New guidelines for Chinese mining companies operating overseas were launched today by a Chinese business chamber called the CCCMC, which is supervised by the Ministry of Commerce. The guidelines represent the strongest endorsement by a Chinese government-affiliated body of international standards to prevent corruption linked to the mining sector. You can read a full briefing about them here.
The guidelines encourage mining companies to publish the revenue payments they make to governments in line with the Extractive Industries Transparency Initiative. This is the landmark transparency scheme which requires extractive firms in participating countries to publish their payments – such as taxes, royalties and licence fees – from each project they operate. The Guidelines also cite the EU Accounting and Transparency Directives and the US Dodd-Frank Act (Section 1504) laws, which also oblige oil, gas and mining companies to report payments at the project-level.
These laws could be a game changer for people in resource-rich but poor countries. By being able to see the payments from each project, communities living near extraction sites will be able to monitor the hundreds of billions of dollars that companies pay each year and hold their governments to account for how the money is used. CCCMC should be applauded for taking this step to encourage responsible business.
This development in China could also have a positive impact in the US, where the situation is less promising. Once the champion of revenue transparency, the implementation of the Dodd-Frank Act (Section 1504) is still on hold following a spurious legal challenge by the American Petroleum Institute (API), an oil lobby group. As part of its attack on the US rules, a dwindling group of oil companies including Exxon, Chevron, Shell and BP, represented by the API, have used the ‘What about China?’ argument to claim that the US rules will put them at a competitive disadvantage to their Chinese counterparts.
The fact that China’s biggest oil companies are already covered by the same revenue reporting standards, including PetroChina, CNPC and CNOOC, already skewers the API’s case. With a government-supervised Chinese industry body now endorsing revenue transparency, the API’s push for weaker rules has been undermined even further.
It’s time that Big Oil took the gun away from the head of US regulators and instead embraced the new global standard in revenue transparency. Otherwise, where once it led the way, America risks lagging behind the rest of the world and perpetuating the secrecy around oil and mining revenues that leads to conflict, corruption and human rights abuses.