MINING FOR GOOD: WHY MINES MUST GET BETTER AT TALKING

As mining’s leaders make their annual pilgrimage to Cape Town’s African Mining Indaba, the sector is facing some of its most daunting hurdles yet–including winning the confidence and collaboration of vulnerable local communities whose sustainability is increasingly threatened by global impacts like climate change

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It is no longer a point of debate where the most pressing operational risks for mining lie; as difficult as the issues are that relate to commodity price cycles and finance raising, these do not top the list. Instead, the main concerns are primarily social and environmental, according to Mining Journal’s 2017 World Risk Report.

The report cites social licence, environmental management, project permitting and mine closure as today’s most important operating risks. Not only are they considered the biggest risks currently, they are also rising in significance, and are considered to be the hardest to manage.

While this research certainly confirms what we have been saying to our clients for some time, it also represents a serious warning that many players in the sector are finding these challenges difficult to address. We have advised our clients to actively continue with stakeholder engagement during the downturn to facilitate the development of new projects once financing becomes available.

The real danger is that the broader social, economic and environmental conditions in which mining operates are becoming harder to navigate, even as we explore and trial new models of sustainable management. Key among the forces at play in the current mix of factors is climate change, and the effects that this is having on subsistence agriculture, water supply, food security, the rise in terrorist activity, and migration.

Amid the difficulties, there has been considerable progress in mines’ efforts in terms of safety, health, environmental management and stakeholder engagement—and the complexities of the challenges should not obscure these achievements.

Rising temperature of resistance

Community resistance to a mine is not just a more common phenomenon; it is also having growing consequences for mining companies, often bringing large projects to a standstill and even causing investors to walk away completely from mineral opportunities.

Climate change is likely to exacerbate this trend, as it worsens living conditions in many areas and renders communities more vulnerable—indeed, more desperate—and reliant on sharing in the value of previously isolated and self-contained mining operations. In addition to mines’ effects on communities, there may also be competition for scarce resources—such as water – between communities and mines.

African countries like Niger and Senegal, for example, have already experienced a rise in ambient temperature that affects food security, and desertification continues apace. It is affecting livelihoods of especially rural communities, and famines are occurring in record numbers. The disruptions felt in these communities are reflected by terror-related instability and growing migration in many parts of Africa. Mines can no longer exist as islands of wealth on a landscape of endemic poverty; engagement with other stakeholders now has to be more proactive, and better coordinated—with civil society and the public sector in-country, as well as with the broader global community of explorers, developers and investors.

Furthermore, mines are often not managing their environmental impacts effectively or fully implementing those management measures which are legally required in their approved environmental management plans; this can also trigger community resistance and action.

Roots of mistrust

In many ways, the challenge now facing many mining companies on this front is a shortcoming of management, a failure to prioritise stakeholder relationships and to systematically manage their communication and interaction. Promises may be made and not followed through. False expectations may be created and not dispelled soon enough. Most importantly, trust has not effectively been built and maintained, leading to frustration that simmers under the surface and periodically bursts into violence.

For us as consulting engineers and scientists, we encounter this frustration and other negative sentiments frequently in the course of our work in stakeholder engagement. It commonly shows itself at public meetings during the public participation phase of our social and environmental impact assessments. These gatherings are sometimes the only forum for local people to voice their concerns, many of which relate to legacy issues and past instances of unfulfilled expectations.

These are management issues for mines in the sense that the complex links and engagements between a mine and its in-country stakeholders have often not been properly documented, shared and agreed. Mine staff come and go, and commitments made by one incumbent are not always honoured or even remembered by the next; hence the importance of systems and mechanisms to record and track these engagements, which will ensure institutional memory.

But the community remembers; they remain, where mine employees may be transient. And when the green but hapless ‘community officer’ attempts to progress the company’s corporate vision on building local trust at a local level, they often find the community hostile and unforgiving. These sentiments are expressed—if perhaps at a more abstract but equally heartfelt level—at the fringes of the African Mining Indaba itself, in the form of the Alternative Mining Indaba.

This prevailing atmosphere is confirmed in recent research by the International Council on Mining and Metals (ICMM), itself a powerful and progressive force in favour of responsible and sustainable mining practices. On the strength of almost 800 surveys with stakeholder groups in mining, the research shows that the mining industry continues to operate in an adverse social environment, “with persistent concerns around the license to operate, be it with local communities or the general public”.

Engagement and transparency

The ICMM reiterated “the wide array of both environmental and social impacts” that mining has on society. “These historical pain points and the increased pressure to deploy meaningful engagement with local communities,” it said, “seem to contribute to a climate of anxiety, also fuelled by the prospect of challenging community conflicts with dramatic consequences on the levels of social acceptance”.

In terms of possible solutions, it concluded that “sustainability implementation, stronger local community engagement, and transparency are most frequently mentioned [by respondents in the research] as pathways for building broader public trust in the industry”.

As we are also in the business of solutions, SRK is continuously generating, testing and implementing practical and integrated interventions that aim to have positive outcomes for all involved; our experience leads us to emphasise the grievance mechanism, for instance, as a process that needs careful management. These processes must also lead to close-out, so that there is some form of resolution of the matter in the eyes of all stakeholders.

