Serbia Descriptive Final January 292020

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Serbia
Final Report
January 2020
Mining Sector Diagnostic (MSD)
Serbia - Mining Sector Diagnostic (MSD)
Final Report (January 2020)
Contents
I. Executive Summary ........................................................................................................................... - 4 -
II. Introduction ...................................................................................................................................... - 6 -
III. Serbia’s Mining Sector .................................................................................................................. - 7 -
1. Mining Sector Importance ............................................................................................................ - 7 -
2. Mining Sector Management ....................................................................................................... - 12 -
3. Legal Framework ......................................................................................................................... - 12 -
IV. Overview of Results—Dashboard and Implementation Gap ...................................................... - 12 -
V. Assessment of Sector Management Framework ............................................................................ - 14 -
VI. Performance Along the Extractive Industries Value Chain ......................................................... - 17 -
1. Contracts, Licenses and Exploration ........................................................................................... - 17 -
2. Mining Operations ...................................................................................................................... - 19 -
3. Taxation....................................................................................................................................... - 23 -
4. Revenue Distribution and Management..................................................................................... - 25 -
5. Local Impact ................................................................................................................................ - 27 -
VII. Stakeholder Priorities.................................................................................................................. - 29 -
VIII. Conclusions and Recommendations ........................................................................................... - 31 -
1. Summary of Main Strengths ....................................................................................................... - 32 -
2. Outline of a Reform Agenda ....................................................................................................... - 32 -
Annex I: MSD Methodology—Brief Description ..................................................................................... - 34 -
Annex II: Question Scores ....................................................................................................................... - 35 -
Annex III: Votes Template ....................................................................................................................... - 50 -
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List of Figures
Figure 1: Growth (in percent) in the Production of Key Minerals in Serbia, 2010-2013 .......................... - 7 -
Figure 2: Projected Lithium Demand by Use, 2016-2025 ......................................................................... - 8 -
Figure 3: FDI Inflows into Serbia, 2004-2013 .......................................................................................... - 10 -
Figure 4: Trends in FDI Inflows to Serbia in US$ Millions, 2008-2016 .................................................... - 10 -
Figure 5: Mining Share of GDP (in Percent), 2000-2016 ......................................................................... - 11 -
Figure 6: Total Employment in Mining, 2000-2016 ................................................................................ - 11 -
Figure 7: The Mining Sector Diagnostic Dashboard--Serbia ................................................................... - 13 -
Figure 8: Policy Implementation Gap...................................................................................................... - 14 -
Figure 9: Sector Management Framework ............................................................................................. - 14 -
Figure 10: Contracts, Licenses and Exploration--Indicators.................................................................... - 17 -
Figure 11: Mining Operations--Indicators ............................................................................................... - 20 -
Figure 12: Mining Taxation--Indicators ................................................................................................... - 23 -
Figure 13: Revenue Management and Distribution--Indicators ............................................................. - 26 -
Figure 14: Local Impact--Indicators ........................................................................................................ - 27 -
Figure 15: Stakeholder Priorities............................................................................................................. - 31 -
Figure 16: Shared Stakeholder Priorities ................................................................................................ - 30 -
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I. Executive Summary
The mining sector currently contributes less than 1 percent to GDP, but Serbia has a rich mineral
endowment that has for the past decade attracted the interest of leading multi-national exploration and
mining companies. There are two advanced stage exploration projects that offer potential opportunity for
new billion-dollar investments that, if guided by good international industry practice, would catalyze
broad economic linkages, infrastructure upgrades and strong export earnings. Converting these
discoveries into productive assets requires strong sector governance.
The Serbian Prime Minister’s office asked the World Bank in 2017 to prepare a policy note on the mining
sector which would summarize key sector issues. The short note was subsequently expanded and then
led to a request for a more systematic sector diagnostic. A Mining Sector Diagnostic (MSD) was requested
by Minister Antic in June 2018.
Following the request, a desktop assessment commenced using a local lawyer. In late June a workshop
was held in Belgrade hosted by the World Bank with participants from across government Ministries,
industry and civil Society. The preliminary findings of the MSD were presented in August to Minister Antić,
State Security Ms. Mirjana Filipović and Assistant Minister MrIvan Janković. In September the preliminary
findings were presented to the wider stakeholders and participants at a workshop.
The MSD finds that Serbia has many of the foundational building blocks necessary for a robust mining
sector going forward. Serbia’s institutional arrangements for the mining sector are strong. The legal
framework for the mining sector is generally strong, in particular with respect to licensing, taxation and
revenue management. Sector performance could be further improved, though, in some areas as follows:
Sector Management Framework
There are two key actions that would improve the functioning of Serbia’s sector management framework.
First, a mining sector policy should be developed through a consultative process with all stakeholders.
This should be seen as a consensus-building exercise that results in commitment by all actors to a stronger
mining sector. The policy should be widely publicized, be integrated with the overall national development
plan and a separate investment strategy for the mining sector should be developed on this basis. A sector
policy is a requirement under the mining law and as such Ministry of Mining and Energy has started this
to draft the required sector policy.
Secondly, measures should be taken to improve the mining sector dialogue. The establishment of a new
representative industry consultative body to represent the opinions of the mining industry or greater
representation through any of the existing organizations would be helpful. The sector dialogue should
also include civil society representatives and community groups. Regarding the latter, there is a need to
proactively map civil society stakeholders.
Legal and Regulatory Framework
Legal and regulatory requirements are lacking in several key areas and priority should be given to close
these gaps:
• Prepare, consult and finalize for promulgation mining regulations, particularly the rule books for
modern large scale mine developments
• Review financial assurance mechanisms covering mine closure.
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Institutional Capacity and Effectiveness
Several government agencies appear to have capacity constraints in terms of staffing and budget.
Government should ensure that all relevant agencies (GIS, Mining cadaster, unit monitoring licenses and
unit monitoring environmental/social impacts) are adequately staffed and have sufficient budget to fulfill
their mandate. This would likely improve weaknesses in implementation.
Additional points to pursue include:
• Consider ways to improve administrative systems within MME to facilitate decision making by
Ministry officials on mineral rights and other licensing requirements
• Resolve geodata ownership and purchasing issues
• Using working groups for assessing mining application under the new regime and working cross
government to build confidence in the application process for mining licenses and associated
permits and consents.
• Building capacity in the large company taxation department on transfer pricing, mining company
auditing and mineral valuations
Sector Transparency and Accountability
Key steps that could be taken to improve the transparency in the resource sector are:
• Disclosure of resource revenue and encourage the use of publicly available revenue statistics.
• Public availability of licenses conditions and obligations.
• Continue to improve availability of and access to Environmental and Social Impact Assessments,
Environmental and Social Management and Mitigation Plans, Mine Closure and Reclamation
Plans, and other relevant documents.
Improvement in the accountability could be obtained by:
• Regulating the legal requirement that mining companies consult with affected communities and
local government during the preparation of the MCRP.
• Amend the legal requirements for community stakeholder consultations to ensure that they are
held throughout the life of the mine.
• Develop of national policy on Corporate Social Responsibility.
The MSD also gathers information on stakeholder priorities—defined as areas where reforms would be
most likely to significantly improve the functioning of the sector with the aim of increasing the mining
sector’s contribution to overall sustainable growth and development. Results showed no strong
convergence on top priorities in any of the three stakeholder groups. But a total of seven areas are shared
priorities for two of the three groups. Government and industry representatives jointly agree on “Intra-
Governmental Coordination” and “Mining Tax Auditing” as priority areas. Government and civil society
representatives jointly agree on “Environmental and Social Impact Management”, “Mining Tax
Administration Rules”, and “Resource Revenue Transparency” as priority areas. Industry and civil society
representatives jointly agree on “Sector Dialogue” and “Tax and Policy Instruments” as priority areas. Of
these overlapping priority areas, the three with the lowest scores in the MSD framework are “Sector
Dialogue), “Resource Revenue Transparency”, and “Tax Policy and Instruments”.
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II. Introduction
The Mining Sector Diagnostic (MSD) is a tool that the World Bank has developed to comprehensively
assess the laws, policies and regulations in a country’s mining sector. The MSD identifies the strengths
and weaknesses of the institutions that administer the laws, policies and regulations and monitor and
regulate the sector. It addresses the “rules” in place (the so-called de jure performance) as well as the
extent to which these “rules” are implemented in practice (the so-called de facto performance).
The MSD considers the views of the three main stakeholder groups – government, mining investors and
civil society representatives in a structured manner. It is a systematic and practical diagnostic tool, that
informs objectively. The results of an MSD can form the basis for sector reforms that bring about a more
vibrant mining sector that contributes to growth and prosperity for the entire population.
The Serbia MSD collects and shares information on its mining sector’s management structure and
governance. It analyses the rules and policies that exist in the mining sector and the gap between these
rules and their implementation in practice. It not only reviews sector performance from the perspective
of the three main stakeholder groups, but also provides their priorities to improve mining sector
performance.
In 2017, the Serbian Prime Minister’s office asked the World Bank to prepare a policy note on the mining
sector which would summarize key sector issues. The short note was subsequently expanded and then
led to a request for a more systematic sector diagnostic. The MSD was requested by Minister Antic in June
2018. Following the request, a desktop assessment commenced using a local lawyer. In late June a
workshop was held in Belgrade hosted by the World Bank with participants from across government
Ministries, industry and civil Society. Input from this workshop, MSD questionnaires and follow up
interviews with stakeholders are the inputs to the MSD tool.
A wide range of Ministries were interviewed including the Ministry of Mining and Energy, (MME), Ministry
of Environmental Protection and the Ministry of Agriculture, Forestry and Water Management.
Respondents from industry included Dundee Precious Metals, Rio Tinto, Mundoro, Jantar Group, Terra
Gold & Co, Rakita Exploration (Nevsun), Freeport McMoRan. Civil society participation included Belgrade
Open School and Citizens’ Reading Room Europe (Bor). Other respondents include academics from the
Faculty of Mining and Geology at the University of Belgrade. All respondents filled out questionnaires and
provided information on their sector priorities.
The preliminary findings of the MSD were presented in August to Minister Mr. Aleksandar Antić, State
Security Ms. Mirjana Filipović and Assistant Minister MrIvan Janković. In September the preliminary
findings were presented to the wider stakeholders and participants at a workshop. This report summarizes
the findings of the MSD.1
This report is organized as follows. Section III provides an overview of the mining sector in Serbia—its
importance in the overall economy, the main institutional roles and responsibilities, and an overview of
the legal and regulatory framework governing the mining sector. A high-level summary of the results is
presented in Section IV—discussing the data as aggregated into the MSD dashboard and analyzing
implementation gaps between de jure and de facto performance.
1
Detail on the MSD methodology can be found in Annex I. The MSD does not assess the coal mining sector. A coal
mine closure assessment for Resavica is being supported through a separate ESMAP TF.
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Section V discusses the strength and weaknesses of the sector management framework in place for the
mining sector in Serbia. Section VI discusses the detailed findings regarding the strength and weaknesses
of Serbia’s mining sector. The discussion is structured using the five stages of the Extractive Industries
Value Chain—(i) Contracts, Licenses, and Exploration; (ii) Operations; (iii) Taxation and State Participation;
(iv) Revenue Distribution and Management; and (v) Local Impact. For each of these stages the MSD
assesses de jure and de facto performance.
Section VII analyzes stakeholder priorities defined as those areas that respondents identified are the key
priority areas—reforms in which would have a significant impact on improving the contribution of the
mining sector to sustainable economic development and well-being for the entire population. Section VIII
concludes with a summary of sector strength and recommendations for a reform agenda.
This report has four Annexes. Annex I provides a brief overview of the MSD methodology. Annex II
contains the MSD questionnaire and the scores for all individual questions that form the basis for this
report, Annex III contains the Voting Template used during the MSD interviews to elicit stakeholder
priorities. This report and the underlying data will be made publicly available on the MSD website.
III. Serbia’s Mining Sector

