal mining industry among economies. While valuable as a single analytical product, the repository of information will aim to attract public and private financing to become a long term product to serve the needs of APEC economies. This project is a onetime experience, however, it would be considered to develop a second phase depending on the success of this one, and update the repository deepening the quantity and quality of information. By doing this, over a few years the APEC economy members would have compounding information to use to develop policies and for industry to take proper decisions on investment. 

Outcomes: APEC economies are crucial suppliers of mined commodities. According to the CRU APEC mining study (2014), APEC economies collectively produce more than half of the world’s iron ore, more than 70% of its copper, nickel, silver, lead, zinc, bauxite and tin, and more than 90% of its coal and molybdenum. For those APEC economies, the mining industry can contribute as much as 24% of the economy’s’s GDP. On the other hand, there is a lack of information about crucial mining data from these mining economies. 

Since the project will contribute with a data base on mining indicators, expected outcomes are:

- APEC developing economies that did not have a register of their performance in the past will start gathering that information for their own benefit and for the benefit of the rest of the APEC economies. They will be able to compare their performance through time and to identify good practices.

-  APEC economies will be able to recognize their strengths and weaknesses with regard to their position in the mining industry. Giving that, each economy will be able to create different policies to enhance the strengths and improve the weaknesses, and also policies to attract and sustain investment in the mining industry, both in medium and long term. Having transparent information about key mining indicators will help increase collective efficiency among APEC economies.

-  An indirect outcome of the project, driven by changes in policies to attract investment, would be the following positive impacts: Generation of direct (mine construction and operation) and indirect jobs (contractors, purchase of goods and services), infrastructure provision (construction of roads, power generation), and increase in the economy’s revenues. 

Beneficiaries: The direct project participants are the mining APEC economies, while the users of the outputs are both the APEC economies and the private sector.

The participants from the APEC economies will consist of selected members from mining public institutions, private and state-owned enterprises, mining union representatives, and researchers. Every economy should choose their participants that will help them gather the required information. The exact identification of the participants will be done through the contractor and the MTF members that participate from this project. Examples of institutions will be: Ingemmet in Peru, ABARE in Australia, Natural Resources Canada in Canada, ESDM in Indonesia, Mining General Coordination in Mexico, and Mineral Resources Authority in PNG. In the case of Chile, the participants will be SERNAGEOMIN (National Geology and Mining Service), SONAMI (National Mining Society), the Ministry of Mining, and COHILCO (Chilean Copper Commission). The participants will be the ones that will help the economies to get the information needed to develop the repository of information.

Therefore, the beneficiaries that will use the information obtained from the project, would be the decision makers of the mining industry (public and private), college researchers and other consultants or analysts. In Chile, we develop a database every year with information from the major mining industries. This would be a best practice to share among economy members. 

Economy Members will get engaged by their commitment on the relevance of this project to their own interests. ABAC are engaged as collaborators as shown in the letters to be delivered in proper time. The Mining Chilean Association (SONAMI) also is formally committed with this project. All of these participants will be asked to contribute in the process to gather information and comments on the draft reports. 

Having a data base on mining activities performance is very useful to know which economy is implementing good policies, what were those public policies implemented and what was the real impact of them.

Dissemination

We intend to disseminate the results of our project through all APEC economies involved. To do so, the most efficient way is through an electronic report that will include the methodology, survey structure, indicators, repository of information and analysis. We do not intend to sell the outputs, instead we will share them with all the participants since they gave their valuable contribution to the information contained in the report. Chile will publish the results in COHILCO’s web page, and we strongly recommend that the involved APEC economies publish this report in their institutional webpages as well.

The economies will not be able to update the repository themselves, but instead, Chile can repeat the survey and gather the information of every economy during the MTF annual meeting. The project does not include a web page, but just a report. 

The report will consist of three main parts:

1) Explanatory methodology, for capacity building and for future versions of the project.

2) Description of the proposed indicators to be measured. These indicators are mine production, use of energy (electricity and fuel), work force (including percentage of women and distribution of their positions), and non-current assets (properties, plants and equipment).

3) Results represented in a repository of information.

Gender

The project will collect data to create several indicators that will help APEC economies compare their performance, in regard to every indicator, with other economies performance. One of those indicator is related to work force, specifically, percentage of women in mining workforce, and what is the distribution of work positions among them. For the project, it is relevant to know what kind of positions women occupy in the mining industry, to realize how real the level of inclusion is. When inclusion is real, it is interesting to analyze the policies that were implemented to do it. 

