Despite extensive CSR programs, Barrick Gold’s $8.5 billion Pascua Lama copper-gold project high in the Andes mountains has been met with considerable community protests, leading to its Q4 2013 suspension.
By Joseph Kirschke, News Editor-Mining
Lorenzo Soto, the attorney who led the case against Barrick Gold Corp., before it mothballed its $8.5 billion Pascua-Lama project over Andean glacier impact concerns, recently cemented one of the mining industry’s greatest fears: He has more work than he can handle. “The question of big mining is just getting started,” Soto said in an interview at his Santiago office. “I can’t absorb all the requests I’m receiving-we haven’t reached the peak of the wave yet.”
Barrick suspended its construction-stage copper-gold-silver asset afterregulators cited the world’s biggestgold miner for pre-stripping preceding protective infrastructure installation.In Q4 2012 to the north, Newmont Gold Corp.’s $4.8 billion Peruvian Minas Conga project lost similar ground over community-related requests from Lima officials against a backdrop of an anti-mining campaign by incoming President Ollanta Humala, as Bank of America reported Peru’s mining investment falling 6% in 2012.
Other numbers are equally staggering. For projects valued between $3 and $5 billion, the toll can be $20 million weekly; exploration stage projects alone can tally $50,000 per week, according to Costs of Company-Community Conflict, by Harvard’s Kennedy School of Government. Lost opportunities, said this year’s groundbreaking report analyzing 50 projects, can eviscerate schedules and salaries for entry-level geophysicists, miners, engineers, senior managers and CEOs-while consuming future operations, sales and expansion plans alike.
Moreover, despite “a popular misperception communities are powerless in the face of large corporations and governments, our findings show community mobilization can be very effective at raising the costs to companies,” said Daniel Franks, deputy director of the University of Queensland’s Center for Social Responsibility in Mining (CSRM) and a co-author with The Shift Project, a business and human rights nonprofit.
As depleting reserves and declining ore grades push miners ever-deeper into unknown waters, many find themselves increasingly exposed to conflict, with those unprepared paying a steep price-especially those swatting “mosquito bites.” Pressure can mount over time, meanwhile, “as a project moves from one phase to another,” according to another survey by The Chatham House, a U.K.-based think tank.
Ernst & Young (E&Y), with its 2012-2013 mining executive survey revealing the “Social License to Operate” as mining’s No. 2 risk, boosted the consensus. Or as E&Y Asia Pacific Sustainability Leader Matthew Nelson noted, “it is an ongoing relationship that needs constant attention.” Employee turnover and an aging workforce aren’t helping: Canada’s Mining Industry Human Resources Council estimates 40% of workers are 50, with one-third pending 2022 retirement-a trend mirroring countries like Australia, where extractive industries will face an employee shortfall of 170,000 by 2016.
A “risk mitigation” mindset, meanwhile, often focuses on “communities that are most vocal,” added the Harvard report. But while these may have legitimate complaints, “the company risks ignoring other communities who also have real concerns;” the study also cited a 2012 Credit Suisse index ranking community-related risks across Australia’s stock market at $19.9 billion, of which resource projects represented $7.8 billion.
Some mining company setbacks, especially those with international profiles fueled by nongovernmental organization (NGO) activism and spotlighted by celebrities, can paint a David and Goliath portrait. One very notable example culminated in 2014’s defeat of Vedanta Resources plc’s plans for a bauxite project in India’s state of Orissa. After years of planning, the London-listed multinational company lost billions following mobilization for the Dongria Kondh indigenous people-a plight thinly veiled in the theme of the 2009 blockbuster Avatar.
Last year, two dozen residents near Pascua Lama joined a three-month Heavy Equipment Operators initiative, including math, physics and leadership skill courses. The three-month program included instructions on how to drive massive 930 Komatsu trucks. The operation has since been suspended in part over community environmental concerns.
On the Radar South of the Border
Indeed, even the slightest public perception of public community discontent can reverberate across an already-troubled industry-with politicization, costs, investor worries, and, of course, reputations, on the line. Before an Inter-American Commission on Human Rights (IAHCR) this year, six civil society organizations surveyed 22 large-scale projects condemning “the impact of Canadian mining in Latin America and Canada’s responsibility” with anti-mining activists subject to “sabotage,” “terrorism,” “rebellion” and “conspiracy;” since 2001, mining investment in the region has swelled more than 300%.