1. Mining Sector Importance
Serbia is endowed with mineral resources, including precious, base and industrial metals, and
hydrocarbons. The mineral industry is dominated by copper production in the vicinity of Bor. Other
mineral and mineral-based commodities produced in the country included cement, coal and clay. The
growth in output for major metal and industrial metals is generally stable (see Figure 1 below).
Figure 1: Growth (in percent) in the Production of Key Minerals in Serbia, 2010-2013
250.0
200.0
150.0
100.0
50.0
0.0
2010 2011 2012 2013
-50.0
Coal Copper Gold Silver
Source: The U.S. Geological Survey (2014)
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There is renewed interest in Serbia’s mineral potential, following recent discoveries of mineral deposits.
These include the high-grade copper-gold mineralization at Cukaru Peki/Timok south of Bor and the
presence of substantial lithium-borate deposits in Jadar. Discovered in 2004, Jadar is a unique deposit
near the town of Loznica, Serbia. Due to its high lithium and boron concentrations – and an assessed
geological resource of more than 200 million tonnes—Jadar has been ranked as one of the largest lithium
deposits in the world.
If developed, Jadar has the potential to supply more than 10% of global demand for lithium. The lightest
metal on earth, lithium is used in a vast array of products, most notably, batteries for hybrid and electric
cars. The deposit also contains borates, which are essential building blocks for heat resistant glass,
fiberglass, ceramics, fertilizers, detergents, wood preservatives and many other household and
commercial products. They are used in insulation that makes buildings energy-efficient, and to produce
TV, computer and smartphone screens.2
Both copper and lithium deposits could position Serbia as a leading supplier of essential metals for the
ongoing low-carbon transition. As a recent World Bank study3 finds, lithium is one of the metals whose
global demand is rising rapidly as a key component of batteries for electric vehicles (EVs) and other
technologies driving the global clean energy shift. Other base metals whose demand is expected to rise,
especially for EVs, include copper for electrical wiring, and aluminum to reduce the weight of cars.
Figure 2: Projected Lithium Demand by Use, 2016-2025
Source: Goldman Sachs Investment Research Group
Exploration activities for the lithium-borate deposits have demonstrated Serbia’s capacity to attract
foreign investment. Rio Tinto plc of the United Kingdom holds 100% interest in the Jadar lithium-borate
2
Rio Tinto (2017) “Rio Tinto Jadar Project” www.riotinto.com/Jadar
3
World Bank (2017) “The Growing Role of Minerals and Metals for a Low Carbon Future.” Washington D.C.
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project.4 Rio has spent over $90 million on the project since its discovery in 2004, and will make a final
investment decision in 2020. Significant investment is required to continue technical analysis and planning
to move from prefeasibility to feasibility, then to construction and operation, from 20235. Erin Ventures
Inc. of Canada also holds a 100% interest in the Piskanja boron deposit.
Although there is a history of strong state presence in the production of key minerals, there is increasingly
the participation of foreign mining companies. For many years, the largest mining operation in the country
has been the state-owned enterprise (SOE) Rudarsko Topionicki Bazen Bor (RTB Bor) copper-gold mine,
the dominant producer of copper, gold, and silver in the country, but in August 2018, Chinese mining
company Zijin Mining took over 63% of shares of the company, in a $1.26 billion deal with the Government
of Serbia. In addition, there are private investors engaged in exploration activities for copper, gold, silver
and lithium, among others. There are 35 companies with 130 exploration licenses and 220 exploitation
sites. International companies with a presence include American Freeport McMoRan, Canadian Nevsun,
Mundoro, Dundee Precious Metals, British-Australian Rio Tinto, and English Mineko limited among others.
Two mineral projects are in the final phase of the exploration - Jadar lithium near Loznica by Rio Tinto and
new deposits of copper and gold at Cukaru Peki by Nevsun. Additionally, there is lead and zinc potential
at Krupanj, Pirot and Bosilegrad.
Extraction varies from small scale quarries servicing aggregate and cement facilities to modern large scale
operations for copper and coal.
Mining and quarrying accounted for 7.6% of FDI Inflows to Serbia during 2010- 2017 (Figure 3)6. However,
there is potential to attract investments. Serbia ranked first out of 50 countries in the 2016 Greenfield
Performance Index for greenfield inward investment.7 Greenfield foreign investors announced 77 projects
in Serbia in 2016, up from 57 in 2015, but more than half (53%) of these projects were manufacturing
based. With the recent discoveries of copper and lithium-borate deposits, attracting new investments into
the mining sector, this sector has become a priority for the government.
4
USGS (2014)
5
Rio Tinto (2017)
6
Deloitte (2015) "Guide for Investing in Serbia: at your Glance"
7
The Greenfield FDI Performance Index is an annual study by the Financial Times’ FDI Intelligence.
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Figure 3: FDI Inflows into Serbia, 20010-2017
Source: Bank of Serbia
New mining sector investments can drive growth in FDI inflows which have been mostly stagnant within
the last decade. As Figure 4 below shows, FDI inflows peaked in 2011, declined sharply in 2012, and have
been increasing slowly through 2017, but remaining below US$3 billion annually.8
Figure 4: Trends in FDI Inflows to Serbia in US$ Millions, 2008-2017
5000
4000
3000
2000
1000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: UNCTAD FDI Statistics
8
UNCTAD FDI Statistics.
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The mining sector’s contribution to Serbia’s GDP and employment is declining. In 2000, the mining sector
accounted for 1.1% of GDP, and reached a peak of 1.6% in 2012. By 2016, the sector constituted just 0.8%
of GDP. These developments are within a macroeconomic context of less than 2% average GDP growth
for almost a decade, recessions in 2012 and 2014, persistent trade deficits, and a high rate of public debt,
of up to 74% in 2016. The sector’s contribution to employment has also been on a declining trajectory. In
the year 2000, 41,343 workers were employed, by 2016, there was a 41% decline to just 24,169 workers.
Fluctuations in the labor force are driven principally by coal which is undergoing mechanization and
automation and to a lesser degree the fall in copper production during the period leading up to RTB Bor’s
privatization.9 New mineral projects in lithium-boron and copper could boost exports, GDP, government
revenue and employment.
Figure 5: Mining Share of GDP (in Percent), 2000-2016
1.8 1.6
1.5 1.5
1.6
1.4 1.3 1.4
1.3 1.3 1.3
1.4
1.2 1.2
1.1 1.1 1.1
1.2
1.0
1.0 0.9
0.8
0.8
0.6
0.4
0.2
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Statistics Office of the Republic of Serbia
Figure 6: Total Employment in Mining, 2000-2016
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
20002001200220032004200520062007200820092010201120122013201420152016
Source: Statistics Office of the Republic of Serbia
9
The employment figures include employment in coal mining. The latter is not covered by the MSD which focuses
on ferrous and non-ferrous metals.
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2. Mining Sector Management
The Ministry of Mining and Energy is the government agency responsible for allocating exploration and
mining rights and regulating the mining sector, through the Sector for Geology and Mining. Environmental
management and monitoring is the mandate of the Ministry of Environmental Protection while the
Ministry of Agriculture, Forestry and Water Management is also an important stakeholder for water
management, land use and land access.
Geological information (Geodata) and regional geological expertise is held within the Geološki zavod Srbije
/ Geological Institute of Serbia (GIS).
The Ministry of Economy also has some jurisdiction in the sector. It oversees the corporate governance of
the state-owned enterprise (SOE) RTB Bor which has for decades been the dominant producer of copper,
gold, and silver in the country.
3. Legal Framework
The law governing mining in Serbia is the Law on Mining and Geological Explorations.10 The mining law is
modelled on the widely accepted practices of Finland and Sweden and was an outcome of consultations
from 2013 with stakeholders. The law classifies mineral resources and applies to non-renewable
resources, including minerals and hydrocarbons, and renewables, including groundwater and geothermal
resources. It provides the framework for the mineral policy and its implementation, establishes the
Geological Institute of Serbia to carry out basic and other geological explorations, and deals with mining
works and mining waste, rehabilitation and re-cultivation of abounded mining sites, licences, documents
for mining and geological work, inspection and regulation of geological and mining works and facilities;
and health and safety aspects of these activities. Other important laws which apply to the sector include
the Law on Public Enterprises11 which defines the purpose and the roles of public enterprises, internal
structure main reporting requirements to government bodies, and the Law on Corporate Income Tax.
Supporting the mining law are a series of regulations “rule books” specific to the sector. These include,
Regulation on payments for usage of mineral and geothermal resources for 2016,12 regulation on
payments for geological research and lease of researched area for 201613 and others. Older regulations
drafted under previous mining laws are also relevant under the mineral regulatory regime. Proposed new
regulations have been drafted in consultation with industry and Mining and Geology Faculty of Belgrade
University, although are yet to be promulgated.
IV. Overview of Results—Dashboard and Implementation Gap

This section presents an overview of the results of the Serbia MSD. The data are aggregated into the
dashboard (Figure 7) which gives an overview of performance in the mining sector along the extractive
10
Official Gazette 101/2015, December 8,2015.
11
Official Gazette 15/2016, February 25, 2016.
12
Official Gazette 97/2015, November 28, 2015.
13
Official Gazette 10/2016, February 8, 2016.
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industry (EI) value chain as well as with respect to the sector management framework. The dashboard
consists of the following two elements:
1. Sector Management Framework which evaluates Sector Policy, Sector Dialogue, Roles and
Responsibilities, and Intra-Governmental Coordination.
2. Extractive Industries Value Chain which looks at performance along the five stages of the EI value
chain. For each stage, performance is evaluated in terms of two dimensions:
a) Legislation, Policy and Regulation—which looks at the legal and regulatory framework (de
jure performance); and
b) Institutional Capacity and Effectiveness—which focuses on how well the legal and
regulatory framework is implemented, including the capacity of relevant agencies (de facto
performance).
Serbia’s mining sector receives high or very high scores on all but two of the assessed elements—
indicating a strong overall performance. The two areas with below-average scores are the sector dialogue
in “Sector Management Framework” and the legal and regulatory framework governing “Local Content,
Employment, Community Engagement, Sustainability and Social Issues” (EI value chain stage 5).
Figure 7: The Mining Sector Diagnostic Dashboard--Serbia
Mining Sector Diagnostic

Mining Sector Management
Sector Policy Sector Dialogue Roles and Responsibilities Intra-Governmental Coordination
II. Extractive Industries Value Chain

Revenue Management and
Contracts, Licenses and Exploration Mining Operations Mining Taxation Local Impact
Distribution
Mining Legislation/Processes,
Land/Compensation/Resettlement, Local Content, Employment,
Legislation, Policy, and Rules for License Allocation, Tax Policy and Tax Administration Revenue Sharing and Fiscal
Environmental and Social Impact Community Engagement, CSR and
Regulation Oversight, and Transfer Rules Stabilization--Rules
Management, ASM, OHSA, Mine Social Issues
Closure--Rules
Collection/Maintenance of Land/Compensation/Resettlement, Local Supplier Development,

Revenue Sharing, Fiscal
Institutional Capacity Geological Information and Environmental and Social Impact, Mining Tax Administration and Employment, Community
Stabilization and Resource Revenue
and Effectiveness Effective License Allocation and Support for ASM, OHSA, Mine Auditing Engagement, CSR and Social Issues--
Transparency--Practice
Management Closure--Practice Practice
Scoring Key: Very low (1.00 - 1.75) Low (> 1.75 - 2.50) High (> 2.50 - 3.25) Very High (> 3.25 - 4.00)
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Figure 8: Policy
Figure 8: Policy Implementation
Implementation Gap
Gap
The implementation gap (e.g., the difference
between de jure and de facto performance)
4.00
provides another high-level analysis of the Serbia
data (see Figure 8). For the first two stages of the
3.25
EI value chain (Contracts, Licenses and
Exploration; and Mining Operations), the
2.50
difference between rules (de jure) and
implementation (de facto) performance is very
1.75
small—indicating strong implementation of a
strong legal and regulatory framework. On
1.00
Contracts, Licenses and
Exploration
taxation, implementation scores higher than the
Mining Operations Mining Taxation Revenue Management and
Distribution
Local Impact
legal framework indicating some room for

Rules Implementation
improvement of the latter. The situation is

reversed for revenue management and
distribution where implementation scores considerably lower than the legal framework—indicating room
for capacity improvements. Another sizeable gap between rules and implementation is found at the local
impact stage, where the low score on rules indicates the most significant room for improvement of the
legal framework.
V. Assessment of Sector Management Framework

The inspection of the dashboard and the gap analysis provide a birds-eye view of the functioning and
performance of the sector, but do not yet provide specific information on the strength and weaknesses
identified through MSD. This and the following chapter take a more detailed look—including identifying
potential areas in which there is room for improvement—starting with the sector management
framework.
Figure 9: Sector Management Framework
Mining Sector Management (3.11)
Sector Policy (2.62) Sector Dialogue (2.40) Roles and Responsibilities (3.44) Intra-Governmental Coordination (4.00)
Overall the sector management framework for Serbia’s mining sector receives a high score—with some
variation in the scoring of individual elements. Very high-scoring elements are “Roles and Responsibilities”
and “Intra-Governmental Coordination”, while “Sector Policy” and “Sector Dialogue” score just above and
below average, respectively. The scores for each element of the sector management framework are
derived from a set of relevant questions.14 Annex II provides a full list of the underlying questions for each
element as well as the scoring for each question. The remainder of this chapter and the following chapter
14
Each question is scored on a scale from 1 (lowest) to 4 (highest). The score for each element of the sector
management framework is the unweighted average of the underlying question and the overall score for the sector
management framework is the unweighted average of the scores for the four elements.
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summarize the main findings. The report is based on the data collected and summarized in Annex II. The
MSD questionnaire used to collect the data aims for a high degree of objectivity by asking respondents
very specific and detailed questions. However, there are instances where the views of different
stakeholder groups on various issues differ and this report does note these differences.
Sector Policy15
An integrated strategic framework for Serbia’s mining sector is lacking. There is no mining sector strategy
and the national development plan does not cover the mining sector. In addition, the existing investment
promotion strategy also does not adequately cover the mining sector. There is neither an investment
promotion unit within the Ministry of Mining and Energy nor a similar unit within the Development Agency
of Serbia (RAS) for domestic and foreign investments. Instead the government has set up a working group
sourcing expertise internally to review and develop a new investment promotion strategy and
implementation plan.16
In principle, the 2015 mining law provides the framework for a minerals sector strategy, which is under
preparation by the Ministry of Mining and Energy (entitled “the Mineral Resources Management Strategy
in Serbia Until 2030”). The Ministry of Mining and Energy continues work on a sector strategy document
and at time of writing is in the early stages of preparing the document.
Both government (4.0) and industry (3.0) report that they are satisfied with the mining sector
development taking place in Serbia. Civil society, however, reports dissatisfaction (2.0).
Mining sector legislation is fully consistent with other relevant legislation and government (4.00) and
industry (2.83) rate it as reasonably up-to-date and addressing all relevant issues, even though the
industry’s score suggests some room for alignment.
Sector Dialogue
The quality of the sector dialogue is assessed very differently across stakeholders. Government is highly
satisfied (4.00) with the dialogue with both industry and civil society. However, both industry and civil
society respondent indicate that they are dissatisfied with the dialogue with government and between
each other—with average scores between 1.80 and 2.00.
There are several industry organizations, but they are either not representative of the entire industry or
not very active. Industry representatives indicate that they are dissatisfied (2.40) with the way these
organizations represent the views of the mining industry. There appears to be no formal platform for
dialogue with mining companies collectively to understand their concerns, agree on ways to address them
and enable key stakeholders to provide input into government policy in the sector. A key indicator in this
regard is that the Annual Conference on Mining in Serbia used to be wholly led by individual private
organizers with minimal input from government, as opposed to being a formal platform for government-
business policy discussions in the sector. The draft agenda for the 9th International Conference on Mining
15
The numbers in the text refer to (average) question scores as reported in Annex III. They are included for easier
reference.
16
Industry participants at the 9th International Mining Conference held in Belgrade in November 2019 were not
aware of the activities of this working groups.
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Resources features speakers and delegates from a broader range of stakeholders—including central as
well as local government and industry. Civil society appeared to remain under-represented, though.17
The government is satisfied with the existing organizations specifically noting the Chamber of Commerce
of the Republic of Serbia which deals with issues relating to business and economy, including the mining
industry and the companies operating in this sector.
Roles and Responsibilities
Based on responses from government agencies, the roles and responsibilities in the mining sector are well
defined and the involved agencies understand and accept their assigned roles. This assessment needs to
be put in context, though. Very few projects have passed through the permitting phase in recent years
and as a result, intra-governmental coordination regarding the permitting of new mining activities is
largely untested.
The authority to issue exploration and mining licenses rests with the Ministry of Mining and Energy and
both environmental monitoring and water use within separate Ministries.
Intra-governmental Coordination
Intra-governmental coordination regarding the mining sector is functioning very well. In practice, there
are no disagreements between government ministries and agencies regarding their roles and
responsibilities. Again, It has to be noted that this is a largely untested area since very few projects have
passed thorough the permitting phase in recent years.
Mining-related information is shared among relevant agencies and is easily accessible. There are formal
mechanisms for information sharing. However, timing of data sharing between ministries and agencies
was raised as a concern for land access and compensation particularly in relation to mine site
development or pit expansions.
Room for Improvement in “Sector Management Framework”