The project overseer is Miss Constanza Kutscher, and the MTF representatives include also women. For the project development, Chile will search a multidisciplinary team that includes the participation of both men and women. 

There are many advantages of having women in one industry, not just for gender equality reasons, but also because women bring different points of view to the business, which can improve the industry’s perspective and performance.

Developed economies like Australia and Canada, have relatively high participation of women in mining, with 16.4 and 19.4% respectively (source: www.wgea.gov.au, 2013; www5.statcan.gc.ca, 2015). By knowing how high or low the percentage of women recruitment is, the different economies can take action to increase this percentage. This can be done by checking the recruitment plans for women in those economies with higher percentages, reviewing their policies and, when possible, adapting their practices to increase the number of women employed.

Work Plan

Based on project objectives, there would be three main activities. The dates and outputs would be:

I) Joint Expert Activity, with public and private sector, with the expected collaboration of ABAC. (MTF10)

-  Chile already presented the project to the APEC economies and invited them to participate and give their feedback about the indicators proposed. The economies showed their interest in participate and in the repository itself.

-  APEC economies that decide to participate will answer the QAF and write their comments, propose changes to the project, resolve their inquiries.

-   The project overseer will contact the APEC economies to encourage them to participate in the project. 

II)  Data collection and consultant reporting from economies (September to December 2016), including preliminary analysis of how data and dialogue can improve productivity and investment climate, and figure out relevant variables and indicators on it

-  Once the project is approved, a tender process will take place to determine who will be the contractor. The PO will undertake an open tender process for the consultancy. The PO will work with the Program Director to ensure APEC Procurement Principles are applied prior to engaging of or entering into any financial commitment.

-  Project overseer start working with the contractor to define the methodology including the comments made by the participant APEC economies.

-  The contractor will develop the structure of the survey. After that, this structure will be reviewed by the project overseer along with other institutions that have shown their interest in this project (ABAC, Mining Chilean Association).

-  Once the survey’s structure is approved, the contractor will contact the participant APEC economies to make the survey.

-  As the responses of the survey come to the contractor, he will be developing the repository of information.

-  Every six months, the contractor will deliver a monitoring report (two pages) with key information: challenges, level of progress, main findings, possible changes, among others.

-  Developing of the repository of information with all the information available. 

III)  Dissemination activity (MTF11)

-  Presentation of the results of the database in the MTF 11 meeting

-  Gathering of all the comments of the participants

-  Review of the repository of information and developing of the final report

-  Electronic dissemination among the participant APEC economies

Risks

The main risks associated to the project are the following two:

1) The main risk that could hazard the success of the project would be the lack of motivation of the APEC economies to participate. This could be due to internal policy reasons (restrictions in information dissemination), work pressures already placed on staff, or different priorities among the members. 

2) The second risk identified is the lack and/or low quality and amount of information to build the different indicators. Even if the economies do want to participate, there could be some information that is not registered and, therefore, not possible to be used. 

To manage the first risk we presented our project in the MTF 10 and also by disseminating the Project Proposal, where all the benefits of the project were explained. There will be an instance (during the project’s development) where all the APEC economies will have the option to give comments to the project in order that it can serve the majority of them and commit his active participation. That meeting is a key point in the project’s development, because there we will be able to gather which is, according to the APEC economies, the relevant and accessible information to be included.

The second risk can be managed in the long term. APEC economies have shown their interest in gathering this information for their own use and for the repository of information. Many of them said that even if they do not have the information now, they are willing to have it in the future. For years to come, the repository can be more completed and this risk can be mitigated.

Monitoring and Evaluation

The project overseer will be in constant contact with the contractor to monitor the progress of the project. Contractor and project overseer will be working according to an internal Gantt chart with different milestones to be accomplished. The project overseer will be also in charge of monitoring the quality of the work done by the contractor. 

Project success will be determined by the level of demand identified for ongoing exchange of information between APEC economies relating to mining productivity and investment conditions. We will consider progress and results indicators. While the first ones are related to the activities described above on the work plan, the seconds are related to the objectives of this project, which are to have a representative sample of the APEC economies’ mining sector. Impacts and success of this project will be note on APEC economies’ interest in developing a second phase, deepening the data base’s quantity and/or quality. 

The information will be collected through surveys and interviews to the representatives of the participant APEC economies, according to the methodology proposed in the project. 

One of the most important indicators is the level of participation among the APEC economies. We will consider a successful recruitment if we can get a 30% of the economies to participate and cooperate with the project. 

