Following the money: Not so easy
What happens to oil and mining money? It’s hard to tell.February 12th, 2010 | by Chris Hufstader
Ever stop to consider where the money you spend gassing up your car actually goes? It is surprisingly hard to find out. We’ve just released a short animation “Follow the money” to raise awareness about how important it is for people to know where the money generated by resources like oil or gas goes and the need to use resource revenues to help poor communities.
Check it out and share it with your friends. And if you want to make sure that companies and governments have to disclose where all the money goes, join our effort to pass the Energy Security Through Transparency Act of 2009 (S. 1700).
A few years ago I actually attempted to “follow the money.” I walked into the town hall of Sadiola, Mali—a community near the border of Senegal—and asked the mayor how much money Sadiola got from the gold mine in town, which produced about half a million ounces of gold that year. The government of Mali owns part of the mine, and Balla Sissoko—the mayor—said that the government gave the town about US$500,000 each year, but he did not know what portion of those funds were generated by payments made by the mining company to the central government.
To me, Sadiola appeared in dire need of cash. The area was seeing rapid growth in population: In 1987, 250 people lived there—by 2005, the mayor reported that there were more than 10,000. Along with more people came more crime, increased demands for education, and health care for everyone, especially those injured in the increasingly frequent accidents on the dangerous, unpaved main road. Just these accidents were becoming a serious financial drain on Sadiola. “With all the resources from mining, why can’t they fix this road?” Sissoko asked. “Where is all the money going?”
Sissoko said the area has seen increases in incidence of HIV, and they were concerned about the environment. Both the massive open-pit mine, which generates a lot of dust and respiratory problems, and the increased demand from Sadiola’s residents for firewood resulting in deforestation, were long-term concerns.
Luckily for Sadiola, the mining company SEMOS, led by the South African company AngloGold Ashanti (which cleared nearly $3 billion in gold from all its mines in 2006), helped out. There used to be three schools in town, and by 2006 there were 23. Sadiola also invested in its own infrastructure: “In 1999 we had one small health center. But since the increase in mining revenue we have built four new health centers,” Sissoko said. And although the mine could never meet the demand for jobs in the area, it did employ about 500 people who might otherwise not have any way to earn cash.
So here’s the question: is the mine worth it? It’s hard for someone like Mayor Sissoko to tell. He can’t do a hard-eyed cost-benefit analysis without the figures. Mali’s laws on mining revenues and an opaque budget system make it impossible. People in communities producing oil, gas, and minerals have a right to know where the money is going, and how it is being used for their benefit, so they can make their own decisions about their future.