Yet just as every community enjoys distinctions, many share powerful commonalities and interwoven complexities within national borders. Still traumatized by a 20-year civil war, moreover, Peru and its indigenous groups in particular are emblematic in their marginalization by Lima’s pro-business agenda, creating nationwide uncertainty for extractives, wrote Rosemary Thorp, a fellow at Oxford University, in the Q4 2013 edition of Americas Quarterly.
These have included 81 environmental conflicts between mining companies and communities, according to the national ombudsman-among them seven involving Antamina, a copper-gold joint venture between BHP Billiton plc, Swiss-based Glencore, Japan’s Mitsubishi and Canada’s Teck Resources Ltd., which booked $1.4 billion in profits in 2013. Locals have bitterly condemned dust pollution despite company assertions of “100%” compliance with standards; Peruvian regulators, however, have reportedly assessed nearly $487,000 in fines against the project.
Another possibly brighter spot is Glencore’s $5.8 billion Las Bambas project in southern Peru, which was lauded by Executive Briefing, a publication by advisory firm Critical Resource, as having “generous social benefits in a country where other miners have stumbled.” But its Q2 2014 sale to an MMG Ltd.-led consortium and subsidiary of state-controlled China Minmetals Corp. could still generate problems-Chinese miners have a reputation, and it’s not a pretty one.
Barrick Gold, for its part, made a stong commitment to Pascua-Lama, one of six mega-projects moving into a water-starved, fragile and suspicious alpine environment. Despite installing waste treatment infrastructure, long-haul roads, a cultural center, internet access, and creating scholarships for Valle de Huesco students, Barrick and its asset are equated with the other projects already pressuring water, food and electricity supplies-with crime and prostitution and a migrant worker inflow.
Standoffs at Peru’s Antamina mine, one of the world’s largest copper-zinc projects, are among more than 80 environmental conflicts between miners and communities nationwide, according to the country’s national human rights ombudsman.
South Africa Goes South
In South Africa, rough legacies of historical repression and labor strife are so deeply ingrained they resonate across the borders of sub-Saharan Africa’s biggest mining economy, which hosts its No. 1 gold deposits and 70% of global platinum deposits. The 2012 killing of 34 striking miners by security forces at Lonmin plc’s Marikana, one of the country’s top platinum mines, provides a case study, wrote Phillip Frankel in Between Rainbows and the Rain: Marikana, Migration, Mining and the Crisis of Modern South Africa. (Agency for Social Reconstruction, 2013)
The worst state massacre since Apartheid’s 1994 end “could have occurred at any mine in South Africa because of workforce similarities, historical residues, similarities of geological conditions, industrial relations nationwide, safety in South Africa’s ‘hard rock’ mines, or because the industry has discomfort with demands made on it by a new regime,” Frankel wrote. “The massacre is a symbol, or outcome, of wider developments.”
Since then, despite a government-sponsored Farlam Commission and a wave of soul-searching, little has changed. “Marikana is more about a degenerative process in mining and in general,” he added. “This encompasses not only the Northwest province where poor governance, exploitation and atrocities are among the worst in South Africa, but all eight provinces make up the supposedly new democracy.”
One municipality in the “platinum belt” he documented is a “lethal, breathing health hazard, foul-smelling and fetid with transmittable disease” on “islands of unknown material is a sickening mixture of sewerage run-off, animal excrement and mounds of garbage.” People “otherwise unemployable in the most arduous underground conditions, are also migrants from Lesotho, Mozambique, the Eastern Cape and other nodes of poverty,” work for “survivalist reasons.”
Some are outright human trafficking victims “in a netherworld punctuated by breaks in appalling slums adjacent to mine property just beyond the line of vision from the shafts,” he added. Although Frankel noted CSR investments exist, “unfortunately, much of this for environmental assessments, feasibility studies, and the social and labor planning required by law has little impact-either on the ground or under it.”
First impressions can last a lifetime, especially when it comes to what are increasingly called “land grabs.” A 2013 land tenure report by the Munden Project Ltd., singles out “companies ignoring land rights in their acquisition experienced financial damage from operating costs increased by as much as 29% to outright abandonment.”