Indicators with direct impact on increasing investment in different APEC economies could measure after a second stage and agreement to subscribe between the APEC economies regards transparency policies on information arising as a result of this final phase.

Linkages

Mining data is collected by private firms, such as SNL.com and Wood Mackenzie, and multilateral agencies such as the World Bank Group and the International Monetary Fund. With regard to women participation in mining, we will look to have a rapprochement with PPWE to look for synergies.

The project will assess the relevance and availability of data to APEC economies to enable them to benchmark and improve national productivity and investment climate. 

Some of the issues to be approach may be of interest to other APEC groups, therefore it is expected to meet with the Chair of some of them in order to let them know the progress of this project and develop a platform of collaboration, such as Market Access Group, if possible. Private associations are interested to support actively this project, starting from ABAC, also the biggest Chilean Mining Association has expresses explicitly its commitment. We expect to increase the associations’ involvement during the project development.

Sustainability

Despite this project is a onetime activity, we propose to repeat the experience every year to update the information gathered. Data are subjected to change every year, and it is crucial to have this information updated. On the other hand, we will be able to check how the indicators evolve, this is, if the APEC economies are using the repository of information to create public policies to improve their performance. 

Once the project is complete, doing a second phase would be much easier, because APEC economies will already know what information they should disseminate for the database to be completed.

To update this repository of information, we will ask all the participant economies for them to gather this information and share it in the MTF annual meeting, so Chile can update the repository and share it with everyone. The Project Overseer will be in charge of asking the participant economies to have this information ready and to put everything together for the next version of the report.

One benefit of participating in the data collection is to highlight which areas in an individual economy are lacking and/or could be further developed. In the case that an economy identifies a lack of information in a specific area, cooperation among economies is expected to take place. This is, one economy can share their methodology for gathering certain information with another economy that didn’t succeeded in doing this.

The outcomes and impacts will be measured by the level of usage that APEC economies give to the repository of information. We will know this by a simple questionnaire where we ask if they have use it, and in case of a positive answer, we will ask how useful it was. The questionnaire will take place one year after the official dissemination of the project.

Project Overseers

The project will be managed by Miss Constanza Kutscher. She will be in charge of manage the contractors and specialist, along with choosing the contractor in the bidding process. She will ensure the compliance of the proposed milestones and will review the work done by the contractor. 

Miss Kutscher works as a strategic and public policies analyst in the Chilean Copper Commission (Cochilco). She is a civil engineer from the Catholic University of Chile, with a master degree in environmental conservation education from the New York University. Her contact data are:

Email: ckutsche@cochilco.cl
Phone number: +562 23828203
Address: Agustinas 1161, 4th floor, Santiago, Chile

Cost Efficiency

Not Applicable.

Drawdown Timetable

Not Applicable.

Direct Labour

Not Applicable.

Waivers

Not Applicable.

Are there any supporting document attached?

No 
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Version: 4.0 
Created at 03/08/2016 10:37  by Lucy Phua 
Last modified at 15/08/2018 13:19  by Lucy Phua 
Version HistoryVersion History

Project No.

Project Title

Project Status

Publication (if any)

Fund Account

Sub-fund

Project Year

Project Session

APEC Funding

Co-funding Amount

Total Project Value

Sponsoring Forum

Topics

Committee

Other Fora Involved

Other Non-APEC Stakeholders Involved

Proposing Economy(ies)

Co-Sponsoring Economies

Expected Start Date

Expected Completion Date

Project Proponent Name 1

Job Title 1

Organization 1

Postal Address 1

Telephone 1

Fax 1

Email 1

Project Proponent Name 2

Job Title 2

Organization 2

Postal Address 2

Telephone 2

Fax 2

Email 2

Declaration

Project Summary

Relevance

Objectives

Alignment

TILF/ASF Justification

Beneficiaries and Outputs

Dissemination

Gender

Work Plan

Risks

Monitoring and Evaluation

Linkages

Sustainability

Project Overseers

Cost Efficiency

Drawdown Timetable

Direct Labour

Waivers

Are there any supporting document attached?

hdFldAdmin

Project Number

Previous Fora

Secretariat Comments

Reprogramming Notes

Consolidated QAF

Endorsement By Fora

PD Sign Off

Batch

Forum Priority

Committee Ranking Category

Committee Priority

PDM Priority

Priority Within Funding Category

Monitoring Report Received

Completion Report Received

PMU Field 1

PMU Field 2

PMU Field 3

On Behalf Of

Proposal Status

Originating Sub-Forum

Approval Status
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