Tuesday, January 5, 2010

"Emerging International Framework in Sustainable Natural Resources Development" Short-Course Begins; Need for Global Investment Rules Highlighted

The cutting edge series Sustainable Natural Resources Development kicked off its 2010 course offerings with the "Emerging International Framework for Sustainable Natural Resources Development," a five-day intensive short-course being offered by the DU College of Law.

The course, which is the first in a four-course series that will take place in 2010, is led by three outstanding practitioners in this area: Luke Danielson, a Colorado attorney with significant experience working in the natural resources sectors; Cecilia Dalupan, an attorney licensed in Colorado and the Philippines who also has a long-time career in issues involving sustainability and natural resources; and David Szablowski, assistant professor of Law and Society at York University in Toronto and author of Transnational Law and Local Struggles: Mining Communities and the World Bank. Mr Danielson and Mr. Dalupan are also principals in the Sustainable Resources Strategies Group.

Monday's course included an overview of the "rules of the road for global natural resources development" and consideration of "where these rules might come from" from Mr. Danielson. There was discussion of one treaty regime, involving climate change, and lessons that might be learned in terms of the natural resources sector that was presented by Ms. Dalupan.

A highlight of Monday's session was a presentation by Doug Silver, CEO and chairman of International Royalty Corporation (IRC). IRC is a global mineral royalty company that holds 84 royalties.

Mr. Silver addressed the topic of "Why Natural Resources Investors Want There to be Some Global Rules," a matter of immense importance in terms of issues that are key to investors in the natural resources sector. In his role, Mr. Silver talks with investors on a regular basis. He noted that mutual fund managers tend to have considerable interaction with the companies in which they hold stock. "The investors are part of the company, so when I am talking about things I am doing in the business I talk to them," he said.

As a result, Mr. Silver is a unique position to speak about what investors want to know about the minerals business. He brought that unique perspective into Monday's session.

In summary, he said investors want standards in place in the minerals sectors "because investors want to be able to compare investments." In particular, investors are concerned with reporting in four key areas:
  1. Resources and reserves
  2. Accounting
  3. Physical environment
  4. Social environment
By having access to these standards, investors can compare one investment opportunity with another. In most instances investors look for a standard reporting scheme because the more different standards are involved, the more difficult it is to make a definitive comparison. For that reason, the use of international standards is becoming more important. Being able to rely on a common set of standards works to "de-risk" an investment, he said, since there is no need to learn the nuances of different systems.

Looking ahead, he mentioned that there are several key concepts to bear in mind in large minerals-related development projects:
  1. Cross border deals are now normal
  2. Using a common set of standards leads to better transparency, which is a core principle of sustainable development
  3. The International Financial Reporting Standards scheme is becoming the focal point of minerals related-projects.

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