With mining representing 30% of foreign investment, Laos has been particularly hard-hit, said researchers at the University of Bern’s Center for Development and Environment (CDE) in Switzerland. “There are indications there is a new poverty happening in Laos with the landless poor,” said Andreas Heinimann, a senior lecturer at CDE, who co-authored a report with the Southeast Asian nation’s Ministry of Natural Resources and Environment.
Most rural ethnic groups, he added, practice shifting cultivation, requiring land plots allowing soil to lie fallow for regeneration as other sections are planted-a system “completely different” from the farming of the lowland areas where they are resettled. In Q2 2014, IRIN News also reported that of 1.1 million hectares of land, 5% of the country’s arable total, has been the subject of 2,600 land agreements since 2010-including hundreds of mining concessions.
In such places over the past half-decade, concession-oriented enterprises borrowed capital at rock-bottom rates for projects guaranteeing a booming demand in emerging economies where debt could be easily serviced. “Risk has not been much of a concern,” said Munden, an asset management-focused consultancy. “The policy has been to shoot first and ask questions later.”
This includes local-level bribery. “There are very few communities where not everything is known, so the moment you buy off the local politicians, the whole world knows about it,” according to a subject of the Harvard study.
The Great Land Heist, a report by NGO ActionAid, speaks of a “global land rush” leading to “a massive rise in the number of people in developing countries evicted or denied access to their own land-sometimes in violent confrontation with the authorities;” among humanitarian violations and investment incentives, the Johannesburg nonprofit also criticized the G8’s “New Alliance for Food Security and Nutrition,” with an emphasis on mobilizing capital and innovation over minimizing risk.
Extractive sector companies are also straying into “customary tenure” systems-unofficial borders pre-dating those of modern nation states. Traversing a developing world long at the mercy of colonial powers, and the crumbling institutions and corrupt dictatorships they left behind, these can pose a far greater nightmare than many commodity and currency shifts.
In extreme environments in Southeast Asia where investors from China converge, farmers are left with nothing, and word can spread fast. “The legal framework is good, but enforcementis the issue,” said CDE researcher Schoenweger. “Most of the time, no compensation is provided to individuals;” Akhom Tuonalom, a vice minister ofthe nation’s Ministry of Natural Resources, conceded: “Weakness is in national land planning and enforcement of investment regulations.”
Free Prior and Informed Consent
Guatemala’s indigenous groups have been acutely sensitive to this aftermining concessions soared 1,000% since 1997 peace accords capped 36 years of Central America’s longest, most genocidal civil conflict. These include “institutional” and “relational” types of trust “laden with emotion,” when engaging with outsiders regarding large mining projects, noted sociological and legal experts like Michael Dougherty of Illinois State University and Tricia Olsen of the University of Denver’s Daniels College of Business. Both are “instrumental in understanding how individuals in agrarian host communities form preferences about mining,” the two wrote in a recent white paper.
Moreover, “self-efficacy makes the difference,” in stakeholder relations, when individuals “believe in their own capacity they tend to grapple, and those who grapple are more likely to critique mining; alternately, those who lack self-efficacy tend to support and trust mining,” Dougherty and Olsen added.
Essential is Free Prior and Informed Consent (FPIC), however, wherein residents agree to a project after initialconsultation. But it’s a crisis in Guatemala, wrote Silvel Elias, a director at the Agronomy School of Guatemala’s University of San Carlos, this year in Americas Quarterly. FPIC “requires trust and respect among the government, companies, social organizations and indigenous groups,” Elias said, “conditions that do not currently exist in Guatemala.”
Having withered under their own cocaine-fueled, Marxist-oriented drug civil unrest, Colombian rural and indigenous communities are similarly marginalized in another of Latin America’s most mineralized jurisdictions. In Q1 2014, for instance, Claudia Jimenez, a Mining Ministry official, told El Colombiano that some $7.3 billion in investment had been stalled over FPIC issues concerning both environmental licenses amid a dip in international commodity prices.
Brazil to the south also hosts FPIC issues-in particular, Maranhao, the poorest state in Latin America’s biggest country-where rail infrastructure tying Vale S.A.’s Carajas iron ore mine with Sao Marcos bay is being expanded across 23 municipalities. “We have money in our pockets, but no water to drink, the rivers are polluted,” George Pereira, secretary of the Community Association of Itaqui-Bacanga, near the port, told the Inter Press Service news agency.