The mining sector in Africa is not alone in terms of falling short of community expectations when managing the social impact of its work; African governments have experienced similar shortcomings on large state projects, which come back to haunt the prospects for future initiatives in ways that can scarcely be anticipated. Over half a century after the massive resettlements that made way for the Kariba Dam, for instance, some descendants of those affected still carry grievances about lack of livelihood restoration that makes them indisposed to formal collaboration with public or private sector initiatives.

Attention to detail, then, is vital for mines to build firmer foundations of engagement; mine officials need to carefully plan and track their communications and interactions with communities; as in other operational areas, records must be kept of meetings and decisions, to feed and maintain institutional memory. An obligations register, for instance, which sets out timeframes and allocates obligations, is a particularly useful tool to help the process outlast transient mining staff.

A regular question should be: what is the baseline prior to mining, so that mines can meaningfully measure benefits that a mine brings to local communities and broader societies? While environmental baseline studies are now conducted as a matter of course, mines will seldom formally measure the economic conditions in areas where a mineral development takes place. When a mine wants to assert that it has made a material difference or improved conditions in the area, therefore, it is not possible to convince stakeholders that the ‘before’ situation is quantifiably better than the ‘after’ —as there is no baseline from which to judge.

Management accountability

A further practical issue that subtly but profoundly affects the drive with which mining companies meet their constructive obligations —whether to society or the environment—relates to incentives. It is usual for CEOs and other senior executives to be employed on contract for a certain term, and many are rewarded with bonuses during their tenure and on their departure, based on financial performance.

In most cases, the shareholders demand a clear financial focus from the executives, who dutifully do their best to deliver on the bottom line. What is not always so clear is the impact that financial success may be having on other operational priorities in the long term; indeed, many unintended consequences of current management will only be felt by shareholders in the years to come.

This opens for discussion the way that bonuses are paid out, and whether shareholders are really in a position to judge executive performance until some years down the road. Failure to properly resource the business units that address social and environmental impact, for instance, may show itself immediately as a bottom-line benefit and for which the executives may be handsomely rewarded.

Five years later, however, a disgruntled community could bring the operation to a halt due to the mine’s insufficient attention to its social impact; by this stage, however, the incentive has been paid out.

Shareholders in this situation may justifiably ask themselves whether they have paid fair value for the services rendered, or whether they have unwittingly encouraged their executives to focus on quick wins instead of long-term sustainability. Perhaps there is scope for revised incentive structures, which reward executives over the number of years that their decisions will continue to reap consequences. Nowhere are these consequences more significant to investors than in the social and environmental space.

Technology and productivity

Even mines’ efforts to become more productive—as they certainly must, especially in countries with deep and mature mines like South Africa (SA)’s—are going to have social impacts.

Broaching the subject of mechanisation and automation in certain countries leads quickly to the question of employment losses, and how many jobs are at risk when machines start doing more of the work.

Clearly the sustainability of mining operations is based on many external factors to which mines simply have to adjust, through productivity and other measures. A more practical question for mines is the way their skills profile will be affected, and new skill sets become required by modernised tasks and processes. As importantly, how will the mine ensure that local people will be in line to fill these positions? This is particularly tricky in environments where mineworkers are mainly semi-skilled without a depth of good education or trainability.

Apart from optimising current benefits from mining, the thrust of sustainability thinking is also forcing mines to consider and address their role in helping secure a future for their host communities and countries after mining has ceased. This is the implied or explicit intention of many countries’ mining regulations, as exemplified in SA’s ‘Social and Labour Plan’ element of mining licences.

Getting real closure

This creates not just an opportunity but an obligation for mines to ‘plan’ their social impact even before they start mining; once again, however, this is an area where successful application lags considerably behind a commitment to the concept. One of the reasons is, again, the challenge and complexity of working effectively with communities, especially in societies that are highly stressed by economic hardship aggravated by environmental change or degradation. It is no coincidence that SRK’s social and environmental work has grown rapidly, both in the innovation of its interventions and in its scope in recent decades. Applying sociology to mining is every bit as complex as any of the other scientific disciplines, and it is perhaps no surprise that mines are struggling to succeed on this front.

The sector is emerging from a situation where closure planning in countries like SA has been undertaken largely by engineers and scientists. The result is a focus on mitigation of environmental and social impacts and residual risk reduction, bringing sustainable and beneficial post-closure land use into focus, as opposed to the historical approach of just returning to a pre-mining condition.

In recent years, however, SRK has seen a wider range of specialists becoming involved in closure planning, with social scientists, stakeholder engagement practitioners, health practitioners, biodiversity experts and others now playing a role.

While this happens mainly when major mining houses are driving the process, it is certainly a positive development that we would encourage across any size of client companies.

If closure planning is supposed to achieve an ultimate goal of sustainability, then a change in philosophy is required.

The mining sector needs to stimulate multi-disciplinary thinking —where town and regional planners, landscape architects, community development specialists and social scientists are all included in the planning teams, along with the engineers and biophysical scientists. This is likely to require a change of priorities for many operators as well as the authorities, particularly where new and unfamiliar methodologies may be proposed.

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