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SEC heads back to drawing board on mining transparency rule

U.S. Senators, Oxfam America, and groups representing $5.6 trillion in investments have urged the SEC to quickly rewrite its mining transparency rule.

The SEC Tuesday said it will rewrite its oil, gas and mining transparency rules, instead of appealing a federal court ruling that said the agency’s financial disclosure rule has “serious” problems.

On July 2nd Federal District Judge John Bates ruled the commission misread a Dodd-Frank statute requiring mining companies to disclose what they pay foreign governments for mineral rights. Bates found forcing companies to reveal foreign payments in countries where those nations prohibit such disclosure, “drastically increased the rule’s burden on competition and cost to investors.”

Adopted a year ago, the SEC financial disclosure transparency rule required 1,100 publicly traded mining, oil and gas companies to report payments greater than $100,000 made to host countries for their resources.

The oil industry sued, arguing that the requirement to provide financial details for specific projects rather than whole countries at a time would give their rivals a competitive advantage.

SEC spokesman John Nester told news media Tuesday that the commission would not appeal the federal court decision. The agency had until September 2nd to file an appeal.

Meanwhile, the SEC could choose to add an exemption to the original rule, or reenact a new rule with additional justification.

Also on Tuesday, Oxfam America announced it had joined U.S. senators and key investors “with over five trillion dollars in assets to call on the Securities Exchange Commission (SEC) to promptly re-issue landmark oil, gas and mining transparency rules.”

“The oil industry might want to keep their dealings in the shadows, but the global momentum for increased transparency in the oil, gas and mining industry is irreversible,” said Ian Gary, senior policy manager for extractive industries at Oxfam America. “It’s now up to the SEC to swiftly reissue strong rules for Section 1504 with a strong justification that satisfies the court’s requirements.”

“The bill is back in the SEC’s court and they must urgently breathe life into this landmark law,” Gary stressed. “Millions of poor people and investors worth trillions of dollars are still waiting to be armed with the knowledge of how much money oil and mining companies pay their governments so they can claim their rights and protect their investments.”

On August 28, a group of 44 international investors representing more than $5.6 trillion in assets wrote the SEC Chairman Mary Jo White to reduce the mystery in resource deals in order to reduce the operating risk for oil, gas and mining companies from resource nationalism, social unrest, and market risk from volatility in commodities prices. “The less mystery there is behind these resource deals, the fewer unpleasant surprises we can expect,” said Frank Curtiss, head of corporate governance at Railpen Investments.

In a August 2nd letter to the SEC, U.S. Senators Benjamin Cardin, D-Maryland, Patrick Leahy, D-Vermont, Carl Levin, D-Michigan , (former Senator) Richard Lugar, R-Indiana and Edward Markey, D-Massachusetts, observed, “A prompt revision of the rule that takes into account the decision handed down by the U.S. District Court will ensure that implementation of the law stays on track and that the United States will retain its leadership role in this important anti-corruption and anti-tax evasion effort.”

“The movement toward greater corporate transparency, particularly in the extractive industries, has become a global priority,” they said. “The concurrent efforts of the G8 leaders in June, the Extractive Industries Transparency Initiative, the SEC Resource Extraction Issuers rule, and efforts underway in the EU and other jurisdictions such as Canada, demonstrate a growing international consensus that investors, citizens and government around the world should have ready access to information about corporate payments to the governments on a country-by-country basis.”

http://www.mineweb.com/mineweb/content/en/mineweb-political-economy?oid=203553&sn=Detail