THE Extractive Industries Transparency Initiative (EITI) is a voluntary mechanism which draws together governments, companies and civil society to enhance openness and accountable management of natural resources revenues. The EITI is premised on the theory that enhanced transparency and dialogue will assist in overcoming increased poverty, conflict and corruption - the ‘resource curse’ afflicting many developing country economies that are heavily reliant on resource extraction.

The initiative is leading to legislative reform in participating countries and more controversially, has led to the full public disclosure of resources sector agreements with host governments. With 41 countries already implementing the EITI and the Australian government considering full implementation, mining and resources companies should monitor the implications of the EITI both in Australia and abroad. This article considers some aspects of the EITI, including its growing global influence and how it operates. For mining and resources companies that are investing and operating in EITI participating countries, the EITI signals greater transparency in the regulatory environment in which they operate, but also imposes greater reporting obligations.

The EITI’s global footprint

The launch of the EITI is attributed to the ‘Publish What You Pay’ civil society campaign drawn from the 1999 Global Witness Report ‘A Crude Awakening’ which focused on oil payments in Angola. In 2002, then UK Prime Minister Tony Blair outlined the idea of the EITI in a speech intended for the World Summit on Sustainable Development in Johannesburg. In 2003 the founding EITI Principles were agreed to increase transparency in the sector. In 2013, the EITI Standard was formally launched which sets out more detailed rules and procedures for company reporting of revenues paid and government reporting of receipts.

The EITI was described by Georg Caspary in ‘Practical Steps to Help Countries Overcome the Resource Curse’ (2012) as “the most promising international initiative for combatting the resource curse to date”. This is most apparent in the support the EITI has gained amongst governments, companies, civil society and international organizations:

  • 41 countries have commenced efforts to implement the EITI. Of these 25 countries are EITI compliant and 35 countries have disclosed payments and revenues in an EITI Report. A number of other countries including the US, France, Germany, Italy, the UK, Ukraine and Papua New Guinea have signalled an intention to implement the EITI and Australia has just concluded an EITI Pilot. The 25 compliant countries are Albania, Azerbaijan, Burkina Faso, Cameroon, Central African Republic, Cote d’Ivoire, Ghana, Iraq, Kazakhstan, Kyrgyz Republic, Liberia, Mauritania, Mali, Mongolia, Mozambique, Peru, Niger, Nigeria, Norway, Republic of the Congo, Tanzania, Timor-Leste, Togo, Yemen and Zambia.
  • The EITI has attracted the support of more than 80 of the world’s largest oil, gas and mining companies as well as more than 80 institutional investors, collectively managing assets in excess of US$19 trillion.
  • The EITI has garnered support from the World Bank, International Monetary Fund and regional development banks which provide technical support and outreach. It has also been endorsed by the African Union, the European Union and the United Nations.

How the EITI operates

Compliance process:

In order to achieve EITI compliant status, countries are required to meet the EITI requirements, which include:

  • Establishing a multi-stakeholder group (MSG) comprising stakeholders including but not limited to the private sectors, civil society and relevant government entities to effectively oversee compliance;
  • Publishing EITI Reports which disclose revenues and payments; and
  • Maintaining an assurance process for EITI reporting.

Countries implementing the EITI must first apply for EITI Candidature, a phase intended to lead towards full EITI compliance. To do so countries must issue an unequivocal public statement of their implementation intention, appoint a senior individual to lead implementation, commit to working with civil society and companies, and establish an MSG and ensure the MSG maintains a current work plan, fully costed and aligned with the reporting and validation deadlines established by the EITI Board.

Reporting obligations:

In EITI participating counties, the EITI Standard provides that extractive industry companies disclose all material payments to governments. The kinds of revenue streams which should be reported include production entitlements, profits taxes, royalties, dividends, bonuses and licence and other fees.

Legislative changes have occurred around the world to implement EITI. Participating countries are required to:

  • Describe (and/or amend) the legal framework and fiscal regime governing the extractive industries;
  • Explain the prevailing rules and practices with respect to state participation, relating to the financial relationship between the government and state-owned enterprise and disclose quasi-financial expenditures and level of beneficial ownership in mining, oil and gas companies;
  • Maintain a publicly available register of all licences pertaining to companies covered in the EITI Report and disclose information relating to the award or transfer of licences pertaining to companies covered in the EITI report.