Regarding “Sector Management Framework” there is room for improvement as follows:
• Develop (through a consultative process) a mining sector strategy and make it publicly available.
• Going forward, include the mining sector in the national development plan.
• Develop and implement an investment promotion strategy for the mining sector with the
Development Agency of Serbia (RAS).
• Encourage the formation of a new representative industry consultative body or encourage greater
representation through any of the existing organizations.
• Consult with industry and civil society stakeholders on improving the mining sector dialogue with
government.
17
https://www.miningconference.rs/agenda
- 16 -
VI. Performance Along the Extractive Industries Value Chain
This chapter takes a more detailed look at the performance of the mining sector at each stage of the value
chain—including listing potential areas in which there is room for improvement.
1. Contracts, Licenses and Exploration

The dashboard presented earlier provides a very aggregate view. Each cell in the dashboard consists of
one or more indicators and each indicator is scored based on a range of questions. Figure 10 below shows
the scoring of the indicators related to the first value stage. The details behind each indicator (e.g., the
underlying questions and their scoring) can be found in Annex II at the end of this report.18The areas for
which there is room for improvement are summarized at the end of the sub-section.
The legal and regulatory framework scores slightly higher than the implementation, but as noted earlier
the gap is very small. Four of the five indicators at this stage score “very high” and the remaining one
scores at the upper end of the “high” category—indicating overall very strong performance regarding
contracts, licenses, and exploration.
Figure 10: Contracts, Licenses and Exploration--Indicators
Indicators
License Allocation Rules (3.41)

Legislation, Policy, and Regulation
(3.39)
License Management and Transfer Rules (3.38)
Collection and Maintenance of Geological Information (3.40)

Institutional Capacity and
Effective License Allocation (3.03)
Effectiveness (3.34)
Effective License Management (3.58)
Legislation, Policy and Regulation (3.39)

License Allocation Rules (3.41)
Current allocation rules for exploration and mining licenses are generally consistent with good practice.
The rules are detailed, easily accessible, and compatible with other legislation. They require that licenses
be issued to applicants that meet all the requirement and prohibit the issuance to applications that do
not meet all the requirements. License issuance is based on the “First Come, First Served” principle.
Competitive bidding is not used in Serbia.
The legal requirements include timeframes for the issuance of licenses and require that a map component
be used to record license boundaries in the cadaster. Applicants need to be informed if a license
application is denied or a license is cancelled, and the denial/cancellation procedures are consistent with
good practice.
18
Each question is scored on a scale from 1 (lowest) to 4 (highest). Indicator scores are unweighted averages of
question scores and the scoring in the dashboard is an unweighted average of underlying indicator scores.
- 17 -
Exploration license holders are required to report exploration activities to MME and are held at the
Ministry. This requirement does not specify the disaggregation of exploration expenditures.
License Management and Transfer Rules (3.38)
There are legally binding provisions for penalties and sanctions for non-compliance with exploration and
mining license conditions. There is no legally binding requirement for exploration and mining licenses to
be made publicly available, even though there are no legal barriers to such disclosure. License holders are
required by law to provide the government with details of the beneficial ownership of the license.
A company that holds and exploration license has a legally binding automatic priority right to apply for a
mining license—provided it does also meet the conditions for a mining license. Furthermore, exploration
and mining license holders are permitted by law to transfer their licenses to an eligible party that meets
the license provisions.
Institutional Capacity and Effectiveness (3.34)

Collection and Maintenance of Geological Information (3.40)
Exploration license holders are delivering the required information to the Geological Institute of Serbia
which maintains it in a confidential manner as required until it is made available in a publicly accessible
library. There is, however, no government website that presents which information is available.
Government respondents indicate that the Geological Institute of Serbia uses the geological information
to improve government and public awareness/understanding of geological prospectivity and to monitor
compliance with license conditions. The Geoliss web portal provides public access to the documentation
held by the Geological Institute of Serbia, and can be review by filing a request with the Ministry.
Government respondents note that both the Geological Institute of Serbia and the mining cadaster suffer
from inadequate staffing and budget. These concerns are broadly consistent with the satisfaction ratings
provided by industry respondents regarding these two organizations. Industry respondents rate their
satisfaction with these two organizations at the lower end of the “dissatisfied” range for the Geological
Institute of Serbia (1.80) and around average (2.50) for the Mining Cadaster. Industry is, however,
generally satisfied with the availability of geological maps for the most prospective areas (3.00). The Fraser
survey of mining companies gives a high rating to the quality of Serbia’s database.
Government respondents note that most of licensed ground is being serviced by active exploration, that
the mining cadaster is kept up-to-date and that the topographic map for the cadaster is compatible with
GPS systems.
Effective License Allocation (3.03)
Industry respondents confirm that the information for license applications is publicly available and that
the legal procedures for the award of exploration and mining licenses are followed in practice (3.50).
While industry respondents do not report any preference for local companies in the allocation process,
they have some concerns about the extent of discretionary power in the allocation process (2.80) and the
breach of legislated timeframes for both license allocations (2.38) and the approval of exploration work
programs (2.33). They have also been concerns about the incompatibility of timelines for license approvals
with the timelines for other required permits (2.50).
Government respondents note that there are capacity constraints (staff and budget) for the unit issuing
exploration and mining licenses (2.71) which is consistent with industry’s average satisfaction rating for
- 18 -
the work of the unit (2.50). According to government, however, there are no licenses that are subject to
boundary disputes and license cancellations and denials never or rarely result in appeals.
Industry respondents perceive that corruption has a negative impact on mining sector activities, although
they are not aware of the payment of bribes in the mining sector.
Effective License Management (3.58)
Government respondents note that they are effectively managing compliance with exploration and
mining license conditions and that the unit in charge has the capacity to fulfill its mandate in a satisfactory
manner. This is broadly consistent with industry’s satisfaction rating for the work of the unit (3.00).
Industry also gives an average satisfaction rating (2.50) to the authorities’ practices regarding the
extension of exploration and mining licenses.
Both industry and government respondents agree that in practice license holders can transfer their
licenses to companies which meet the qualification criteria. Exploration and mining licenses are made
publicly available.
Room for Improvement in “Contracts, Licenses, and Exploration”

Regarding “Contracts, Licenses, and Exploration” there is room for improvement as follows:
• Ensure that the prescribed timelines for license allocations, extensions, and the approval of work
programs are followed in practice.
• Use existing license website infrastructure to include license applications and license details such
as license obligations and work programs.
• Explore ways to improve and build capacity of MME’s cadaster department, compliance
department and Geological Institute of Serbia.
2. Mining Operations
Overall performance at the second stage of the EI value chain is weaker than at the first stage. Still, both
de jure and de facto performance with respect to mining operations score at the upper end of the “high”
range, however, there is substantial variation across the underlying indicators with scores ranging from
the “low” to the “very high” range. Of the ten indicators only, the rules for “Mine Closure and Financial
Sureties for Decommissioning” scored dissatisfied overall — indicating room for improvement.
Implementation of these rules however, scored satisfied a theme emphasized during the workshops.
- 19 -
Figure 11: Mining Operations--Indicators
Indicators
Mining Legislation and Processes (3.80)
Land, Compensation and Resettlement Rules (3.00)
Environmental and Social Impact Management (3.25)
(3.21)
Occupational Health and Safety (3.70)
Mine Closure and Financial Sureties for Decommissioning (2.31)
Land, Compensation and Resettlement--Practice (4.00)
Environmental Impact (3.21)
Social Impact (3.03)

Mining Legislation and Processes (3.80)
Serbia receives a very high score on its mining legislation and processes. The legal framework is sound and
the laws are easily accessible electronically. There is a legally binding process to appeal decisions by mining
authorities which is independent of the mining authorities and has the legal standing to overturn
decisions.
Land, Compensation and Resettlement Rules (3.00)
There are legally binding procedures for the resettlement of communities displaced by mining activities
that follow internationally accepted principles. Similarly, there are legally binding procedures for the
payment of compensation when exploration and/or mining activities interfere with land ownership or
land use. However, the holder of a mineral right does not have a legally guaranteed access right to surface
land. The exception being for strategic raw materials, where the Law on Mining and Geological Exploration
provides the possibility to declare public interest and expropriate the land that will be used for mining.
Environmental and Social Impact Management (3.25)
There is a legally binding requirement that the clearance of the agency or ministry responsible for
environmental protection be obtained before exploration or mining activities can commence.
Environmental and Social Impact Assessments (ESIAs) and Environmental and Social Management and
Monitoring Plans (ESMMPs) have to be prepared by companies for review and approval by the concerned
government agencies and they are to be made public.19 There are legally binding requirements for (i)
pollution prevention and management of air pollution, hazardous and non-hazardous wastes, chemicals
and hazardous materials and pesticides, (ii) the protection of surface and ground water quality and the
review and balancing of water allocations, and (iii) structures such as tailings dams and impoundments
that hold mine wastes to be designed, operated and maintained according to internationally recognized
standards. Legally binding requirements exists in the areas of biodiversity and natural habitat, but they
lack requirements for regular updating and reporting. No legally binding requirement exists regarding the
need to reflect anticipated trends in weather event severity and frequency related to climate change in
mine design and operations. An Emergency Preparedness and Response Plan is required to be prepared
19
Combined ESIAs/ESMMPs are prepared in Serbia. The legal framework is provided in the “Law on Environmental
Impact Assessment” published in the Official Journal of the Republic of Serbia No. 135/2004 and No. 36/2009.
- 20 -
prior to the commencement of mining operations and it needs to be made public (MME and the Sector
for Emergency Management implements procedures regarding the annual emergency risk assessments).
There is a legally binding provision establishing a grievance and complaints mechanism for environmental
and social mitigation issues that is consistent with good practice. The authority with whom a grievance
or complaint can be filed has been established and has put in place procedures for hearings as well as
corrective procedures.
There are legally binding Occupational Health and safety (OHS) standards and procedures in the
“Occupational Health and Safety Law” (Official Journal of the Republic of Serbia, No. 101/2005, No.
91/2015 and No. 113/2017) that include related education and training and a grievance mechanism for
non-compliance with OHS standards and procedures, with penalties in case of non-compliance.
A sound legal framework for mine closure activities is in place, but it lacks some elements and does not
cover financial sureties. There are legally binding regulations covering mine closure and reclamation
activities. There is a requirement for a Mine Closure and Reclamation Plan (MCRP) to be prepared and it
is consistent with good practice. While the requirement outlines what the MCRP must cover regarding
environmental protection, remediation and reclamation, it does not outline required coverage regarding
managing and mitigation potentially harmful social impacts and there is no legally binding requirement
for mining companies to include progressive rehabilitation in the plan. The MCRP has to be prepared in
consultation with affected communities and it has to be made public.
There are no legally binding requirements for the posting of environmental bonds or similar financial
assurance methods to cover the cost of environmental rehabilitation and reclamation post-mining. For
cultivation areas affected by large scale mining operations, the mining license holder is required to provide
MME with a security instrument (bill, bank guarantee or corporate guarantee) against potential loss to
cultivation productivity.

