Big five - Tough social issues in mining

Many of SRK’s mining clients are active in developing countries. These are often difficult investment environments, where risks include complex political and social issues.

Banks that uphold Equator Principles are demanding a more robust approach to social matters, and the Performance Standards of the International Finance Corporation emphasize the effective management of social impacts and the enhancement of development opportunities. SRK’s team of social issues specialists has helped clients adopt and implement responsible social practice in challenging circumstances. For developing country miners, this has involved navigating one or more of the “big five” social issues below:

Involuntary resettlement. Economic and physical displacement of communities often accompanies mining projects. Resettlement is an emotional issue, with human rights a prominent concern. When resettlement processes are badly managed, reputations can be severely damaged, and the process is difficult to reverse. In the Democratic Republic of Congo (DRC), Zambia and South Africa, SRK has helped clients develop best-practice Resettlement Frameworks and Action Plans, incorporating provisions to restore livelihoods and to improve quality of life.

Indigenous peoples. Indigenous peoples have strong links with the natural environment, and especially with land. Miners seeking to work in areas where land and other traditional rights are in play face complex issues, and sometimes get limited help from governments reluctant to deal with traditional rights. SRK advises clients about the requirements to engage with indigenous peoples; for example, SRK assisted a mining company in Suriname to plan and undertake appropriate consultation with local indigenous communities.

Artisanal mining. Artisanal mining provides a living for many poor people in resource-rich developing countries. The sector is often unregulated, with formal miners having to compete with artisanal diggers for their own resources. Governments often deal erratically with artisanal miners, and some companies that have taken strong action have been accused of rights abuses. Artisanal mining is especially prolific in the DRC, and the SRK social issues team has helped several companies there to develop Strategies and Action Plans to address volatile artisanal mining situations.

Corporate governance and standards. Many developing countries have weak legislation on the management of mining impacts, and the use of tax and royalty revenues. This may allow some officials to adopt corrupt practices, and some miners to dodge responsibilities. The SRK social issues team has advised many clients operating in African countries on the use of international instruments that promote financial transparency (for example, the Extractive Industries Transparency Initiative), and on internal arrangements to promote and entrench best-practice governance.

• Corporate social investment (CSI). Mining contributes to the economies of many developing countries; however, the wealth may not reach local communities. Responsible miners often seek to contribute to local development, but they face a number of challenges, including unrealistic expectations and a plethora of deserving projects. The social issues team has assisted clients to pursue CSI strategies that are defensible and sustainable. In several situations, the team has helped to plan the establishment of Development Foundations, based on a partnership between mines and communities.

Tim Hart:

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