Currently, the Carajas project, oneof the biggest of its kind, already exports 110 million tons of ore daily via a 556-mile railway to the Ponta da Madeira port. Vale, the No. 3 Rio de Janeiro-based miner, “does good work, but in isolation,” Pereira said, “without transformative programs to develop the entire area.”
Burma, highly anticipated as a mineral-rich nation opening up in 2011 after decades of brutal military rule, has seen violence of late-even after Nobel Peace Prize winner and opposition leader Aung San Suu Kyi went to calm protestors outside a Chinese copper mine. Despite sharing the remote villagers’ ethnicity, they chased her off in fury over losing their land (prior to her visit, Suu Kyi’s parliamentary inquiry revealed security forces deployed white phosphorous, a gruesome chemical agent banned by the Geneva Conventions as a war weapon, against the same protestors).
For better or worse, the frailty of nations like Burma also leaves room for outside NGO intervention preceding a company’s presence. U.S.-based Earthworks, for instance, has already teamed up with Myaung Po villagers in court over pollution charges by a Thai miner; Indonesia’s state-owned PT Timah, one of the world’s biggest tin miners, meanwhile, has also announced plans to begin 2015 operations nearby.
Other things, while less dramatic at the outset, can add up over time, such as the technical orientation of staff, according to Bruce Harvey, a consultant and former global practice leader for communities and social performance at Rio Tinto. “To the outside world, the business and the staff who work within it, continue to be seen as insular, introverted, uncaring technocrats who appear highly uncomfortable at the very thought of rubbing shoulders with community members,” Harvey wrote in the journal Extractive Industries and Society in Q4 2013. “In fact, all the operational, safety, security and other systems at an extractive operation are perfect for maintaining quarantine and these tend to become inadvertently reinforced over time.”
John Aston, owner of Aston Eco Management, a consulting firm with extensive experience in eastern Europe, knows the mindset. “The sad reality is the companies only take it seriously when the activists wake up,” he said. “The industry is just fed up with the activists.”
They still play a critical role. “It’s amazing how the tone can change when a company has fear of an opposition,” Aston added.
In Changing the Game: Communications and Sustainability in the Mining Industry, a 2013 International Council of Mining and Minerals (ICMM) study, interviews with 25 executives of multinational miners showed a major shift in engagement is under way-if not fast enough.
“This is moving from a short-term tactical role to a long-term strategic one,” said the report, co-authored by the International Finance Corp. (IFC) “Every company is grappling with the need to evolve from ad-hoc and reactive communications to a more proactive and structured model, able to engage in dialogues with stakeholders and anticipate issues before they appear.”
But misinterpretations persist all around, noted people like Yadaira Orsini of the U.K. NGO International Alert. “One is that communities only want money-that’s very simplistic,” she said at 2014’s Mining Indaba in Cape Town. “In some cases, we see that, but you’re dealing with communities that have nothing-so, of course, anything anyone will give them they will take.”
But as mining operations last decades, companies remain tied to “imperatives to produce returns as quickly as possible,” added ICMM. “Meanwhile, communities evolve over generations, politicians are elected every few years, and fund managers are judged on an even shorter basis-all feel enormous pressure to demonstrate influence and results.”
For this reason, Harvey advocates a highly texturized “in reach” approach over “outreach.” “It means working to change behaviors and thence attitudes of employees across the spectrum of the workforce-it means consciously minimizing the belief that ‘outreach’ programs can substitute for working with people face-to-face-not agendas set by the developers and their national or international ‘development’ partners.”
Many companies are successfully finding common ground in difficult environments, like Freeport McMoRan Inc. at its Tenke Fungurume asset in the Democratic Republic of Congo (DRC), one of the most impoverished, war-ravaged nations in Africa. “Building strong political relationships while adhering to strict anti-bribery policies and developing well-designed and resourced community programs are prerequisites for any company wishing to build sustainable advantage in DRC,” said Critical Resources Executive Briefing.
Elsewhere in Francophone Africa, Rio Tinto is laying sustainability groundwork in a crucial commitment to Guinea’s endangered chimpanzee population, according to Penny Trussell, a Rio Tinto corporate communications adviser. Amid habitat reduction, hunting, brushfires, disease and grazing by other animals, West Africa’s chimp population has plummeted by 75% since the mid-1980s, she noted.