Land, Compensation and Resettlement—Practice (4.00)
Civil society respondents confirm that the legal requirements to resettle communities affected by mining
activities and for the payment of compensation when exploration and/or mining activities interfere with
land ownership or land use are implemented in practice.
Environmental Impact (3.21)
Exploration and mining activities do not commence without obtaining a permit from the agency or
ministry responsible for environmental protection. Government representatives are broadly satisfied with
the capacity of the institution tasked with monitoring and enforcing environmental laws and regulations
and this view is shared by industry representatives (3.33), but less so by civil society representatives (2.00).
Based on government answers, ESIAs and EMMPs are approved by the Ministry of Environmental
Protection, before a mining right is granted and the documents are updated and approved on a regular
basis; and public available. Monitoring and enforcement is taken place and the documents are made
publicly available. Civil society representatives, however, note that they are very dissatisfied (1.00) with
the public availability of these documents.
- 21 -
Government representatives confirm that in practice surface and ground water quality are being
protected and water allocations reviewed and balanced. Government is also satisfied with the mining
companies’ design, operation and maintenance of structures such as tailings dams and impoundments
that hold mine wastes which is in line with industry responses on this issue (3.50). The majority of industry
representatives report that in practice (i) biodiversity is being identified, managed and protected, (ii)
natural habitat is being identified, managed, and protected, and (ii) mine design and operations reflect
anticipated trends in weather event severity and frequency related to climate change, but some industry
representatives disagree.
Answers from industry representatives vary as to whether they have in place an Emergency Preparedness
and Response Plan (EPRP) (2.35). According to government these plans are made public in practice and
are widely available.
Social Impact (3.03)
Government officials note that the institutions tasked with monitoring and enforcing social mitigation
measures and requirements have capacity issues—lacking both adequate staffing and budget (2.71). This
is broadly consistent with the satisfaction ratings for these institutions provided by industry (2.75) and
civil society representatives (2.00).
Government representatives confirm that SIAs and SMMPs are approved by the regulatory authority
before a mining right is granted and that the documents are updated and approved on a regular basis
with specified timeframes. They also confirm that monitoring and enforcement is taking place — even
though there is no separate accounting for the harmful impacts on women — and that the documents are
made public in practice and are widely available. Civil society, however, is less satisfied (2.00) with the
public availability of SIAs and SMMPs, but acknowledges that the grievance and complaints mechanism
for environmental and social mitigation issues is working well in practice.
Most industry respondents confirm that the OHS standard and procedures including any related education
and training requirements are enforced in practice (3.00). Government confirms that it tracks the number
of injuries and fatalities related to mining activities.
Mine Closure and Reclamation Plans (MCRPs) are prepared and approved prior to the commencement of
production—with a final MCRP prepared, approved, and audited by an independent expert prior to the
commencement of mine close activities. MCRPs are made public in practice and are widely available.
According to industry representatives there is very little—if any—consultation with communities and local
government during the preparation of MCRPs. This is consistent with civil society representatives’
dissatisfaction on this issue. According to government representatives, however, local government is
satisfied with the consultation done by industry on MCRPs. Civil society also expresses dissatisfaction
about the public availability of MCRPs.
Industry representatives are very dissatisfied (1.00) and civil society representatives are dissatisfied (2.00)
with the way the institutions tasked with monitoring and enforcing the environmental and social
obligations associated with mine closure are carrying out their tasks. Industry representatives confirm
that no progressive rehabilitation takes place.
Government officials confirm that adequate procedures are in place regarding the funds being set aside
for mine closure, industry representatives vary in their responses as to whether adequate funds are being
set aside for mine closure (1.75).
- 22 -
The government is working to inventory abandoned mine sites, but a plan on moving forward with
abandoned mines has not been approved yet.
Room for Improvement in “Mining Operations”

Regarding “Mining Operations” there is room for improvement as follows:
• Regarding environmental protection, strengthen requirements for the identification,
management and protection of biodiversity and natural habitat to include regular updating and
reporting.
• Requirement the inclusion or progressive rehabilitation in mining plans.
• Consult with stakeholders on the framework for a financial assurance mechanism covering mine
closure.
• Expand the requirements for the coverage of the MCRP to include managing and mitigating
potentially harmful social impacts of mine closure.
• Encourage compliance with the legal requirement that mining companies consult with affected
communities and local government during the preparation of the MCRP.
3. Taxation
Performance in the third EI value chain stage is very strong; with all but one of the indicators in this area
score in the “very high” range. There appears to be some room for improvement of the framework for
mining taxation.
Figure 12: Mining Taxation--Indicators
Indicators
Tax Policy and Instruments (2.99)

(3.31)
Mining Tax Administration Rules (3.63)
Mining Tax Administration (3.48)

Mining Tax Auditing (4.00)

Tax Policy and Instruments (2.99)
Serbia’s tax policy framework has many strong elements. It clearly prescribes which government agencies,
in this case, the Ministry of Mining and Energy, have the authority to collect taxes and other mining-sector
related payments and these payments are required to be placed in the national treasury. The law
prescribes the rates, formulae and bases for the main fiscal instruments and the government cannot
- 23 -
negotiate fiscal provisions with mining companies that differ from those provided in the law. There are
legally binding provisions that (i) require an annual disclosure of related party transactions and (ii) limit
the risk from thin capitalization. Lastly, there are no tariffs on imports of capital equipment and no tariffs
or other barriers on raw material exports.
While there are legally binding provisions for the granting of tax incentives to mining companies, a cost-
benefit analysis is not required before granting these incentives. There are no legally binding provisions
that ensure that the government has an adequate minimum revenue stream in all production periods.
Fiscal instruments include a royalty element and corporate income tax, but no variable rates targeted at
rents. There are legally binding provisions regarding transfer pricing, but they do not provide for the use
of advanced pricing agreements.
There are no legally binding provisions that identify profits from the indirect or offshore transfer of
exploration and mining assets. Government officials are of the view that the actual benefits from
government’s equity holding in resource companies does not exceed the cost of holding such equity.
Companies are required to pay VAT or sales tax on imports of capital equipment.
The mining industry is broadly satisfied (2.80) with the stability over time of fiscal terms. However, an
ongoing revision of the tax code in Serbia could introduce a new dimension to the mining tax regime. It
proposes to move royalties from the mining code to the new tax and fees law,20 to be placed under the
jurisdiction of either the Ministry of Finance, or Ministry of the Economy. Industry has expressed concerns
that could introduce discretion by the government in tampering with royalty rates depending on the fiscal
situation at any point in time.
Mining Tax Administration Rules (3.63)
The legal framework for mining tax administration is generally very strong. The legal framework clearly
specifies which agencies collect mining sector payments and the number of involved agencies is small.
These include local offices of Serbian Tax Administration or, where relevant, its Office for Large Taxpayers.
Detailed payment processes for tax and royalty payments are clearly laid out. The legal framework
provides for penalties and sanctions for non-compliance with tax legislation. Independent agencies
exercise oversight of the administration of the fiscal regime and government officials with an oversight
role are required to disclose information on their financial interest in any extractive activity or project.
National mining companies, such as RTB Bor, are limited to a commercial role and subject to fiscal
regulations in the same way as other commercial companies.
Legally binding provisions requiring regular tax, cost and physical audits of mining operations are missing.
Mining Tax Administration (3.48)
Government officials confirm that (i) taxes and other mining-sector related payments are only collected
by the mandated agencies, (ii) payments are placed in the national treasury, (iii) the fiscal terms including
provisions for tax incentives in the law, are followed in practice, (iv) government does not negotiate fiscal
terms and incentives with mining companies that differ from those in the mining and fiscal laws, and (v)
20
The Law on Fees for Use of Public Goods was adopted by the National Assembly in December 2018.
- 24 -
government officials with a role in the oversight of the mining sector disclose information about their
financial interest in any extractive activity of project.
Government officials are of the view that the existing large taxpayer unit has the capacity to satisfy its
mandate in a satisfactory manner—noting only the lack of a sufficient number of staff, industry
respondents indicate a low level of satisfaction (2.67) with the way the unit is fulfilling its mandate.
Government responses indicate the existence of disputes between taxpayers and the tax authorities
regarding the bases on which taxes and levies, but that these disputes are resolved through active tax
tribunals.
The majority of industry respondents indicate that policies and procedures related to mining taxation are
publicly available, easily accessed and understandable to the taxpayer (3.40) but have some more
concerns about the availability of guidance notes that meet the needs of mining sector taxpayers (2.67).
While the majority of industry respondents confirm that changes to mining tax legislation are undertaken
through a consultative process, there is considerable variation as to the satisfaction with this process
(2.50).
Mining Tax Auditing (4.00)
Government respondents are of the view that the legal framework for tax administration is implemented
efficiently. Specifically, they assert that (i) tax, cost and physical audits of mining companies are conducted
systematically, (ii) the legally binding provisions regarding transfer pricing are being implemented, (iii)
regular audits of mining companies are being conducted for compliance with thin capitalization rules, and
(iv) the legally binding provisions on penalties and sanctions for non-compliance with tax legislation are
being implemented.
Room for Improvement in “Taxation”

Regarding “Taxation” there is room for improvement as follows:
• Consider building capacity in the large company taxation department on transfer pricing, mining
company auditing and mineral valuations
• Work with industry on developing better guidance notes for mining sector taxpayers.
• Investigate the cause for the substantial number of disputes between taxpayers and tax
authorities regarding the bases on which taxes are levied.
• Look at ways of improving the work of the large taxpayer unit considering industry’s relatively low
satisfaction with the work of this unit.
4. Revenue Distribution and Management
Serbia’s performs very well at this stage of the value chain. Most indicators scores in the very high range
with the exception of a high score for the de facto indicator regarding fiscal stabilization and a low score
on resource revenue transparency. This reflects mainly the fact that Serbia does not participate in the
Extractive Industries Transparency Initiative and does not use another form of disclosing resource
revenue flows.
- 25 -
Figure 13: Revenue Management and Distribution--Indicators
Indicators
Revenue Sharing Rules (4.00)

(4.00)
Fiscal Stabilization Rules (4.00)
Revenue Sharing Arrangements (3.33)

Fiscal Stabilization (3.00)
Resource Revenue Transparency (2.50)
Legislation, Policy, and Regulation (4.00)

Revenue Sharing Rules (4.00)
There are legally binding provisions regarding arrangements for resource revenue sharing (Article 160 of
the Mining Code) and the Ministry of Finance has written guidelines regarding when and how yearly
budget allocations to sub-national governments should be disbursed.
Fiscal Stabilization Rules (4.00)
There is a legally binding provision that requires a medium-term fiscal framework (Law on Budget Systems,
Article 27).

Revenue Sharing Arrangements (3.33)
According to Government sources, the arrangements for revenue sharing between central and sub-
national governments are being followed in practice and the Ministry of Finance follows its guidelines
regarding budget allocations. Serbia did receive a relatively low PEFA score in the area of inter-
governmental transfers in its most recent PEFA assessment, mainly due to delays in the information
provided about these transfers.
Fiscal Stabilization (3.00)
According to the IMF WEO estimates, there is limited variation of domestic revenues in real terms over 5
years, indicating a relatively high level of fiscal stabilization.
Resource Revenue Transparency (2.50)
The Ministry of Mining and Energy publishes an annual bulletin on its website containing resource
revenues data for royalties. All government spending from resource revenues is appropriated through the
national budget.
According to civil society, there is no strong culture of reporting resource revenues. It is civil societies
opinion that at the local government level, financial flows and budgets are even less transparently
operated.
- 26 -
Room for Improvement in “Revenue Distribution and Management”
Regarding “Revenue Distribution and Management”, there is room for improvement as follows:
• Determine whether the low 2015 PEFA score on inter-governmental transfers is still relevant and
consider adjustments in the process, if warranted.
• Consider publishing fiscal revenue contributions from the mining sector and government
expenditure
5. Local Impact
Overall performance on this value chain stage is average, but it is the lowest along the EI value chain. The
lowest scoring indicators are local content rules, SUSTAINABILITY and social impact management, and
rules on community engagement. However, these low scores should be considered within the context
that Serbia has not had a new mine open in over two decades. This was before the global discourse on
local content and local impact of mining activities picked up steam.
Figure 14: Local Impact--Indicators
Indicators
Local Content Rules (1.00)
Legislation, Policy, and Regulation Employment Policies (4.00)

(2.24) Rules on Community Engagement (2.95)
CSR and Social Issues--Rules (1.00)
Local Supplier Development (3.33)
Institutional Capacity and Employment (3.41)

Effectiveness (3.11) Community Engagement (N/A)
CSR and Social Issues (2.60)
Legislation, Policy, and Regulation (2.24)

Local Content Rules (1.00)
There is no formal policy on promoting local content and no site-specific agreements with mining
companies that promote local content. No assessments are being undertaken to tracking the demand and
supply of goods and services by the mining industry and Social Impact Assessments (SIAs) and Social
Impact Monitoring and Management Plans (SMMPs) are not required to support local content goals.
Employment Policies (4.00)
Mining companies are required by law to provide on the job-training and child labor is prohibited. The
government is committed to provide women with equal employment opportunities and conditions and
there are legally binding rules that require employment equity. An agency has been designated to enforce
the rules and the agency has put in place monitoring procedures and enforcement mechanisms.
- 27 -
Rules on Community Engagement (2.95)
There are legally binding provisions for community stakeholder consultations with affected communities,
but there are no specific requirements that they take place throughout the life of the mine and that
women participate in the consultations. It is required that community stakeholder consultations are taken
into account in preparing and updating EIA, EMMPs, SIAs, and SMMPs. There is, however, no legally
binding requirement for Community Development Agreements between mining companies, government
and affected communities.
There is a serious lack of policies in this area. There is (i) no national policy on Corporate Social
Responsibility that applies to mining, (ii) no legally binding requirement for free, prior and informed
consent, and (iii) no legally binding requirement for local governments and companies to work together
to manage the effects of the potentially rapid and disruptive in-migration around mining operations.
Companies are not required by law to collect data on, report on, and address the impacts of mining on
women separately from the impacts on men.

