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Peter Munk, chairman and founder of Barrick Gold, speaks to James Montgomery, editor of FT.com at Davos 2007 on January 25 2007

James Montgomery: Peter Munk, chairman and founder of Barrick Gold, thank you very much for talking to the Financial Times. You’ve been speaking at Davos this week about the problems you believe are caused by what you describe as rogue NGOs. What is a rogue NGO?

Peter Munk: NGOs came on the scene 20, 25 years ago and they were enormously beneficial and a major influence on improving global standards, whether it’s Amnesty International and Human Rights, whether it’s Sierra Club in terms of pollution, we all know that they made a major impact on world opinion and a major impact on the way we all operate today, particularly in the extracting industries.

Unfortunately, because of the high quality of these NGOs, there was no need and there was no intent by any governments to try to control them. They controlled businesses, they controlled corporations, they certainly controlled governments, so all the participants in the debate or dialogue who cannot develop a mine, are well known, but suddenly in the last decade and increasingly over the last few years, NGOs have emerged who people have not heard of before, who come from obscure, non-transparent background, who adhere to no standards, and, worst of all, who have no accountability, and the claims they make are sometimes so wild and so untrue and so blatantly untrue, damaging not just potential projects but corporations and individuals against which there is no defence, that the damage they cause is going to be incalculable, particularly now that we are experiencing a global boom in commodities. Ten years ago or 15 years ago when we had the bottom of the cycle, this would not have mattered because really there was neither the capital nor the need to develop a large number of new mines of base metals, energy, whatever. Today the picture has totally changed. They’ve gone through an unprecedented period, probably never before experienced, right across the board from wheat to platinum where every material, every raw material, has doubled and trebled in price because the demand is so powerful, so strong, that this of course in turn means that every miner and every producer maximises their production which means they exhaust existing mining capacities quicker, which imposes a new demand on putting new mines on stream and this is where the NGOs, these rogue NGOs, come in because they stop the ability of having these new mines evolve.

JM: And what harm do you believe rogue NGOs are doing as you see it?

PM: Well, number one, from a global point of view and from an overall point of view, the main damage, of course, is done to the world at large where you’re forcing people, and I mean people right across the globe from the Chinese worker who’s moved up from his generation long village into finally in a position where he can afford a bicycle or running water, to the luxury guy who’s riding a TJV train in France, every one of us. A large amount of money is being paid for those commodities than it would need to be without this unnecessary totally uncalled for and totally unjustifiable burden. So they’re making the commodity boom become so exaggerated that imposes a tax on global society and if it extends without control the behaviour of these NGOs further and they are able to thwart the development of major deposits, then the demand which will remain constant anyway, will drive prices up to unsustainable levels. So that’s damage number one.

Damage number two is that the communities where these mind deposits are, whether it’s in Europe, whether it’s in Latin America, whether it’s in Asia, or Africa, Africa, of course, is a whole case because of political issues, these mining communities mostly depend entirely on the economic benefits the mining companies would create by making a massive major investment which in today’s world a new mine requires. And that ranges from restaurants to hotels, from education to health, from infrastructure to super-structure. Then the employment issue. A major mine will employ people for two decades, from the lowest, unqualified labour to the foreman and to the manager 75 to 80% on these mines the employees are locals. Now, these locals have no chance of getting the kind of incomes and the kind of wage benefits that they could get from global mining companies. In many cases they go back to the state of absolute poverty because in many of these regions there is no other employment opportunity, so that’s the second major damage they cause.

And thirdly, they are putting a huge damper on the global prospecting community which is an integral part of the process to come up with mines. We always had prospectors who had the genius, who had the geological competence, and some of them were failures, most of them were failures, but some of them were such brilliant success stories that they were responsible for creating billion dollars worth of boom resource development to the benefit of the country, the community, the corporations, the shareholders, and reduced the price of the commodities by making a commodity available cheaply. And that activity is now cut in half because of this NGO rogue behaviour.

JM: So you’ve articulated the problem, what are the solutions and how can they be achieved?

PM: Regulation is always a highly debatable and difficult issue. We manage to regulate unethical businesses quite effectively from Better Business Bureau, which we have now across the world which regulates small businesses, to the big regulatory agencies from security commissions, from stock exchanges. Today business is a highly regulated entity. There is no business today of any scope or any size in a civilised society that can make false claims without being exposed to penalties. There is no business today that is not accountable properly. There is no business today that you do not know who is responsible for the funding and who actually has no transparency. Yet these rogue NGOs have neither accountability nor have any transparency, nor or are they at all answerable to anybody, and that’s what we have to do. How are we going to do it? They’re going to do it by voluntary action, by establishing a code of conduct that more and more governments will apply to, NGOs themselves, the credible NGOs, the major NGOs, who are such a vital part of the global dialogue, insist on this because their credibility is getting hurt by rogue NGOs. So if the community of miners with the government agencies together with the major NGOs get together, that will be happening and be happening effectively and ten years from now they’ll be regulated and they’ll be behaving to the same standards as industry and government is supposed to behave.

JM: You mentioned the role of government in enforcing transparency on rogue NGOs, but some sceptics might say that the countries in which many mining companies operate currently in the developing world, the government and regulatory authorities there are too weak to make a difference. What do you say to that?

PM: It’s a good point you raise but I’m talking about regulatory agencies, I’m talking about the regulatory agencies as far as businesses are concerned where the business is registered. The fact that Tanzania, where we mine, and we are the biggest foreign investors, may not have the kind of standards, that does not matter to us because our behaviour is governed by the highest standards imposed on us in the US and Canada and Britain, and the same holds true for our environmental behaviour. There’s not a major mining company I know of, including Berwick and including all our fellow miners, who do not, years ago, adopted an irrevocable and totally transparent stance where we as miners when we go into any country regardless of how lax their regulations are regarding pollution and the environment is concerned, we will adhere in developing a mine to our domestic standards which have to be the highest of all. So when we go to Tanzania, we go to Argentina, we go to the northern corner of Pakistan where we are now, we will apply the identical environmental and pollution standards as if we were to operate a mine in British Columbia.


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