Despite international battles over Guinea’s massive iron ore deposits-with the specter of the No. 2 miner losing access-Rio Tinto persisted with “comprehensive” studies to understand the animals, their habitat and their survival chances. The data, in turn, “informed mine and railway plans to avert impacts,” Trussel wrote in Rio Tinto’s Mines to Markets online magazine. In particular, orebody work will be phased to leave chimpanzees’ core habitat untouched as long as possible, minimizing disruption, while allowing them to migrate elsewhere in lieu of displacement.
Of similar importance, local members of a newly organized hunters’ federation play a crucial part by patrolling the area.
Trust, Creativity and Bonding
Other face-to-face trust-building methods are flourishing creatively. In Ghana, Colorado-based Newmont Gold Corp. is sharing information on accidents and environmental issues with the local population and is running a CSR “boot camp” where locals can work on-site for a week. In Michigan’s Upper Peninsula, officials at Mining Corp.s Lundin-owned Eagle mine developed an interactive “community scorecard” allowing nearby residents input regarding safety and the environment; handheld software allows for real-time, and at times, anonymous feedback.
Others are saving lives. At Anglo American’s New Vaal colliery in AIDS-stricken South Africa, for example, a “stay negative” campaign has encouraged 80% of its workers to take ongoing HIV tests. Mine managers are judged by the number of workers who participate in testing, while HIV-positive workers are offered free antiretroviral drugs to lead normal lives.
It’s been a welcome turnaround. In the 1980s and the 1990s, when AIDS was at its most deadly, many South African mining companies trained two workers at a time at important projects-in case one fell ill-so prevalent was the disease.
To the northwest in Senegal, Teck Resources Ltd., the nonprofit Micronutrient Initiative, and the Canadian government have joined to launch the first project under the Zinc Alliance for Health. The program provides Senegalese children with zinc supplements and rehydration salts; “the problem is not producing more zinc,” said Teck CEO Don Lindsay, “it is getting more zinc into the diets of people who are suffering from zinc deficiency.”
In Obuasi, Ghana, malaria, a leading cause of adult morbidity, the biggest killer of children under the age of 5 and the leading cost of lost workdays, was targeted by AngloGold Ashanti Ltd., which included a residual spraying campaign. After a $1.7 million investment in 2006, followed by $1.3 million each following year, local infections fell 72%; monthly lost days plummeted to 238 from 6,983.
Representing the second-biggest gold mining nation in sub-Saharan Africa, Accra’s Chamber of Mines has actively embraced such alliances through a “National Mining Safety” week every October. In Q4 2013, Australia-based Perseus Mining Ltd. joined in providing breast cancer education and screening programs for 300 local women, while providing $200,000 annually alongside a community development fund.
Sometimes, communities in other parts of the world have even protested government shutdowns of mining projects outright, so popular were their CSR programs. India’s former Portuguese enclave of Goa provided an interesting case in point after locals demanded Sesa Sterlite Ltd., a Vedanta subsidiary, be allowed to resume operations after a 2012 blanket regulatory ban over environmental and environmental concerns.
Savio Viegas, a local priest, was one. “The mining companies always gave a helping hand to the villagers around,” he told Outlook India. “They have been a great support for our church.” A local school official lamented “the children of those who were employed in the mining industry have left;” Sesa’s return was preceded by a Supreme Court-mandated annual cap of 20 million iron ore tons, while 10% of the sales to mining lease owners must be dedicated to a Goan Iron Ore Permanent Fund.
But while it has worked hard to burnish its public image in the CSR domain, Vedanta, a $13 billion company, has also weathered its share of unwanted attention. In Q1 2013, more than 680 miles south of the seaside resort of Goa, for example, authorities shuttered a Sterlite copper smelting plant days after a noxious gas leak sickened and caused skin irritation among local people who later cheered the shutdown, reported the Indo-Asian News Service.
Vedanta was further stripped of several international safety awards for not reporting a Q4 2012 chimney collapse-one of the worst industrial accidents in recent Indian history-that claimed 40 workers. Aviva Investors, a top London Stock Exchange financier, has decried “significant” underperformance related to human rights and the environment. And in 2009, the U.K. government censured Vedanta over human rights violations, while the Norwegian state pension fund divested its shares altogether. London’s Financial Times since quoted analysts calling the company “opaque and unwieldy.”