Local Supplier Development (3.33)
The majority of industry respondents report sourcing more than 25% of goods and services from local
suppliers. They also indicate that they are generally satisfied with the support provided for domestic
suppliers in attaining local content goals (3.17).
Employment (3.41)
Industry respondents report providing on-the-job training for employees as well as equal employment
opportunities and conditions for women. Several of the mining companies currently in exploration
recruited their project managers and other technical staff from the Faculty of Mining and Geology,
University of Belgrade. There appears to be a good link between industry and local educational institutions
providing a pipeline for geologists, engineers and other technical staff. In some of these companies, the
managers for flagship projects are female geologists. Civil society respondents, however, are dissatisfied
with the government’s actions to provide women with equal employment opportunities and conditions.
Community Engagement (N/A)
Civil society respondents did not answer any questions related to this indicator. However, some of the
mining companies currently in exploration phase in places like Bor and Loznica appear to have strong
community engagement strategies. Both Rakita Exploration and Rio Sava have information centers in their
respective locations where information about the proposed projects is publicly available. According to
company representatives, they also hold regular meetings with municipal authorities, donate funds for
community activities and participate in local festivities. Civil society respondents did not answer any
questions related to this indicator.
Very few answers were provided to the questions that constitute this indicator. The only exception are
industry respondents who indicate that they are moderately satisfied (2.60) with the planning and
implementation of CSR activities.
- 28 -
Room for Improvement in “Local Impact”
Regarding “Local Impact” there is room for improvement as follows:
hold throughout the life of the mine and that women participate.
• Consider reviewing requirements for Community Development Agreements between mining
companies, government, and affected communities.
• Review existing practices of providing support for domestic suppliers to the mining industry and
consider improvements, and if required develop a local content policy.
• Develop a national policy on Corporate Social Responsibility through a consultative process.
• Put in place a legally binding requirement for free, prior, and informed consent.
VII. Stakeholder Priorities

The analysis in Sections V and VI regarding the evaluation of the sector management framework and the
performance along the EI value chain has treated every topic (e.g., each cell of the dashboard) and each
indicator equally. Importantly, each issue that was identified as not working well or not achieving its
intended purpose was identified as providing “room for improvement”. In doing so, the analysis misses
an important aspect—some issues are simply more important than others. They either have a larger
impact (positive or negative) on the functioning of the mining sector or they are perceived as
indispensable areas which require reforms. The analysis of stakeholder priorities in this section is a first
step towards identifying which issues should be considered more important than others—as seen through
the eyes of the three main stakeholder groups in the sector—government, industry, and civil society.
During the interview phase of the MSD, all respondents were asked to identify their top priorities for the
sector. Specifically, respondents were provided with the Votes Template reproduced in Annex III. Each
respondent then picked those topics (indicated by blue lines in the template—each representing one of
the 14 cells in the MSD dashboard) they deemed most important. For each topic, respondents allocated
100 votes to the indicators that constitute that topics which allowed them focus on specific aspects of
sector performance that require special attention. Priority areas were defined as areas where reforms
would be most likely to significantly improve the functioning of the sector with the aim of increasing the
mining sector’s contribution to overall sustainable growth and development. Note that by definition a
priority area is an indicator from the MSD framework.
Stakeholder votes were then normalized to 100 per respondent thereby giving equal weight to each
respondent. After that, responses were aggregated for each stakeholder group. The table below shows
the top 8 priorities for each group (Figure 15). The table also lists the scores for each priority topic. Some
of the priorities picked by the three stakeholder groups score low in the MSD analysis—indicating areas
for policy interventions. However, there are also many high and perfect-scoring topics among the top
priorities.
Only two of the elements of the Sector Management Framework—Sector Dialogue and Intra-
Governmental Coordination appear in the lists of priorities. Priority areas are also not equally distributed
across the EI value chain—priorities are more likely to be found in stages 3 (“Taxation”, 9 mentions) and
2 (“Mining Operations”, 6 mentions) of the EI value chain. Some indicators from stages 1 (“Contracts,
Licenses, and Exploration”) and 5 (“Local Impact”) appear on the lists, but no indicator from stage 4
- 29 -
(“Revenue Distribution and Management”). Priority topics along the EI value chain are equally split
between indicators that measure de jure performance (“Legislation, Policy, and Regulation”) and de facto
performance (“Institutional Capacity and Effectiveness”).
There is no strong convergence in any of the stakeholder groups on top priorities. For each group, the top
eight priorities only gathered 40-50 percent of total votes—indicating significant disagreement even
within each group on what constitutes a high priority.
The Venn diagram (Figure 16) provides information on shared priorities by illustrating where the top
priorities listed in the table above overlap among stakeholder groups. There is no topic that appears in
the list of top eight priorities for all three stakeholder groups. But a total of seven areas are shared
priorities for two of the three groups:
• Government and industry representatives jointly agree on “Intra-Governmental Coordination”

and “Mining Tax Auditing” as priority areas.
• Government and civil society representatives jointly agree on “Environmental and Social Impact
Management”, “Mining Tax Administration
Figure 15: Shared Stakeholder Priorities
Rules”, and “Resource Revenue
Transparency” as priority areas.
Government CSO • Industry and civil society

representatives jointly agree on
3 “Sector Dialogue” and “Tax and Policy
4 4 Instruments” as priority areas.
0 Of these overlapping priority areas,
2 2 the three with the lowest scores in
the MSD framework are “Sector
Dialogue” (2.40), “Resource Revenue
Transparency” (2.50), and “Tax Policy
5 and Instruments” (2.99). The scores
for all other priority areas depicted in
Industry
the Venn diagram are either in or very
close to the “very high” scoring range.
- 30 -
Figure 16: Stakeholder Priorities
Votes (%
Topic Votes (%) Cumulative) Score
Government
Mining Tax Administration Rules 7% 7% 3.63

Mining Tax Auditing 6% 13% 4.00
Resource Revenue Transparency 6% 19% 2.50
License Management and Transfer Rules 6% 25% 3.38
Intra-Governmental Coordination 4% 29% 4.00
License Allocation Rules 4% 32% 3.41
Environmental and Social Impact Management 3% 36% 3.25
CSR and Social Issues--Rules 3% 39% 1.00
Industry
Collection and Maintenance of Geological Information 8% 8% 3.40

Fiscal Stabilization Rules 6% 14% 4.00
Intra-Governmental Coordination 6% 20% 4.00
Tax Policy and Instruments 5% 25% 2.99
Sector Dialogue 5% 30% 2.40
Land, Compensation and Resettlement Rules 5% 35% 3.00
Land, Compensation and Resettlement--Practice 5% 39% 4.00
Fiscal Stabilization 5% 44% 3.00
Civil Society
Resource Revenue Transparency 10% 10% 2.50

Tax Policy and Instruments 7% 17% 2.99
Mining Tax Administration Rules 7% 24% 3.63
Sector Dialogue 6% 30% 2.40
Environmental and Social Impact Management 6% 36% 3.25
Environmental Impact 5% 41% 3.21
Social Impact 5% 46% 3.03
Community Engagement 5% 51% N/A
VIII. Conclusions and Recommendations

This chapter concludes the report by noting the strengths that exist at present - where the rules are in
line with modern good practice and are implemented efficiently through capable institutions. It then
outlines potential areas and actions for improvement which could then be organized into a reform agenda.
- 31 -
These action points identify potentially important key improvements in both the rules and in institutional
performance.
1. Summary of Main Strengths
Serbia’s institutional arrangements for the mining sector are strong. There are clear responsibilities for
the main actors and coordination and information sharing among different institutions and agencies is
working well.
The legal framework for the mining sector is generally strong, in particular with respect to licensing,
taxation and revenue management.
2. Outline of a Reform Agenda

As detailed in Sections IV and V there are areas where there is room for improvement in the sector
management framework and along the EI value chain. A strong reform agenda should prioritize those
identify items. There are several reasons for prioritizing certain issues over others. Potential impact is an
important consideration—reforms that are thought to have a significant impact should probably be higher
up on the agenda. Second, some areas have been identified as priorities for reform by sector stakeholders
(see Section VI). Those areas which are identified as strong priorities by certain stakeholder groups and/or
constitute shared priorities are also good candidates for early reform efforts. Third, there are some issues
which are easier to fix than others and/or that are more likely to result in quick wins. Again, these are
good reasons to prioritize these items.
Identifying a reform agenda still requires a substantial amount of judgement and country-specific
circumstances will need to be considered. A careful weighing of all these considerations leads to the
following suggested reform agenda:
Sector Management Framework
There are two key actions that would improve the functioning of Serbia’s sector management framework.
First, a mining sector policy should be developed through a consultative process with all stakeholders.
This should be seen as a consensus-building exercise that results in commitment by all actors to a stronger
mining sector. The policy should be widely publicized, be integrated with the overall national development
plan and a separate investment strategy for the mining sector should be developed on this basis. A sector
policy is a requirement under the mining law and as such Ministry of Mining and Energy has started this
to draft the required sector policy.
Secondly, measures should be taken to improve the mining sector dialogue. The establishment of a of a
new representative industry consultative body or greater representation through any of the existing
organizations would be helpful. The sector dialogue should also include civil society representatives and
community groups. Regarding the latter, there is a need to proactively map civil society stakeholders.
Legal and Regulatory Framework
Legal and regulatory requirements are lacking in several key areas and priority should be given to close
these gaps:
• Prepare, consult and finalize for promulgation mining regulations, particularly the rule books for
modern large scale mine developments
• Review financial assurance mechanisms covering mine closure.
- 32 -
Institutional Capacity and Effectiveness
Several government agencies appear to have capacity constraints in terms of staffing and budget.
Government should ensure that all relevant agencies (GIS, Mining cadaster, unit monitoring licenses and
unit monitoring environmental/social impacts) are adequately staffed and have sufficient budget to fulfill
their mandate. This would likely improve weaknesses in implementation.
Additional points to pursue include:
• Consider ways to improve administrative systems within MME to facilitate decision making by
Ministry officials on mineral rights and other licensing requirements
• Resolve geodata ownership and purchasing issues
• Using working groups for assessing mining application under the new regime and working cross
government to build confidence in the application process for mining licenses and associated
permits and consents.
• Building capacity in the large company taxation department on transfer pricing, mining company
auditing and mineral valuations
Sector Transparency and Accountability

Key steps that could be taken to improve the transparency in the resource sector are:
• Disclosure of resource revenue and encourage the use of publicly available revenue statistics.
• Public availability of licenses conditions and obligations.
• Continue to improve availability of and access to Environmental and Social Impact Assessments,
Environmental and Social Management and Mitigation Plans, Mine Closure and Reclamation
Plans, and other relevant documents.
Improvement in the accountability could be obtained by:
• Regulating the legal requirement that mining companies consult with affected communities and
local government during the preparation of the MCRP.
held throughout the life of the mine.
• Develop of national policy on Corporate Social Responsibility.
- 33 -
Annex I: MSD Methodology—Brief Description
MSD is a data-driven diagnostic of the mining sector. Data are collected with the help of a questionnaire
which consists of 280 questions. Questions draw on two different data sources - namely:
• Primary data regarding the country’s laws, regulations and procedures – these are questions
regarding the de jure “rules”. These data are generated through a desk review of relevant
documents.
• Interview data from in-country interviews with representatives from government, civil Society
and industry – these are questions regarding the de facto “implementation” performance
The answer to each question is scored on a scale from 1 (lowest) to 4 (highest). More specifically,
• Primary questions typically deal with the existence of legally binding requirements. In some cases,
primary questions are simple Yes/No questions which are scored as 4 or 1, depending on the
answers. In many other cases, the primary questions do explore whether the legally binding
requirement is consistent with good practice. This is done through a series of sub-questions. The
overall score then averages the sub-question scores.
• Interview questions have specific answer choices. Either four, three, or 2 answer choices are
given. An example of four choices are (very satisfied/satisfied/unsatisfied/very unsatisfied) with
respective scoring from 1 to 4. An example of three answer choices would be (Fully/Partially/Not
at all) with scoring of 4/2.5/1. An example of two answer choices would be (Yes/No) with scoring
of 4 or 1. Interview questions can consist of 2 or more sub-questions, in which case the overall
score would be an average of sub-question scores.
The interview responses obtained from civil society and industry are averaged into one civil society and
one industry response, respectively. Interviewees also have an opportunity to provide comments to
support or clarify their views. Questions are aggregated into indicators, indicators are grouped into
“topics” which represent the cells of the dashboard (Indicators are shown in Figures 4-8 of the report and
are clearly identified through headings in Annex II). Aggregation at each step involves simple averaging.
The resulting scores are broken into four groups:
- “very low” (score of 1 – 1.75)

- “low” (score of >1.75-2.5)
- “high” (score of >2.5-3.25)
- “very high” (score of >3.25-4)
The figures in the report translate these scores into color coding as follows:
Scoring Key: Very low (1.00 - 1.75) Low (> 1.75 - 2.50) High (> 2.50 - 3.25) Very High (> 3.25 - 4.00)
- 34 -
Annex II: Question Scores
Number Question Data Source Score

