Starting off on the right foot
Insights | 6 May 2024
Whether you are a new CEO, a recently appointed project manager or the exploration manager taking on the job of getting the next round of studies up and running, you need to be aware of the social aspects that might need attention. Ideally the first identification is done as part of the preparation ahead of the project kick-off but it is never too late to make a start.
Irrespective of the company or project there is a lot of readily available information to be found with a little digging. A few global socio-economic indicators, the local laws, company aspirations, the nature of the ore deposit, some satellite imagery, the experiences of the exploration and / or operations team in the field and a site visit can generate a great deal of information, certainly enough to get a good feel for where to focus.
Starting with the broader socio-economic setting, a quick web search will provide a sense of the law-and-order situation, presence of civil society groups and what legacy mining companies have, if any. Also, if the company has been working in the country for some time then someone somewhere in the organization will have some understanding of the country’s level of socio-economic development. While there is any number of sites to choose from and over time I’ve found some more useful than others: UNDP country reports allows anyone to dive as deeply as they wish to into demography, health, education, equality, poverty and employment. The Centre for Disease Control (CDC) country reports give a great overview of the salient health issues. EITI will help understanding a bit about government accountability while the transparency international Corruption Perception Index pretty much speaks for itself. The world fact-book has a wealth of information. Nations online is another place to go for general information. I’ve also found that by looking at the data for my own country (Australia) as well I can use it as a bit of a benchmark to give me a feel for how far I might be getting outside my comfort zone and it gives me a reminder that I need to be careful not to project my preconceived ideas of what is "normal" out too far.
What is the company legally required to do? What home country laws does it need to comply with? What are the host-country national laws and local customs related to land access and acquisition, community consultation (especially when it concerns indigenous peoples), local content, cultural heritage and local, regional and national development? What agreements have been signed, with whom, and what commitments have been made? Again, a web search is a good place to start looking for information. Mining Codes, Environmental Protection/EIA/ESIA, Land Tenure and Indigenous Rights Legislation are the best places to start. It is also worth doing a search on ‘local content’ to check if there are any rules around local procurement and workforce development. With regards to requirements for community development, check out this matrix pulled together by IIED to see if the country the company is working in is covered. Local custom and practice is a bit harder to find on line. Academic research papers can be helpful, the local Chamber of Mines or Commerce is worth a try as are other explorers and operators working in the country already. The site team could be a treasure trove of local knowledge and if they are not it probably tells something about the degree to which they are engaged with the local community. In an ideal world they will also have a commitment or promises register of some sort, where they record and track progress against the legal and voluntary social commitments and agreements the company has met. A face-to-face meeting or some phone calls and emails will usually turn up what is needed. It pretty much goes without saying that gaps will need to be closed as soon as possible.
Company aspirations will dictate how it goes about its business. So, what are they saying – the ubiquitous vision, values, mission statement – and how are they putting the words into practice? If the company is promoting itself as a leader in environmental and social performance, it will need to walk the talk. Green Washing isn’t so easy in an increasingly skeptical and connected world. Aspiring to being developer of choice is one thing but increasingly communities (and others) believe something when they see it, so it is a good idea to try and understand what communities think is important for them and try to deliver the results they need to see. If the company is expecting to borrow money or issue shares to build a project you need to seriously think about adopting IFC Performance Standard No 5 as their land acquisition guide because a large and increasing number of lenders and investors are using this as the de facto requirement. If this isn’t on the radar up front the company can find itself having to do a lot of rework to fill the gaps which will take time and are likely to delay project financing and a construction start. If the land the company needs to access is home to Indigenous People, you will need to pay particular attention to the quality of consultation and negotiation and to be able to demonstrate that you have free prior and informed consent (FPIC) for the project (Performance Standard No 7). The company will also need to pay extra attention to cultural heritage (Performance Standard No 8). Last but not least, if the company might be a seller at some future date you can expect an increasing number of potential buyers to take an interest in the social legacy they will take on and that the offer price will reflect the risk, a point then ICMM CEO President Tom Butler made back in a 2015 Q&A session with Critical Resource when he said 'Junior companies must be careful not to destroy value in the early stages of a project'.
I’m of an age which relied on expensive and difficult to access satellite imagery or aerial photography to see what was happening on the ground around my projects. Now finding a wide range of information is as easy as logging into Google Earth and zooming in on a known set of coordinates or a local town name. The distance between the deposit and the local communities is one simple example. By being able to see how far apart the two are, it is possible to make an initial judgement of how big the community health and safety issues of dust, noise, vibration, and visual impact are likely to be, the need for buffer zones or even relocation. If there are people living on or near the deposit the likelihood for resettlement will be high. The type of housing construction – corrugated iron for the roof and cement block walls or bush timber and palm fronds tells something about the level of wealth. The type of agriculture can also give a feel for the level of poverty – people with small holdings of annual crops are more likely to be poorer than people with land under tree crops which are usually grown for cash. This same information will also allow an initial call on the likely complexity of land ownership and user rights and the scale of compensation required. Forests are often community assets as sources of firewood, bush food and medicine and cultural significance. The presence or absence of nearby towns or cities will give a feel for the potential of the area as a source of job-ready employees, the likely pull factor for opportunistic migrants and the presence or absence of government services. Likewise with the existing accessibility of the site by road or rail, where it is possible to not only get a feel for the logistical challenge of building and operating but also the potential to exacerbate in-migration because any work the project does that improves the quality of transport infrastructure will increase population mobility.
