Around the world, governments are reshaping the rules of mining to ensure that extractive industries contribute more directly to community development in the areas where they work. Recent changes in mining codes in countries like Madagascar, India, and Ecuador are mandating corporate social responsibility (CSR) contributions, with a growing emphasis on co-governance and direct impact for the communities closest to the resources.

In Madagascar, the government has enacted Law No. 2023-007, a sweeping reform of the country’s Mining Code. Among its provisions is the requirement for mining companies to contribute multi-million-dollar sums to a fund for social and community investments. The fund is co-managed by the regional government with input from mayors, regional ministry heads, and approvals from the National Council of Ministers, and companies must submit a CSR plan as part of their permit obligations.

“This is an important shift,” says Palladium’s Erin Leyson. “It’s no longer just about contributing to community development, but rather these changes promote mining companies and regional governments to collaboratively plan regional development efforts so they are more impactful, efficient, and better target the areas closest to the resources.”

Palladium has been working closely with stakeholders in Madagascar, supporting both the public and private sector to set up and co-govern such a fund. Leyson explains that, through the process, the team is helping to establish a governing committee that includes mayors, civil society representatives, regional officials and the mining company to better plan regional development initiatives that leverage capital from multiple parties to have long term positive impacts.

The committee oversees how CSR funds are allocated, ensuring that decisions are made collectively and budgets are best used to increase access to basic services, improve livelihoods and complement what the public sector and other donors are doing in a given region.

“We’re building capacity and trust, helping the private and public sectors to collaboratively decide development priorities and channel funds towards them,” Leyson explains. “It’s so important that we build and codify transparent systems and processes for allocating and spending funds. While you might have a great government counterpart to work with during one term, the next term might bring someone who is less skilled at supporting regional development.”

“We are building in safeguards to ensure that no matter who is in office—be it political or a mining company leader—the funds go towards the most impactful initiatives that boost community livelihoods,” she adds.

In India, the Ministry of Coal has also updated its guidelines for mine closure, reinforcing the requirement for companies to contribute to and fund mine remediation efforts.

These funds are managed by the government and used to restore land and mitigate environmental damage after a mine site moves into care and maintenance. While companies don’t directly control the funds, they are expected to engage with authorities to ensure effective implementation.

“This model creates built-in incentives for companies to work effectively and collaboratively with governments,” Leyson notes. “It’s not just about handing over money—it’s about ensuring that the funds are used responsibly and that the remediation efforts are effective.” She points to Hindustan Zinc Limited as an example. Owned by Vedanta, the mine has a CSR department that oversees development projects in areas affected by mining, where land and water tables have been significantly impacted. Despite limited job opportunities, Vedanta has maintained positive public sentiment by partnering with the NGO Manjiri to empower women through institutions like Self Help Groups, Village Organisations, and District Federations that facilitate access to funds for small businesses and improve health, education, and livelihoods.

In Ecuador, although official government documentation is limited, industry reports confirm that new decrees will require 60% of mining royalties be directed to communities within the mine’s area of influence. These funds must also be earmarked for social development and must align with the country’s National Development Plan. This approach ensures that mining revenues contribute directly to local infrastructure, education, and health services.

“These kinds of mandates, while not new, are becoming more and more common,” says Leyson. “What is new is this addition of co-governance with the public sector and added guard rails that ensure funds go directly to affected communities and regions. They reflect a growing recognition that mining must and in fact can deliver real benefits to host communities and regions. “

The trend toward co-governed compliance funds presents both opportunities and challenges. In many jurisdictions, local governments lack the technical expertise or institutional strength to manage large-scale development funds.

Alternatively, mining companies who have long been scrutinised and at odds with governments must learn to openly engage with the public sector and manage multi-million development funds, something that is historically beyond their core business.

There is a compelling opportunity now to build capacity both in the mining companies and in the public sector to improve development fund management. “This is a moment to create smarter partnerships, and stronger collaborations” Leyson says.

For companies willing to embrace this shift, the rewards can be substantial: stronger government and healthier community relations, reduced conflict and a more stable operating environment. Success will depend on their ability to engage with governments not just as regulators, but as partners.

“The future of mining is collaborative,” Leyson concludes. “And that’s a future we’re helping build—one code, one committee, one community at a time.”