A Mining Sector Management
A1 Sector Policy
1 Is there an approved mining sector strategy that is publicly available? Primary 1.00
Is there a current multi-year national development plan that has a section on the mining
2 Primary 1.00
sector and that is publicly available?
How satisfied is government with the mining sector development taking place in this Interview
3 4.00
country? Government
How satisfied is the mining industry with the mining sector development taking place in Interview
4 3.00
this country? Industry
Interview
5 How satisfied is civil society with the mining development taking place in this country? 2.00
Civil Society
Interview
6 Is mining legislation in accordance with the mining sector strategy? ...
Government
Interview
7 Is mining sector legislation consistent with other relevant legislation? 4.00
Government
How satisfied is the mining industry with the country's mining legislation (e.g., is it Interview
8 2.83
reasonably up-to-date and addresses all relevant issues)? Industry
How satisfied is the government with the country's mining legislation (e.g., is it Interview
9 4.00
reasonably up-to-date and addresses all relevant issues)? Government
Interview
10 Is there an investment promotion strategy that adequately covers the mining sector? 1.75
Government
A2 Sector Dialogue
Is there a Chamber of Mines(or similar organization) that represents the mining
11 Primary 1.00
industry?
How satisfied is the mining industry with the way the Chamber of Mines (or similar Interview
12 2.40
organizataion) represents the views of the mining industry? Industry
How satisfied is the government with the dialogue between the government and the Interview
13 4.00
mining industry on mining sector issues? Government
How satisfied is the government with the dialogue between the government and civil Interview
14 4.00
society on mining sector issues? Government
How satisfied is the mining industry with the dialogue between the government and the Interview
15 1.80
mining industry on mining sector issues? Industry
How satisfied is the mining industry with the dialogue between civil society and the Interview
16 2.00
mining industry on mining sector issues? Industry
How satisfied is civil society with the dialogue between the government and civil society Interview
17 2.00
on mining sector issues? Civil Society
How satisfied is civil society with the dialogue between the mining industry and civil Interview
18 2.00
society on mining sector issues? Civil Society
Did an informed and meaningful national consultation take place during the preparation Interview
19 …
of the mining sector strategy? Government
Did an informed and meaningful national consultation take place during the preparation Interview
20 …
of the national development plan? Government
- 35 -
A3 Roles and Responsibilities
Is there a stand-alone Ministry of Mines with clearly defined responsibilities for the
mining sector? If not, and mining sector issues are covered by a unit/section in a Interview
21 4.00
different Ministry, is this unit/section sufficiently empowered to deal with mining sector Government
issues?
Does mining or other legislation assign clear authorities and non-overlapping Interview
22 4.00
responsibilities between government ministries/agencies in the mining sector? Government
Is there a clear understanding and acceptance of the various roles and responsibilities Interview
23 4.00
amongst the agencies involved in the management of the mining sector? Government
Is there a dedicated unit within the mining authority dealing with artisanal and small-
24 Primary …
scale mining (ASM)?
Is there a legally binding provision for the establishment and operation of a mining
25 Primary 4.00
cadastre that specifies its authority and responsibilities?
Is there a legally binding provision that identifies the authority that issues exploration
26 Primary 2.50
and mining licenses and is this authority separate from the mining ministry?
Is there a legally binding provision that provides for the use of mining-related standard
27 contracts and/or development agreements, does the law define the signatory and is the Primary 1.00
signatory the same as the license issuer?
Are there provisions that identify which institution or institutions are responsible for
28 approving EIAs and EMMPs as well as monitoring and enforcing compliance with legal Primary 4.00
requirements related to managing environmental impact?
Are there provisions that identify which institution or institutions are responsible for
29 approving SIAs and SMMPs as well as monitoring and enforcing compliance with legal Primary 4.00
requirements related to managing social impact?
A4 Intra-Governmental Coordination
In practice, are there disagreements between government ministries/agencies over the Interview
30 4.00
roles and responsibilities regarding the mining sector? Government
Has the government set up formal mechanisms to share resources and information
Interview
31 between institutions in the form of committees, task forces or working groups that bring 4.00
Government
together "mining sector practitioners"?
Are there formal mechanisms for sharing information between government Interview
32 4.00
ministries/agencies working on the mining sector? Government
How satisfied are you with the effectiveness of the formal mechanisms for sharing Interview
33 4.00
resources and information? Government
Has a central information storage system and database been set up that effectively Interview
34 4.00
supports the maintenance, verification, and sharing of data for the mining sector? Government
Interview
35 How satisfied are you with the central information storage system and database? 4.00
Government
1 Contracts, Licenses and Exploration
B1 Rules for License Allocation, Oversight, and Transfer
B1.1 License Allocation Rules
Are there legally binding procedures for granting exploration and mining licenses and , if
36 Primary 3.50
so, are they consistent with good practice?
Are the procedures used in granting exploration and mining licenses consistent with
37 Primary 4.00
good practice?
If competitive bidding is used, are standardized bidding documents and contracts used
38 for granting exploration licenses and, if so, do the evaluation criteria emphasize work Primary …
commitments?
- 36 -
If competitive bidding is used, are standardized bidding documents used for granting
39 mining rights licenses and, if so, do the evaluation criteria for granting mining licenses Primary …
emphasize investment commitment and premium payments?
Are there legally binding procedures for registering or granting licenses to artisanal and
40 small-scale mining operators and, if so, can the registration/license be obtained from Primary …
field offices, not just the mining authority head office?
Are there legally binding provisions regarding the timeframes for the issuance of
41 Primary 4.00
exploration and mining licenses and the approval of exploration work programs?
Is there a legally binding requirement or guideline that requires that a map component
42 Primary 4.00
be used to record license boundaries in the cadastre?
Are there legally binding provisions that an applicant be informed if a license application
43 Primary 4.00
is denied or a license is cancelled and, if so, are they consistent with good practice?
Are there legally binding provisions that require exploration license holders to report
44 exploration activities and results to the Geological Survey Department or the mining Primary 3.40
authority and, if so, are they consistent with good practice?
Are there legally binding procedures for granting licenses to mineral traders and are they
45 required for trading minerals, gemstones, etc. produced by mining license holders as Primary 1.00
well as artisanal and small-scale mining operators?
B1.2 License Management and Transfer Rules
Are there legally binding provisions for penalties and sanctions for non-compliance with
46 Primary 3.25
exploration and mining license conditions?
Are there legally binding requirements that exploration and mining licenses, contracts
47 Primary 1.00
and agreements be made publicly available?
Are there legally binding provisions, such as state secrecy laws, that contain barriers to
48 Primary 4.00
the disclosure of mining sector information?
Are there legally binding provisions that require license holders to provide the
49 Primary 4.00
government with details of the beneficial ownership of the license?
Does a company that holds an exploration license and is in compliance with exploration
license conditions have a legally binding automatic priority right to apply for a mining
50 Primary 4.00
license in that area—provided it does also meet the conditions and has provided all
necessary information required for a mining license?
Are there legally binding provisions that permit exploration and mining license holders to
51 Primary 4.00
transfer their licenses to an eligible party that meets the license provisions?
C1.1 Collection and Maintenance of Geological Information
In practice, are exploration license holders delivering the required operational
Interview
52 information to the Geological Survey Department (GSD) or mining authority on a regular 4.00
Government
basis?
In practice, does the GSD or similar organization maintain geological information from Interview
53 4.00
companies in a confidential manner until such time as it can be made publicly available? Government
In practice, does the GSD or similar organization collect geological information in a Interview
54 4.00
publicly accessible library? Government
Is there a government website that presents what national geological information is
55 Primary 1.00
available or, if not at the national, at the sub-national level?
Is there a library with current national or sub-national geological information maintained
56 Primary 4.00
by the Geological Survey Department (GSD) or a similar organization?
In practice, does the GSD or similar organization make use of the geological data
Interview
57 collected from companies to improve government and public awareness/understanding 4.00
Government
of geological prospectivity?
- 37 -
In practice, does the GSD or similar organization make use of the geological data Interview
58 4.00
collected from companies to monitor compliance with licenses? Government
In practice, does the GSD or similar organization have the capacity to fulfill its mandate Interview
59 2.71
in a satisfactory manner? Government
How satisfied is the mining industry with the way in which the Geological Survey Interview
60 1.80
Department (GSD) or similar organization is fulfilling its mandate? Industry
61 Quality of geological database (Fraser Institute) Secondary 4.00
Interview
62 What percentage of the licensed ground is being serviced by active exploration? 4.00
Government
How satisfied is the mining industry with the availability of geological maps for the most Interview
63 3.00
prospective areas? Industry
In practice, does the Mining Cadastre have the capacity to fulfill its mandate in a Interview
64 2.71
satisfactory manner? Government
How satisfied is the mining industry with the way in which the Mining Cadastre is Interview
65 2.60
fulfilling its mandate? Industry
Interview
66 In practice, is the topographic map for the cadastre compatible with GPS systems? 4.00
Government
Interview
67 What percentage of the mining cadastre is up-to-date? 4.00
Government
In practice, if there is a decentralized cadastre system in place, is the central office able Interview
68 4.00
to obtain updated information on a timely basis? Government
C1.2 Effective License Allocation
Interview
69 In practice, is the information required for license applications publicly available? 3.75
Industry
Are the procedures in the legal framework for the award of exploration and mining Interview
70 3.50
licenses followed in practice? Industry
Are the limits to discretionary power in the award of exploration and mining licenses Interview
71 2.80
followed in practice? Industry
In practice, is there a preference for local companies or producers in the award process Interview
72 4.00
of exploration and mining licenses? Industry
In practice, are exploration and/or mining licenses awarded to applicants which do not
Interview
73 have the technical and financial capacity to fulfill license requirements and any 2.50
Industry
associated work program?
In practice, are the legislated timeframes for exploration and mining license awards and Interview
74 2.38
extensions followed? Industry
Interview
75 Are the timeframes for the approval of exploration work programs followed in practice? 2.33
Industry
Are the timelines for deciding on exploration and/or mining license applications Interview
76 2.50
compatible with the timelines of other required permits? Industry
Interview
77 In practice, when licenses are denied or cancelled, are the procedures followed? 4.00
Government
In practice, does the unit issuing exploration and mining licenses have the capacity to Interview
78 2.71
fulfill its mandate in a satisfactory manner? Government
How satisfied is the mining industry with the way in which the unit issuing exploration Interview
79 2.50
and mining licenses is fulfilling its mandate? Industry
What percentage of licenses are subject to boundary disputes between license holders Interview
80 4.00
due to the ambiguity of boundaries? Government
Are mining contracts and agreements signed and approved by the authority or Interview
81 4.00
authorities defined in the law? Government
- 38 -
Interview
82 In practice, how often do license cancellations or denials result in appeals? 4.00
Government
If mining-related standard contracts and/or development agreements are used, are they Interview
83 …
used to modify provisions in the law? Government
In practice, does the agency or ministry responsible for awarding licenses for exploration
Interview
84 and mining operate independently from the mining ministry (without undue influence 1.60
Industry
from the mining ministry)?
Do you perceive corruption as having a negative impact on mining-sector activities--in Interview
85 1.00
particular the licensing process? Industry
Interview
86 Is your company aware of the payment of bribes in the mining sector? 4.00
Industry
C1.3 Effective License Management
Is the government effectively managing compliance with exploration and mining license Interview
87 4.00
conditions? Government
In practice, does the unit managing the monitoring of licenses have the capacity to fulfill Interview
88 3.57
its mandate in a satisfactory manner? Government
How satisfied is the mining industry with the way in which the unit managing the Interview
89 3.00
monitoring of licenses is fulfilling its mandate? Industry
How satisfied is the mining industry with the authorities' practices regarding the Interview
90 2.50
extension of exploration and mining licenses? Industry
In practice, are license holders able to transfer their licenses to companies which meet Interview
91 4.00
the qualification criteria? Government
In practice, does a company that holds an exploration license for a certain areas and is in
compliance with exploration license conditions have an automatic first priority to obtain Interview
92 4.00
a mining license in that area—provided it does also meet the conditions and has Industry
provided all necessary information required for a mining license?
In practice, are exploration and mining licenses, contracts and agreements made publicly Interview
93 4.00
available? Government
If the answer to the preceding question is "No", are key details of exploration and mining Interview
94 …
license readily accessible? Government
2 Mining Operations
Mining Legislation/Processes, Land/Compensation/Resettlement, Environmental and
B2
Social Impact Management, ASM, OHSA, Mine Closure--Rules
B2.1 Mining Legislation and Processes
95 Are there legally binding regulations which cover exploration and mining activities? Primary 4.00
Are the laws and regulations governing exploration and mining operations readily
96 Primary 3.00
available from a dedicated government source?
Is there a legally binding process to appeal decisions by mining authorities and, if so, is
97 Primary 4.00
the authority that receives the appeal independent of the mining authorities?
If it exists, does the legally binding appeals process to appeal decisions by mining Interview
98 4.00
authorities have the legal standing to overturn these decisions? Government
Are timeframes for the approval of mine development plans and the approval of
99 Primary 4.00
extensions of mining operations set out in the regulations?
B2.2 Land, Compensation and Resettlement Rules
100 Does the holder of a mineral right have legally guaranteed access rights to surface land? Primary 1.00
Is there a legally binding established procedure for the resettlement of communities
101 displaced by mining activities and, if so, does it follow internationally accepted principles Primary 4.00
such as the Equator Principles or the IFC Performance Standards?
- 39 -
Is there a legally binding procedure for the payment of compensation when exploration
102 Primary 4.00
and/or mining activities interfere with land ownership or land use?
If mining is taking place in areas where armed conflict is taking place, are there legally
103 binding requirements for a diagnostic review for appropriate actions regarding existing Primary ...
mineral rights in such areas?
B2.3 Environmental and Social Impact Management
Is there a legally binding requirement that the clearance of the agency or ministry
responsible for environmental protection be obtained before exploration or mining
104 Primary 4.00
activities can commence and is the agency or ministry separate from the mining
authorities or in a separate line of authority from the mining licensing agency?
Is there a legally binding requirement for companies to prepare and submit EIAs, EMMPs
105 (or combined ESIAs and ESMMPs) and related reports including implementation and Primary 4.00
monitoring reports for review and approval by the concerned government agencies?
Is there a legally binding requirement for EIAs and EMMPs (or combined ESIAS and
106 ESMPS) and related implementation and monitoring reports to address mining's Primary 1.00
environmental impacts on women separately from the impacts on men?
Is there a legally binding requirement for EIAs and EMMPs (or other key environmental
107 impact related documents such as monitoring reports) to be made public and is the Primary 3.40
requirement consistent with good practice?
Are there legally binding requirements for pollution prevention and management of air
108 pollution, hazardous and non-hazardous wastes, chemicals and hazardous materials and Primary 4.00
pesticides?
Are there legally binding requirements for the protection of surface and ground water
109 quality and the review and balancing of water allocations and are they consistent with Primary 3.40
good practice?
Is there a legally binding requirement for structures such as tailings dams and
110 impoundments that hold mine wastes to be designed, operated and maintained Primary 4.00
according to internationally recognized standards that is consistent with good practice?
Is there a legally binding requirement for mining operations to identify, manage and
111 Primary 2.20
protect biodiversity on a regular basis?
Is there a legally binding requirement for mining operations to identify, manage and
112 Primary 2.20
protect natural habitat on a regular basis?
Is there a legally binding requirement that mine design and operations reflect
113 anticipated trends in weather event severity and frequency related to climate change on Primary 1.00
a regular basis?
Is there a legally binding requirement for mining operations to have an Emergency
114 Preparedness and Response Program (EPRP) prior to commencement of mining Primary 4.00
operations that is consistent with good practice?
Is there a legally binding requirement for Emergency Preparedness Plans are required to
115 Primary 3.40
be made public and is the requirement consistent with good practice?
Is there a legal provision for a simplified Environmental Permit for artisanal and small-
116 Primary ...
scale mining (ASM)?
Is there a legally binding requirement for companies to prepare and submit SIAs and
SMMPs (and related reports including Implementation and Monitoring reports) for
117 Primary 4.00
review and approval by the concerned government agencies and is the requirement
consistent with good practice?
Is there a legally binding requirement for SIAs and SMMPs (or other key social impact
118 related documents such as monitoring reports) to be made public and is the requirement Primary 3.40
- 40 -
Is there a legally binding provision establishing a grievance and complaints mechanism
119 for environmental and social mitigation issues and is the complaints mechanism Primary 4.00
Is there an authority with whom a grievance or complaint can be filed and has the
120 Primary 4.00
authority put in place procedures for hearing as well as corrective procedures?
B2.4 Occupational Health and Safety
Are there legally binding Occupational Health and Safety (OHS) standards and
121 procedures, and, if so, do they include related education and training requirements and Primary 4.00
are they in line with internationally used standards?
Is there a a grievance mechanism for workers for non-compliance with Occupational
122 Health and Safety (OHS) standards and procedures, and, if so, does it include penalties in Primary 3.40
case of non-compliance?
B2.5 Mine Closure and Financial Sureties for Decommissioning
Are there legally binding regulations which cover mine closure and reclamation
123 Primary 4.00
activities?
Is there a legally binding requirement for a Mine Closure and Reclamation Plan (MCRP)
124 Primary 4.00
to be prepared and is it consistent with good practice?
Are there legally binding provisions that outline what the MCRP must cover regarding
125 Primary 4.00
environmental protection, remediation and reclamation?
Are there legally binding provisions that outline what the MCRP must cover regarding
126 Primary 1.00
managing and mitigating potentially harmful social impacts?
Is there a legally binding requirement for the MCRP to be prepared in consultation with
127 Primary 4.00
the affected communities and local government and is it consistent with good practice?
Is there a legally binding requirement for Mine Closure and Remediation Plans to be
128 Primary 3.40
made public and is the requirement consistent with good practice?
Is there a legally binding requirement for mining companies to include progressive
129 Primary 1.00
rehabilitation in the mining plan?
Is there a legally binding requirement for the posting of environmental bonds or similar
130 financial assurance methods to cover the cost of environmental rehabilitation and Primary 1.00
reclamation post-mining?
Are there legally binding provisions regarding the financial assurance mechanism which
131 require that financial securities be issued and held only by government or approved, Primary 1.00
qualified financial institutions?
Are there legally binding provisions regarding the financial assurance mechanism for
132 mine closure which clearly stipulate the conditions under which the company or the Primary 1.00
government can access the funds?
Are there legally binding provisions regarding the financial assurance mechanism for
133 mine closure which ensure that the funds can only be used for mine closure and Primary 1.00
environmental rehabilitation and reclamation costs?
C2.1 Land, Compensation and Resettlement--Practice
In practice, does the government enforce the legal requirements to resettle communities Interview
134 4.00
affected by mining activities? Civil Society
In practice, does the government enforce the legally binding payments of compensation Interview
135 4.00
when exploration and/or mining activities interfere with land ownership or land use? Civil Society
If mining is taking place in areas where armed conflict is taking place, does the
Interview
136 government take appropriate actions in practice regarding existing mineral rights in such ...
Government
areas?
- 41 -
If mining is taking place in areas where armed conflict is taking place, how satisfied is the
Interview
137 mining industry with the actions taken by government regarding existing mineral rights …
Industry
in such areas?
C2.2 Environmental Impact
In practice, do exploration or mining activities commence without obtaining a permit Interview
138 4.00
from the agency or ministry responsible for environmental protection? Government
Is the institution tasked with monitoring and enforcing environmental laws and
Interview
139 regulations carrying out its task in a satisfactory manner regarding the mining sector 3.33
Government
from exploration to post-mine closure?
How satisfied is civil society with the way the institution tasked with monitoring and Interview
140 2.00
enforcing environmental law is carrying out its task? Civil Society
How satisfied is the mining industry with the way the institution tasked with monitoring Interview
141 3.33
and enforcing environmental law is carrying out its task? Industry
In practice are EIAs and EMMPs (or other key environmental impact related documents)
Interview
142 approved by the mining authority before a mining right is granted and are the 4.00
Government
documents updated and approved on a regular basis with specified timeframes?
In practice is the implementation of EMMPs and other environmental impact
Interview
143 management and mitigation requirements and compliance with legal requirements 4.00
Government
monitored and enforced systematically?
Are Environemntal Impact Assessments (EIAs) and Environmental Management and
Interview
144 Mitigation Plans (EMMPs) (or other key environmental impact related documents such 4.00
Government
as monitoring reports) made public in practice and are they widely available?
Interview
145 How satisfied is civil society with the public availability of EIAs and EMMPs? 1.00
Civil Society
In practice is surface and ground water quality being protected and water allocations Interview
146 4.00
reviewed and balanced? Government
In practice are structures such as tailings dams and impoundments that hold mine
Interview
147 wastes desgined, operated and maintained according to internationally recognized 3.50
Industry
standards?
Interview
148 In practice is biodiversity being identified, managed and protected? 2.80
Industry
How satisfied is the government with the mining companies' design, operation and
Interview
149 maintenance of structures such as tailings dams and impoundments that hold mine 3.00
Government
wastes?
Interview
150 In practice is natural habitat being identified, managed and protected? 3.00
Industry
In practice do mine design and operations reflect anticipated trends in weather event Interview
151 3.50
severity and frequency related to climate change? Industry
In practice do mining companies have an Emergency Preparedness and Response Plan
(EPRP) that is approved by Government, is reviewed, tested, and updated on a regular Interview
152 2.35
basis with reporting to the Govenrment and is prepared and updated in close Industry
collaboration with the local community?
Are Emergency Preparedness Plans made public in practice and are they widely Interview
153 3.57
How satisfied is civil society with the public availability of Emergency Preparedness Interview
154 …
Plans? Civil Society
In practice is the government monitoring and enforcing compliance with environmental Interview
155 …
requirements for artisanal and small-scale miners? Government
- 42 -
C2.3 Social Impact
Are the institutions tasked with monitoring and enforcing social mitigation measures and
Interview
156 requirements carrying out their tasks in a satisfactory manner regarding the mining 2.71
Government
sector from exploration to post-mine closure?
How satisfied is civil society with the way the institutions tasked with monitoring and Interview
157 2.00
enforcing social mitigation measures and requirements are carrying out their tasks? Civil Society
How satisfied is the mining industry with the way the institutions tasked with monitoring Interview
158 2.75
and enforcing social mitigation measures and requirements are carrying out their tasks? Industry
In practice are SIAs and SMMPs (or other key social impact related documents) approved
Interview
159 by the mining authority before a mining right is granted and are the documents updated 4.00
Government
and approved on a regular basis with specified timeframes?
In practice is the implementation of SMMPs and other social impact management and
Interview
160 mitigation requirements and compliance with legal requirements monitored and 2.80
Government
enforced systematically?
Are Social Impact Assessments (SIAs) and Social Management and Mitigation Plans
Interview
161 (SMMPs) (or other key social impact related documents such as monitoring reports) 4.00
Government
made public in practice and are they widely available?
Interview
162 How satisfied is civil society with the public availability of SIAs and SMMPs? 2.00
Civil Society
Is the grievance and complaints mechanism for environmental and social mitigation Interview
163 4.00
issues working well in practice? Civil Society
C2.4 Occupational Health and Safety
In practice, is the implementation of Occupational Health and Safety (OHSA) standards Interview
164 3.00
and procedures including any related education and training requirements enforced? Industry
Is the grievance and complaints mechanism for occupational health and safety working Interview
165 …
well in practice? Government
In practice, does the government track the number of injuries and fatalities related to Interview
166 4.00
mining activities? Government
C2.5 Mine Closure and Financial Sureties for Decommissioning
In practice is an initial Mine Closure and Reclamation Plan (MCRP) prepared and Interview
167 4.00
approved prior to the commencement of production? Government
In practice is a final MCRP prepared and approved prior to the commencement of mine Interview
168 4.00
closure activities and is it audited by independent experts? Government
In practice do mining companies consult communities and local government when Interview
169 1.30
developing and updating the Mine Closure and Reclamation Plan (MCRP)? Industry
How satisfied is civil society with the way mining companies consult with communities Interview
170 1.00
when developing and updating the Mine Closure and Reclamation Plan (MCRP)? Civil Society
How satisfied is local government with the way mining companies consult with Interview
171 3.00
communities when developing and updating the MCRP? Government
Are Mine Closure and Remediation Plans made public in practice and are they widely Interview
172 4.00
Interview
173 How satisfied is civil society with the public availability of MCRPs? 2.00
Civil Society
How satisfied is the mining industry with the way the institutions tasked with monitoring
Interview
174 and enforcing the environmental and social obligations associated with mine closure are 1.00
Industry
carrying out their tasks?
How satisfied is civil society with the way the institutions tasked with monitoring and
Interview
175 enforcing the environmental and social obligations associated with mine closure are 2.00
Civil Society
carrying out their tasks?
- 43 -
In practice does progressive rehabilitation take place to reduce the scope and cost of Interview
176 1.00
work needed for mine closure and reclamation once production ceases? Industry
In practice are mining companies setting aside funds for mine closure consistent with the
estimates in the MCRP and are the funds sufficient to cover the costs of premature Interview
177 1.75
closure as well as the cost of closure by third party contractors in the event this becomes Industry
necessary?
Interview
178 Are adequate procedures in place regarding the funds being set aside for mine closure? 4.00
Government
Are mining companies satisfied with the procedures in place regarding the funds being Interview
179 2.50
set aside for mine closure? Industry
In practice is government working to inventory abandoned mine sites, and determine Interview
180 3.50
the most effective way forward? Government
In practice, is the approved plan for moving forward with abandoned mine sites being Interview
181 …
implemented? Government
3 Mining Taxation
B3 Tax Policy and Tax Administration Rules
B3.1 Tax Policy and Instruments
Are there legally binding provisions that prescribe which government agencies have the
182 authority to collect taxes, royalties, and other payments (if applicable) from mining Primary 4.00
companies?
Are income and withholding tax payments and royalties from mining companies to
183 government required by law to be placed in the national treasury or other designated Primary 4.00
accounts?
Are the rates, formulae and bases for the main fiscal instruments (such as income taxes,
184 Primary 4.00
withholding taxes, indirect taxes and royalties) that apply to mining prescribed by law?
Are there legally binding provisions for the granting of tax incentives to mining
185 companies and, if so, do they require that a cost-benefit analysis be conducted before Primary 2.50
granting the tax incentives?
Can the government negotiate fiscal provisions with mining companies that differ from
186 Primary 4.00
those provided in the law and, if so, are these fiscal provisions being made public?
Are there legally binding provisions that ensure that the government has an adequate
187 Primary 1.00
minimum revenue stream (relative to sales revenue) in all production periods?
Does the country employ an adequate mix of progressive and regressive fiscal
188 Primary 3.25
instruments with respect to revenues from mining?
Are there legally binding provisions that require an annual disclosure of related party
189 Primary 4.00
transactions?
Are there legally binding provisions regarding transfer pricing and, if so, are they
190 Primary 3.25
Are there legally binding provisions that limit the risk from thin capitalization and, if so,
191 Primary 4.00
do they include interest rate caps and debt to equity caps?
Are there legally binding provisions that identify profits from the indirect or offshore
192 transfer of exploration and mining assets/rights so that they are taxable in the host Primary 1.00
country?
In cases where the government holds equity shares in resource companies, are the Interview
193 1.00
actual benefits from equity holding greater than the costs for acquiring equity? Government
How satisfied is the mining industry with the stability over time of the fiscal terms for Interview
194 2.80
mining? Industry
195 Are there no or low tariffs on imports of capital equipment? Primary 4.00
196 Do companies have to pay VAT or sales tax on imports of capital equipment? Primary 1.00
197 Are there no or low tariffs (or non-tariff barriers) on raw material exports? Primary 4.00
- 44 -
B3.2 Mining Tax Administration Rules
Are there legally binding provisions that specify which agency/agencies collect mining
198 Primary 4.00
sector payments and is the number of agencies involved relatively small?
Are there legally binding provisions for mining sector tax payment processes and, if so,
199 Primary 4.00
do they cover detailed arrangements?
Are there legally binding provisions for mining sector royalty payment processes and, if
200 Primary 4.00
so, do they cover detailed arrangements?
201 Does the government have a simplified tax collection system for ASM? Primary …
Are there legally binding provisions that require regular tax, cost and physical audits to
202 be conducted of mining operations and, if so, do the provisions apply to all mining Primary 1.00
taxpayers (excluding ASM) and are the audits risk-based?
Are there legally binding provisions for penalties and sanctions for companies for non-
203 Primary 4.00
compliance with tax legislation?
Are there legal provisions for independent agencies to exercise oversight of the
204 Primary 4.00
administration of the fiscal regime?
Are there legally binding provisions that require government officials with a role in the
oversight of the mining sector to disclose information about their financial interests in
205 Primary 4.00
any extractive activity or project (NB: These could be general, e.g. not mining-specific
provisions)?
If the exist, are national mining companies limited to a commercial role and subject to
206 Primary 4.00
fiscal regulation in the same way as other commercial companies?
C3 Mining Tax Administration and Auditing
C3.1 Mining Tax Administration
Does the tax administration have a large taxpayer unit/office or one specialized in
207 Primary 4.00
natural resources/mining?
In practice, are policy and procedures related to mining taxation publicly available, easily Interview
208 3.40
accessed, and understandable by the taxpayer? Industry
In practice, are changes to mining tax legislation undertaken through a consultative Interview
209 3.00
process and, if so, how satisfied is the mining industry with the process? Industry
In practice, does the taxation authority issue guidance notes which meet the needs of
Interview
210 mining sector taxpayers and, if so, how satisfied is the mining industry with these 2.67
Industry
guidance notes?
In practice, are the bases on which taxes are levied subject to disputes between
Interview
211 taxpayers and the tax authorities and if there are such disputes are they resolved 2.50
Government
through active tax tribunals?
In practice, does the large taxpayer unit/office or the one specialized in natural Interview
212 3.57
resources/mining have the capacity to fulfill its mandate in a satisfactory manner? Government
In practice, how satisfied is the mining industry with the way in which the large taxpayer Interview
213 2.67
unit/office or the one specialized in natural resources/mining is fulfilling its mandate? Industry
In practice, are taxes and payments by mining sector tax payers only collected by the Interview
214 4.00
mandated agency/agencies? Government
In practice, are income and withholding tax payments and royalties from mining Interview
215 4.00
companies to government placed in the national treasury? Government
In practice, are the fiscal terms, including provisions for tax incentives in the law Interview
216 4.00
followed? Government
In practice, does the government negotiate fiscal terms and fiscal incentives with mining
companies that differ from those in the mining and fiscal laws and regulations and, if so,
Interview
217 does the government have well experienced and qualified representative to negotiate 4.00
Government
fiscal terms and fiscal incentives with mining companies and are the negotiated terms
publicly available?
- 45 -
In practice, do government officials with a role in the oversight of the mining sector Interview
218 4.00
disclose information about their financial interest in any extractive activity or project? Government
C3.2 Mining Tax Auditing
In practice, are tax, cost and physical audits of mining companies conducted Interview
219 4.00
systematically? Government
In practice, are the legally binding provisions regarding transfer pricing being Interview
220 4.00
implemented? Government
In practice, are there regular audits for domestic and international related party transfer Interview
221 ...
pricing transactions? Government
In practice, are advanced pricing rules used for regularly occurring domestic and Interview
222 ...
international related party transactions? Government
In practice, are there regular audits of mining companies for compliance with thin Interview
223 4.00
capitalization rules? Government
In practice, are the legally binding provisions on penalties and sanctions for non- Interview
224 4.00
compliance with tax legislation being implemented? Government
4 Revenue Management and Distribution
B4 Revenue Sharing and Fiscal Stabilization--Rules
B4.1 Revenue Sharing Rules
Are there legally binding provisions regarding arrangements for resource revenue
sharing between central and sub-national governments that clearly articulate the
225 Primary 4.00
objectives of resource revenue sharing and do they specify how much should be
transferred to sub-national governments?
Does the Ministry of Finance have written guidelines regarding when and how yearly
226 Primary 4.00
budget allocations to sub-national governments should be disbursed?
B4.2 Fiscal Stabilization Rules
227 Are there legally binding provisions that require a medium-term fiscal framework? Primary 4.00
Are there legally binding provisions for a mechanism to protect budget expenditures
228 Primary …
from revenue volatility?
C4 Revenue Sharing, Fiscal Stabilization and Resource Revenue Transparency--Practice