This one might well be the easiest because it deals with the characteristics of the orebody, information that is usually in-house and just needs a bit of effort to join a few dots to link them to potential social impacts. Precious metals, particularly near surface and high grade, may attract artisanal miners and, with them comes the additional environmental, community and security issues that need managing. Base metals and bulk commodities such as bauxite, iron ore and coal will have large local and offsite footprints to accommodate the mine, concentrator, refinery and port. The scale of these projects may act as a magnet for job seekers and entrepreneurs, putting pressure on local government services – particularly health and education and spatial planning – and is likely to increase the local cost of living. Road and rail infrastructure are known vectors that add to the burden on local communities by opening up the area to in-migration. Near surface deposits are more likely to be open cut and will result in a (large) void which will remain open at closure and waste dumps that will require the current land users to be moved and will need to be returned to productive use at some future time. Tailings storage requires significant area, adding to the impact on land users and any seepage, leakage or discharge have the potential to impact ground water and surface water quality. Chemicals used in processing will create real and perceived health and safety hazards for the local communities. Cyanide is a particularly emotive issue related to gold. Nickel refining has ammonia as an input and H2S and SO2 as by-products. Other minerals will have their own mix. On the other side of the ledger, the expected size, complexity and life of the operation will influence the size of the opportunities for local employment, purchasing and community development. All in all, a wealth of information for very little effort.
Whether it is an existing project or maybe one acquired through a purchase or takeover, or it is just being new to the project, the site team will be a mine of local information. They can describe current practices for accessing land – whether permission is always sought before entry, if compensation is paid, how the current compensation rate was determined, what they do to make sure the right people are paid and how they handle complaints. Likewise with employment and services – how many local people do they employ, what type of work, how do they choose people? Are their processes easy to understand and do they seem fair and reasonable? If they are making donations and sponsorships what are they supporting? Is it easy to see the logic in what they are doing? If not the chances are the local people are also confused. Are they providing free services – water from the camp bore, power from the generator? These are easy ways to win support early on but will come back to bite later as people very quickly become used to these services and begin to see them as entitlements. The team’s knowledge of local customs will give some insight as to how engaged they are with the local communities. What promises have been made, have they been delivered on and are they written down? Failure to deliver on promises is one of the biggest trust breakers for communities. Have there been any notable incidents / disagreements - anything that has caused work to stop or made the team to feel less safe? Last but not least, what changes have they seen in the time they have been on-site? More houses, new shops, bars and restaurants, higher rents are all signs that in-migration is happening. At the end of the day, if the site team can’t quickly put their hands on information and if what, why and how they operate can’t be easily understood or if what they are saying sounds wrong – that I would feel unhappy if you were on the receiving end – then it probably means they are not paying as much attention to the relationship with the community as they need to be and maybe it would be right to be a little bit concerned.
- Visiting the home-country Embassy. It is their job to help companies on their way and they will usually be able to provide advice on what is happening in the country, who are the real players and what are the local sensitivities.
- The Chamber of Mines and / or Chamber of Commerce can provide a look into the experiences of other companies, the legal framework for operating in the country and legislation related to exploration, land rights and land title.
- Scheduling introductory meetings with key government departments. Planning, health, education and police are a good place to start, as is the head of local government. Provide some information about the project – it doesn’t need to be too specific, whatever the company is comfortable with sharing – and ask how they feel about the company and what they think the project will do for them. The more levels engaged with – national, regional and local – the better, but if time is short, focus on the local level for the first visit and expand the circle during subsequent visits.
- Connecting with NGOs working in-country and particularly any that are working locally. They generally have a good idea of local community dynamics and can provide a triangulation point for what the site team is saying. They could also be potential partners for social investment activities so it is worth starting early to understand where interests may overlap.
- Taking a few hours to visit the local communities. Getting out of the car and walk around and talk with a cross section of people such as elders, business owners, women and youth. Asking them how they are. Listening to them. Being relaxed and willing to sit down and talk. In conversations asking specifically, “What are the impacts on your life of the company being here? What are the pluses, the positive impacts for you? What are the downsides, the negative impacts that concern you? And what do you suggest the company could do to make sure that it sustains the positives and begin to address some of these negatives?” Doing this sends the message that the company is not afraid of and distrustful of local people, that it wants to hear and learn from local ideas and that it respects the holders of those ideas and that it is willing to be held accountable for company impacts. Also, the company will probably hear some very important concerns and some surprisingly positive ideas. Many local people do have ideas and many of these contain elements of solutions that may not be imagined from inside the company office.
- Visiting other operations to see how they address the various social aspects, what has worked for them and what has not worked.
- Looking and listening for signs that indicate the quality of the company’s relationship with local people, government, and civil society groups. The indicators in the table below have been shown to be reliable across a wide range of circumstances.
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