Implementing countries are also encouraged to maintain a publicly available register of the beneficial owners of the corporate entities bidding for, operating and investing in extractive assets and disclose contracts and licences relating to the exploitation of oil, gas and minerals. A number of participating countries have begun to disclose contracts including Afghanistan, Azerbaijan, Mauritania and Liberia. Whilst these two initiatives may operate to improve transparency, there is also an inherent risk that they could jeopardize the commercially sensitive information and competitive advantage that companies hold.

In Afghanistan, a 2012 presidential decree requires that all contracts from the past three years be published. In 2012 the government published more than 200 small mine contracts, however larger mining contracts have not been fully disclosed, including the MCC-JCL Aynak Minerals Company Contract signed with a Chinese state-backed consortium to mine the country’s largest known copper reserve and estimated to generate $541 million for the Afghan government annually from 2016.

In Azerbaijan, whilst some Production Sharing Contracts have been disclosed, without disclosure of sub-contracts and ancillary agreements the terms of exploitation of oil, gas and minerals as well as the beneficial ownership underpinning these deals remain unclear. Similar criticism has been made about the Afghanistan government’s disclosure. While Mauritania only discloses an overview of the contracts in existence and the blocs they pertain to, Liberia has been more proactive, publishing its mining concession agreements.

In some participating countries reporting obligations are mandated by legislation, including Albania, Nigeria, Ghana, Guinea, Kazakhstan, Liberia, Niger, Norway. EITI transparency laws have also been proposed for Peru, Cote d’Ivoire, Mongolia and Tanzania.

In June 2013, the European Parliament voted to approve the new Accounting and Transparency Directives. The substance of the directives substantially mirror the guidelines developed by the EITI. The understanding is that the requirement to disclose payments to governments will increase transparency in the operations of multinational companies in the extractive industries by allowing access to information which was not previously available. The duty to disclose is strict.

Although the US has not yet formally joined the EITI, the ‘Dodd-Frank Wall Street Reform and Consumer Protection Act’ signed by President Obama in July 2010 is generally held to be consistent with the EITI. Section 1504 of the Act imposed reporting requirements on members of the extractive industry (oil, gas and mining companies) to disclose all payments made to governments. On August 22, 2012, the Securities and Exchange Commission adopted final rules implementing section 1504. Following a recent legal challenge, however, these are now under review.


The EITI also requires that participating countries establish a credible assurance process to ensure that EITI Reports contain reliable information. The MSG in participating countries is responsible for appointing an Independent Administrator to reconcile data submitted by companies and government entities. Although the MSG is responsible for deciding the level of disaggregation for the publication of data, reporting must generally be at the project level and must include individual company, government entity and revenue stream.


The EITI is governed by a not-for-profit members association established under Norwegian law. The EITI board, consisting of 20 members, oversees the activities of the EITI, including deciding on the admission of EITI Candidates and setting deadlines for the publishing of EITI reports and undertaking validation. The EITI Secretariat, based in Oslo, runs the day to day work of the EITI Association, including implementation by local EITI stakeholders. Technical assistance in implementation is also provided for by the EITI Multi-Donor Trust Fund, administered by the World Bank.

Australian pilot of the EITI

Australia launched a pilot of the EITI in November 2011 which concluded at the end of 2013. An MSG was formed and Deloitte Touche Tohmatsu Ltd (Deloitte) was appointed as the Administrator. The report found Australia’s governance and financial reporting systems are robust and effective. The MSG will provide a report to Government early this year which will inform Australia’s decision on full implementation.

Should the government proceed with full implementation, oil, gas and mining companies will be required to participate in ongoing reporting for the purpose of EITI Reports.


As the EITI attracts an increasing number of participating states and expands its scope into other phases of the mining value chain, mining companies should carefully monitor the EITI’s evolution and their obligation within it. While questions remain about the EITI’s effect on government accountability, the gains it has made in terms of transparency will continue to improve the regulatory environment for international mining investors.