C4.1 Revenue Sharing Arrangements
229 Transfers to Sub-National Governments (PEFA PI-7) Secondary 2.00
In practice, are the arrangements for resource revenue sharing between central and sub- Interview
230 4.00
national governments being followed? Government
ln practice, does the Ministry of Finance follow its guidelines regarding when and how it
Interview
231 disburses budget allocations to sub-national governments and do sub-national 4.00
Government
governments receive their entire yearly budget allocations?
C4.2 Fiscal Stabilization
232 Variation of domestic revenues in real terms over 5 years - IMF WEO Secondary 3.00
In practice, is the mechanism to protect budget expenditures from revenue volatility Interview
233 …
being applied? Government
C4.3 Resource Revenue Transparency
Is all government spending from resource revenues appropriated through the national
234 budget and, if not, are off-budget funds that manage resource revenues audited and Primary 4.00
subject to external oversight?
In practice, are the assets and liabilities of mining sector SOEs included in the public Interview
235 …
sector accounts as reported by the Ministry of Finance? Government
In practice, are the assets and liabilities of any natural resource funds included in the Interview
236 …
public sector accounts as reported by the Ministry of Finance? Government
- 46 -
In practice, does the country disclose details relevant to mining sector revenues, such as
Interview
237 data on production, sales, reported profits and payments by fiscal instruments, through 1.00
Government
EITI or another disclosure process?
5 Local Impact
B5 Local Content, Employment, Community Engagement, CSR and Social Issues
B5.1 Local Content Rules
Does your government have a policy for the promotion of opportunities for local,
238 regional and national supply of goods and services to the mining industry that is Primary 1.00
Are there site-specific agreements with mining companies that promote opportunities
239 Primary 1.00
for local, regional and national supply of goods and services to the mining industry?
Is there an agency in the government whose mandate includes tracking demand and
240 supply of goods and services needed by the mining sector and does this agency Primary 1.00
periodically conduct this assessment?
Does the legally binding requirement to prepare and submit SIAs and SMMPs support
241 local and national employment, supply of goods and services, and business Primary 1.00
development?
B5.2 Employment Policies
Is there a legally binding requirement that requires mining companies to provide on-the-
242 Primary 4.00
job training?
243 Are there legally binding provisions that prohibit child labor including ASM child labor? Primary 4.00
Are there government commitments to provide women with equal employment
244 Primary 4.00
opportunities and conditions?
Are there legally binding rules that require employment equity, has an agency been
245 designated to enforce the rules and has the agency put in place monitoring procedures Primary 4.00
and enforcement mechanisms?
B5.3 Rules on Community Engagement
Is there a legally binding requirement for community stakeholder consultation
246 throughout the mine life with affected communities and, if so, is it consistent with good Primary 2.80
practice?
Does this legally binding requirement for community stakeholder consultation conform
247 Primary 4.00
with good practice in terms of record keeping, access, and use of information?
Is there a legally binding requirement that the results of community stakeholder
248 Primary 4.00
consultations be used in preparing and updating EIAs, EMMPs, SIAs and SMMPs?
Is there a legally binding requirement for Community Development Agreements
249 between mining companies, government and affected communities and, if so, is it Primary 1.00
B5.4 CSR and Social Issues--Rules
Is there a national policy on Corporate Social Responsibility (CSR) that applies to mining
250 and is publicly available and is there an agency that is responsible for oversight of the Primary 1.00
policy and its application in different sectors including mining?
Is there a legally binding requirement for free, prior and informed consent, has an
251 agency been designated to enforce the requirement and has the agency put in place Primary 1.00
monitoring procedures and enforcement mechanisms?
Are there legally binding requirements for local governments and companies to work
252 together to manage the effects of the potentially rapid and disruptive in-migration Primary 1.00
around mining operations?
Is there a legally binding requirement for companies to collect data on, report on, and
253 Primary 1.00
address the impacts of mining on women separately from the impacts on men?
- 47 -
C5.1 Local Supplier Development
Has the government sought the views of a wide range of stakeholders in preparing the Interview
254 …
local content policy for goods and services within the mining value chain? Government
Interview
255 What percentage of goods and services is your company sourcing from local suppliers? 3.50
Industry
How satisfied is the mining industry with the support provided for domestic suppliers in Interview
256 3.17
attaining local content goals? Industry
In practice, is there an agency in the government that is tracking demand and supply of
Interview
257 goods and services needed by the mining sector and does this agency periodically track ...
Government
demand and supply?
In practice, does the Investment Promotion Agency (IPA) or similar organization have the Interview
258 …
capacity to fulfill its mandate in a satisfactory manner? Government
C5.2 Employment
Interview
259 In practice, is your company providing on-the-job training for your employees? 4.00
Industry
Interview
260 Are the laws prohibiting child labor, including ASM child labor, enforced? 4.00
Civil Society
Interview
261 Is employment equity being implemented in practice? …
Government
How satisfied is civil society with the government's actions to provide women with equal Interview
262 2.00
employment opportunities and conditions? Civil Society
In practice are mining companies providing equal employment opportunities and Interview
263 3.38
conditions for women? Industry
Interview
264 In practice do mining companies value and respect their female employees? 3.67
Industry
C5.3 Community Engagement
In practice, are the consultations that take place between mining companies and Interview
265 …
affected communities meaningful and comprehensive? Civil Society
In practice are the consultations that take place between mining companies and affected Interview
266 …
communities comprehensive? Civil Society
Are the results of the mining company-community stakeholder consultations used in the Interview
267 …
preparation of relevant documents? Government
In practice are community development agreements negotiated between mining Interview
268 …
companies and affected communities and local governments? Civil Society
In practice do women consider that mining companies and government are doing a Interview
269 …
satisfactory job addressing women's concerns and issues? Civil Society
C5.4 CSR and Social Issues
In practice, how satisfied are mining community representatives with how industry,
government and civil society collaborate in the planning and implementation of Interview
270 …
Community Social Responsibility (CSR) activities and with the participation of women in Civil Society
these activities?
In practice, is the mining industry satisfied with the planning and implementation of CSR Interview
271 2.60
activities? Industry
In practice are the health services in mining communities similar to or better than nearby Interview
272 …
non-mining communities? Civil Society
In practice are the education services in mining communities similar to or better than in Interview
273 …
nearby non-mining communities? Civil Society
In practice, do mining communities depend on regular support from mining companies Interview
274 …
for the provision of basic services? Civil Society
- 48 -
In practice are the effects of the potentially rapid and disruptive in-migration around Interview
275 …
mining operations adequately managed? Civil Society
Does the government recognize indigenous people on its territory and, if so, does it Interview
276 …
safeguard their rights in relation to mining? Civil Society
If the Government has a policy of free, prior and informed consent, is it implemented in Interview
277 …
practice? Government
If the govenrment has a policy of free, prior and informed consent (FPIC), how satisfied is Interview
278 …
civil society with the imlementation of this policy? Civil Society
In practice do women who are land users but not land owners receive adequate Interview
279 …
compensation for loss of land taken for mining? Civil Society
In practice does the government provide support to improve the productivity and
Interview
280 incomes of female subsistence farmers who have had to relocate their agricultural ...
Government
activities due to mining development taking place?
- 49 -
Annex III: Votes Template
Topics and Indicators Votes

