Obligations of the metal mining companies for the socio-economic development of the community
The obligations of the metal mining companies in the field of socio-economic development of communities are defined in the mining contacts as a separate annex. At present, only 14 metal mining companies have mandatory obligations under the mining contracts.
Since 2018, the metal mining contracts are available as a result of EITI implantation in Armenia.
In the " Social-economic contribution of the mining company to the community" section of the EITI public reporting, the metal mining companies present the contributions made in the field of socio-economic development of communities that are defined in the mining contacts, particularly, the name of the obligation (contribution), the amount of contribution if it is a financial contribution, the value assessment of the contribution if it is a non-financial (in-kind) contribution, as well as the community name to which the contribution is addressed. According to the public EITI reports provided by the heads of the communities and submitted by the Ministry of Territorial Administration and Infrastructure, in the section " Social-economic contribution of the mining company to the community" in case of financial contributions, are presented the amounts paid to the community, the payment dates (for each payment), the documents certifying the payment, and in case of non-financial (in-kind) contributions to the municipality, the communities present the name of commodity or service and the community name to which the contribution is addressed.
In order to strengthen the implementation of the EITI Standard 6.1 requirement following the recommendations of the MSG, the mining companies, whose socio-economic obligations are defined in the mining contacts, provided additional information on financial and non-financial contributions in relation with the commitments made in the field of socio-economic development of the communities defined in Annex 3 to the mining contracts. As a result of additional data, the description of each mandatory non-financial contribution (commodity, service, project) for 2016-2018 has become more complete, the existing gaps have been filled, the names of the specific beneficiaries of each financial and non-financial mandatory (contractual) contribution made in the communities in 2016-2018 have been presented, for example, a local government body (municipality), a third party with a clear indication of its name. The relevant communities clarified some of the differences between the data presented in the reports submitted by the companies and the communities.
At present, communities cannot provide a description of non-financial contributions (commodities, services, projects) if those have been provided to a third party, as the companies do not submit the documents to the municipalities.
For the scope of the 2019 EITI Report MSG decides that the revenue flows whose equity stake in the total revenue flows from the extractive industries comprises 1% and more will be considered as material and will be reconciled. In the list of those financial flows the obligations connected to the socio-economic development of the communities specified by the mining contract should also be considered. The reconciliation cannot be made in case of in-kind (non-financial) obligations, as their cost assessment (cost price) is presented only by the companies. However, if the cost assessment submitted by the company exceeds the established threshold, the Independent Administrator shall, if necessary, obtain additional information on the non-financial (in-kind) contribution (product and / or service) from the community that had received the contribution in order to include it in the Report.