Although “some challenges remain,” Vedanta CEO Tom Albanese promised a commitment to the project after investments of $2.9 billion in its 78.4% interest. “We have a 50-year vision in the Copperbelt and cobalt anchor for our future African growth,” he said. Company founder and onetime scrap metal dealer Anil Agarwal has also come under media fire, with a personal fortune equal to 1% of his native Indias GDP, The Times of India reported in Q1 2014.
Meanwhile, distrust of foreign miners in countries like Zambia, rooted in their colonial histories, runs deep, according to Tomas Frederiksen, a post-doctoral fellow at the University of Manchester, and a mining CSR analyst. “The problem with CSR is the yardstick was set in the 1950s and 1960s,” he said; at a 1960s peak, the country produced 15% of global supply.
Under Rhodesian rule, comprehensive infrastructure near mines meant entire towns were built, roads were cleared and diseases like malaria were fought aggressively. “It was central to history-everything good came from the copper belt,” Frederiksen said in an interview from Lusaka; “mining companies today look very tone-deaf compared to that.”
Companies from countries like China, with their own set of intensely ingrained cultural norms, can sometimes more easily become spoilers given their newer internaiotnal expansions. The Sino Iron project being developed in Western Australia by CITIC Pacific and China Metallurgical Group Corp. (MCC), for instance, stands $6 billion over budget and four years behind schedule.
Some industry observers say it may never produce while representing “the poster child for overseas investments gone awry,” wrote Erica Downs in June’s China Economic Quarterly. Both companies were “unaware of specific environmental challenges at the site, which were vastly different from those in China,” she added. “They were also in the dark about Australia’s immigration and labor laws, which thwarted MCC’s plan to use lowcost Chinese workers.”
Traditional Chinese “stadium diplomacy” continues, with Li Kequiang’s May visit promising African nations $12 billion in aid including technology transfers enabling high-speed rail. His four-country tour also announced increasing African credit lines by $2 billion, boosting the China-Africa Development to $5 billion and offering $10 million toward wildlife protection-where Chinese demand for poached ivory and rhino horns are species speeding toward extinction.
Last year, Ministry of Commerce spokesman Yao Jian launched new national CSR guidelines. “When investing abroad, most Chinese enterprises understand the need to protect the environment, obey the laws of the host nations and actively fulfill social responsibility,” he said in Beijing. “However, some enterprises are not experienced in the work of environmental protection, social responsibility and need the guidance of the Chinese government.”
Case studies in the framework included a nod toward MCC for offering free medical care at a mining project in Pakistan; along with copper companies, home to repeated outbreaks of anti-Chinese unrest, China Nonferrous Metal Mining Group Co. Ltd. was also cited for its popular promises to not lay off workers.
Yet, Chinese mining companies will continue with hard-won lessons. In Chile, copper miners have been met with hostility from local protestors over environmental damage. Local protestors and workers from Zambia to Burma have clashed with Chinese nationals and the security forces guarding their operations. “In virtually all these cases, Chinese companies have been woefully inadequate in dealing with the media, activists and the blogosphere,” wrote Paul French, a partner at research firm Access Asia-Mintel in a business intelligence magazine Ethical Corp. “They simply never had to engage with protestors and they don’t have the skills.”
Increased communication CSR report quality and comprehensiveness will be critical, too. And if China Hanking Holdings Ltd. is anything to judge by, more work needs to be done, according to CSR21, a land use NGO, followingthe Hong Kong-listed company’s first delivery of 47,200 tons of nickel oreto the mainland from its project in Indonesia in Q4 2014.
“Hanking embraces benevolence and advocates the philosophy of harmony and analyzes the different trend of globalization and adopts flexible communications and operating strategies with a deep understanding of international, contemporary and successful mining enterprise,” according to its annual report. “Hanking will adhere to scientific innovation, commit to social and environmental responsibilities and build harmonious mines in the future!”
Given Hanking’s commitments “it could be to everybody’s benefit if information about the community impacts of these projects was made fully and publicly available,” added the CSR21.
Islands of Controversy
Mining in Indonesia itself is most often synonymous with controversy: Freeport McMoRan, for example, has long taken fire over environmental degradation and human rights abuses by government security forces in West Papua; Newmont’s Batu Hijau asset has also been attacked by NGOs. along with Indonesian miners and others, they’re in good company. But while they may not be so high profile, the reputations of Chinese mining companies among Indonesia’s public and government-and other Western miners-is especially poor.
