Solomon Islands re-opened its only mine,owned by Gold Ridge Mining Limited, three years ago and Gold Ridge and other companies are looking at new prospects in gold, copper and nickel.
Mr Hou is one of the keynote speakers at a United Nations Development Program Symposium on Managing Extractive Industries to Improve Human Development, which is being held in Fiji this week.
He told Jemima Garrett mining will become increasingly important for Solomon Islands.
Presenter: Jemima Garrett
Speaker: Solomon Islands finance Minister, Ric Hou
HOU: We consider the mining sector as the next sort of growth alternatives to the logging sector. Forestry generally we see as a sunset industry. So the mining sector is the sector that we see as going to fill that gap.
GARRETT: So how soon do you expect to see mining takeover from logging as Solomons' biggest foreign exchange earner?
HOU: I think it's going to take some time unfortunately because there's a number of things we have yet to do, especially in terms of the legal framework. There's a lot of work to be done although I think we are quite advanced in terms of the amendments to the current act, as well as regulations. But I think the other issue is once the mining and the legal framework is in place, then it takes time for companies to setup and of course to start producing minerals. So it's going to take some time.
GARRETT: Solomon Islands doesn't have a lot of experience in negotiating with mining companies. How's the government preparing itself to make sure that it doesn't get snowed, particularly in offering tax holidays and other financial concessions that could be too generous?
HOU: We fully recognise that and as a result what we are looking at is looking at what is happening in PNG. We will be looking at what neighbouring countries have done, even including Timor Leste. But also we're engaging regional bodies that are familiar with the sector, namely SOPAK and other agencies that have been helping us along in terms of our negotiations. But the other approach that we plan on taking is when we are sure about mineral deposits we put this out on public tender.
GARRETT: You say the revenue management is very important for the government and for the provincial governments as well. How will you manage that?
HOU: What we are doing is we are learning from our other friends, so it's not the legislation itself, but what they are doing with revenues that are derived from these extractive industries we may have to also get people who have experience in some of these sovereign funds, like what they're doing in Timor Leste. But I think the revenues in terms of the mineral sector are still further down the road. So we have some time to try and learn from others but I think the important thing that we have to put in place really quickly is the legal framework, and that's what we are progressing for the moment.
GARRETT: You say that engagement of resource owners is very important. How are you going to go about that?
HOU: That's a very vital question. In the Solomons what the government has taken the initiative to pool together NGOs, churches, landowning groups, and for the moment we are engaging civil society to rope in all interest groups in the country, and where we have explorations happening, these people are going to be engaged by way of national programs which we are going to bring them in through consultations that are going to be happening throughout the country. Already we have had a round table discussion with the stakeholders, and there is a body already in place which is going to be pushing this through where all stakeholders will be coming in forums and in discussions and meetings that we will be ensuring that all the stakeholders' concerns are taken on board. The other process that is going to ensure this is through the EITI initiative, which we already have a working group already in place which comprises civil society groups, representatives from the industry, private sector as well as government representatives.
GARRETT: That's the Extractive Industry Transparency Initiative, just how important could that be for Solomon Islands?
HOU: This is very vital for us, I mean apart from just getting everybody sort of together, I think it's very important. So the government in terms of ensuring transparency and fair distribution and accountability and governance of revenues.