Regulations and World Bank Relationship
The World Bank has been involved in mining since 1955, mainly through grants from its International Bank for Reconstruction and Development, with the Bank's Multilateral Investment Guarantee Agency offering political risk insurance. Between 1955 and 1990 it provided about $2 billion to fifty mining projects, broadly categorized as reform and rehabilitation, greenfield mine construction, mineral processing, technical assistance, and engineering. These projects have been criticized, particularly the Ferro Carajas project of Brazil, begun in 1981. The bank established mining codes intended to increase foreign investment, in 1988 solicited feedback from 45 mining companies on how to increase their involvement.
In 1992 the bank began to push for privatization of government-owned mining companies with a new set of codes, beginning with its report The Strategy for African Mining. In 1997, Latin America's largest miner Companhia Vale do Rio Doce (CVRD) was privatized. These and other movements such as the Philippines 1995 Mining Act led the World Bank to publish a third report (Assistance for Minerals Sector Development and Reform in Member Countries) which endorsed mandatory environment impact assessments and attention to the locals. The codes based on this report are influential in the legislation of developing nations. The new codes are intended to encourage development through tax holidays, zero custom duties, reduced income taxes, and related measures. The results of these codes were analyzed by a group from the University of Quebec, which concluded that the codes promote foreign investment but "fall very short of permitting sustainable development". The observed negative correlation between natural resources and economic development is known as the resource curse.
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