One of most visible community confrontations involving Chinese mining companies took place in Q1 2014, when hundreds of North Sulawesi residents tried blocking a ship owned by an Indonesian subsidiary of Hong Kong-listed Aempire Resource Group from offloading heavy equipment for its Bangka Island project; in Q4 2013, the Supreme Court ruled PT Mikgro Metal Perdana’s (MMP) 2,000-hectare permit should be revoked on a 4,800-hectare island.
Legal battles have followed a government-issued permit in 2010 without an Environmental Impact Assessment, or Indonesian Forestry Ministry approval. The Supreme Court upheld a Sulawesi court order stripping MMP of its permit over violations of land rights, and environmental and tourism laws.
“The people on this island rejectthe mine,” William Hadinaung, a villager at the scene told Mongabay, a conservation and environmental science online publication. “The government should be in favor of the citizens of the island of Bangka, not investors;” Bangka lies ina coral triangle of marine biodiversity with high value for conservationalists and tourists.
The Harvard-University of Queensland report offers a contextual breakdown for the problems such endeavors can fill. Impacts like pollution can “precipitate” conflict, while social and economic issues “underlie” conflict, which, depending on its nature, determine the nature of a confrontation; half of analyzed cases involved blockades, 30% involved fatalities, injuries or property damage and suspension.
Violent scenarios have international watchdogs like Global Witness deeply concerned. “This issue is notoriously underreported,” said the NGO in its 2014 report, Deadly Environment: The Dramatic Rise in Killings of Environmental and Land Defenders, citing 150 mining-related killings between 2002 and 2013 in a survey of 74 countries. “Often, defenders face threats from the very people supposed to protect them-a number of cases involve state security forces, often in collaboration with corporations and private landowners.”
In some cases, “the mindset is, we’ll get through it? and if we can’t then the government will step in and sort it out,” another mine manager told Davis and Franks. “Without being skeptical, there are few companies that really, truly value the expertise of their community relations people,” added another anonymous commentator, “they’re sort of at the asset protection level-and, well, the asset protection guys are just the security guys.”
Proper documentation of communications and, especially, public commitments and dialogues, remain one of the “most-overlooked” elements of local CSR, according to the ICMM report. And where “company-funded public information centers with strong record keeping and grievance collection and response systems are now industry best-practice,” particularly when key staff relocate.
International institutions are increasingly seeking perspectives among community members in mineral-rich jurisdictions: In Q1 2014, notably, the World Bank Institute for Governance for Extractive Industries Program conducted a broad-based study with the RIWI Corp., a research firm, polling 60,000 respondents in 14 countries with eight structured questions drawing 16,000 complete responses.
Or, as the Harvard analysis put it: “Industry experts observed that thetriggers of company-community conflict are increasingly predictable, yet not enough companies are using rootcause analysis or similar processes to evaluate such incidents and learn the relevant lessons.”
“Those that do, through social investment, create significant opportunities for business, enabling them to meet regulatory requirements, secure a social license to operate, improve reputation, attract talented employees, increase workforce engagement, and develop new products and markets,” said accounting firm KPMG’s Australian office in The Community Investment Dividend, a 2013 report.
These include social media and handheld technology elements, which remain constant complexities. In Mongolia, which is in the throes of a massive mining boom, noted ICMM, and despite the remoteness of its Rio Tinto-managed Oyu Tolgoi copper-gold mine in the South Gobi Desert, cell phone penetration among its nomadic population stands at 77% while Internet usage is 23%. One of the world’s largest such projects, anticipated to contribute 30% to the country’s GDP, added the survey, also has 70,000 Facebook fans.
Sometimes, miners face unfair odds far beyond their abilities-astride issues social media can only exacerbate. Since 1999, Canada’s Gabriel Resources Ltd. spent $550 million developing one of Europe’s biggestgold deposits in Romania’s fabled Carpathian Mountains valued at $7.5 billion, but has been cursed by massive protests, despite strong job prospects in an impoverished region alongside extensive CSR programs.