A Mining Sector Management
A1 Sector Policy
A2 Sector Dialogue
A3 Roles and Responsibilities
A4 Intra-Governmental Coordination
B1 Rules for License Allocation, Oversight, and Transfer
B1.1 License Allocation Rules
B1.2 License Management and Transfer Rules
C1 Collection/Maintenance of Geological Information and Effective License Allocation and Management
C1.2 Effective License Allocation
C1.3 Effective License Management
Mining Legislation/Processes, Land/Compensation/Resettlement, Environmental and Social Impact
B2
Management, ASM, OHSA, Mine Closure--Rules
B2.1 Mining Legislation and Processes
B2.2 Land, Compensation and Resettlement Rules
B2.3 Environmental and Social Impact Management
B2.4 Artisanal and Small-Scale Mining
B2.5 Occupational Health and Safety
B2.6 Mine Closure and Financial Sureties for Decommissioning
Land/Compensation/Resettlement, Environmental and Social Impact, Support for ASM, OHSA, Mine
C2
Closure--Practice
C2.2 Environmental Impact
C2.3 Social Impact
C2.4 Support for Artisanal and Small-Scale Mining
C2.5 Occupational Health and Safety
C2.6 Mine Closure and Financial Sureties for Decommissioning
B3 Tax Policy and Tax Administration Rules
B3.1 Tax Policy and Instruments
B3.2 Mining Tax Administration Rules
C3 Mining Tax Administration and Auditing
C3.1 Mining Tax Administration
C3.2 Mining Tax Auditing
B4 Revenue Sharing and Fiscal Stabilization--Rules
B4.1 Revenue Sharing Rules
B4.2 Fiscal Stabilization Rules
C4 Revenue Sharing, Fiscal Stabilization and Resource Revenue Transparency--Practice
C4.1 Revenue Sharing Arrangements
C4.2 Fiscal Stabilization
C4.3 Resource Revenue Transparency
B5 Local Content, Employment, Community Engagement, CSR and Social Issues
B5.1 Local Content Rules
B5.2 Employment Policies
B5.3 Rules on Community Engagement
B5.4 CSR and Social Issues--Rules
C5 Local Supplier Development, Employment, Community Engagement, CSR and Social Issues--Practice
C5.1 Local Supplier Development
C5.2 Employment
C5.3 Community Engagement
C5.4 CSR and Social Issues
- 50 -

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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

III. Serbia’s Mining Sector

Coal Copper Gold Silver

Source: The U.S. Geological Survey (2014)

Figure 2: Projected Lithium Demand by Use, 2016-2025

Source: Goldman Sachs Investment Research Group

Source: Bank of Serbia

Figure 4: Trends in FDI Inflows to Serbia in US$ Millions, 2008-2017

Source: UNCTAD FDI Statistics

Source: Statistics Office of the Republic of Serbia

Figure 6: Total Employment in Mining, 2000-2016

Source: Statistics Office of the Republic of Serbia

IV. Overview of Results—Dashboard and Implementation Gap

Figure 7: The Mining Sector Diagnostic Dashboard--Serbia

Mining Sector Diagnostic

Sector Policy Sector Dialogue Roles and Responsibilities Intra-Governmental Coordination

II. Extractive Industries Value Chain

Collection/Maintenance of Land/Compensation/Resettlement, Local Supplier Development,

legal framework indicating some room for

improvement of the latter. The situation is

V. Assessment of Sector Management Framework

Figure 9: Sector Management Framework

Mining Sector Management (3.11)

Roles and Responsibilities

Room for Improvement in “Sector Management Framework”

1. Contracts, Licenses and Exploration

Figure 10: Contracts, Licenses and Exploration--Indicators

License Allocation Rules (3.41)

Collection and Maintenance of Geological Information (3.40)

Effective License Management (3.58)

Legislation, Policy and Regulation (3.39)

Institutional Capacity and Effectiveness (3.34)

Room for Improvement in “Contracts, Licenses, and Exploration”

Legislation, Policy and Regulation (3.21)

Institutional Capacity and Effectiveness (3.25)

Room for Improvement in “Mining Operations”

Figure 12: Mining Taxation--Indicators

Tax Policy and Instruments (2.99)

Mining Tax Administration (3.48)

Legislation, Policy and Regulation (3.31)

Room for Improvement in “Taxation”

4. Revenue Distribution and Management

Revenue Sharing Rules (4.00)

Revenue Sharing Arrangements (3.33)

Resource Revenue Transparency (2.50)

Legislation, Policy, and Regulation (4.00)

Institutional Capacity and Effectiveness (3.44)

Figure 14: Local Impact--Indicators

Legislation, Policy, and Regulation Employment Policies (4.00)

Institutional Capacity and Employment (3.41)

Legislation, Policy, and Regulation (2.24)

Institutional Capacity and Effectiveness (3.11)

VII. Stakeholder Priorities

• Government and industry representatives jointly agree on “Intra-Governmental Coordination”

Government CSO • Industry and civil society

Mining Tax Administration Rules 7% 7% 3.63

Collection and Maintenance of Geological Information 8% 8% 3.40

Resource Revenue Transparency 10% 10% 2.50

VIII. Conclusions and Recommendations