Thousands of Romanian and international NGOs, activists, and celebrities energized a global campaign, in part, helped by an unrelated 2000 tailings spill in Baia Mare; having killed thousands of fish in Romania, Hungary and Serbia in 2000, it is deemed one of Europe’s biggest environmental disasters after Chernobyl. Perhaps most damningly, the Gabriel project grew into a referendum on the Romanian government itself-reflected in a 2013 World Economic Forum (WEF) report ranking Romania 141 out of 148 countries in “public trust in politicians.”
Gabriel has persisted; among its initiatives was the archaeological restoration of 41 historic structures the Council of Europe deemed “exemplary” near the Rosia Montana asset, a place with a Roman-era past.
No matter. Last year, under pressure after 15,000 protestors marched across Romania, Bucharest parliamentarians buckled. “It’s very clear a decision was taken,” Prime Minister Victor Ponta told reporters; Gabriel nonetheless has promised to fight on, in part, considering through litigation over “multiple breaches of international investment treaties.”
It’s Greece to Them
Home to one of the E.U.’s worst eco-nomies struggling with 27% unemployment in Q1 2014, nearby Greece hosts similar passions toward El Dorado’s Skouries mine in the Halkidiki peninsula. But despite promises of $1 billion in investment over five years-potentially making Greece Europe’s biggest gold producer akin to Romania-and originally slated to open in 2016, protests and political posturing have brought the Vancouver-based miner to its knees.
Like the Rosia Montana region, Halkidiki has great historic value, and is a heavy draw for Russian and Balkan tourists who boost the local economy. The landscape includes pristine beaches, and an enclave of Eastern Orthodox churches on Mount Athos designated a UNESCO World Heritage site. Mining, too, is long ingrained in local history in a region where Alexander the Great’s family is said to have exploited local deposits along with the Ottomans.
In its current incarnation, localsnow represent 90% of the current project’s 1,600 employees, a number El Dorado hopes to increase to 2,000 upon full production. The company has full support of the government to which it pays $4 million annually under a new royalty program.
Unfortunately for the miners, “it’s like the Wild West up there,” opposition lawmaker Dimitris Papamoulis told Reuters. “Police, local authorities and state power are used to protect private interests to the detriment of public interest.”
Public discontent in part stems from a Q4 2002 incident in which the underground Stratoni silver-zinc mine, now owned by El Dorado in northern Greece, spilled acidic waste, according to Mining Watch Canada, a nonprofit. In a Q2 2014 interview with the Canadian Broadcasting Corp. (CBC), meanwhile, CEO Paul Wright said a full community consultation had taken place near the Skouries mine, although this has been disputed by Hellenic Mining Watch.
Commonplace are clashes between residents and law enforcement authorities against a backdrop of regional and national protests; last year a group of armed men vandalized the site, doused several security guards with gasoline and threatened to set them alight. One of the first major showdowns erupted in Q1 2011 when 3,000 descended on the hamlet of Ierissos just outside Skouries; 2012 saw a security crackdown, criticized by Amnesty International, in which 200 riot police in Ierissos, searching for arsonists, broke into homes and used tear gas. Soon thereafter, 15,000 marched through the northern port city of Thessaloniki in protest.
Gold mining has been part of Greece’s “Fast Track” program following an economic collapse in 2008 from which it has yet to recover. Officials at Greece’s privatization agency, for example, told The Financial Times in Q3 2012 that the Halkidiki asset alone could be an “El Dorado for investors;” reserves have been estimated at 12 million oz gold worth more than $13 billion.
Amid hopes to balance the budget with the International Monetary Fund (IMF), Conservative Prime Minister Antonis Samaras has remained steadfast. “Growth means investments; those who drive away investments don’t want growth,” he said. “When they try to cancel legitimate investments and keep fighting against them, even though they have been fully approved, they do not want investments.”
El Dorado isn’t the first company to run afoul of local residents, however. TVX Gold Inc., since purchased by Canada’s Kinross Gold Corp., encountered massive resistance for six years: Petitions, protests and property vandalism flourished before TVX Gold’s Greek subsidiary sought 2003 bankruptcy.
It’s impossible to say whether the Romanian and Greek projects were doomed from the start. One thing is for sure, however: without tweets, Facebook pages, and all the software that has rewired our 21st century, their intensity would have been far different.
The endgame, however, is often the same-and Chryssa Likaki, a 52-year-old Halkidiki resident, summed it up as well as anyone. “Come on,” she told a Greek reporter. “We don’t trust the state.”
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