Dealing with social issues is still a major challenge for many mining companies, owing to a lack of internal capacity and specialist skills, which are important for understanding how and why community engagement should be carried out meaning- fully and effectively, says International Institute for Environment and Development (IIED) senior researcher Dr Emma Wilson.

In a new book, Dispute or Dialogue? Com- munity perspectives on company-led grievance mechanisms, published by the IIED last month, giant mining, timber and oil and gas projects provide lessons for companies with regard to dealing with conflict and building trust in the communities affected by their activities.

“The topic of grievance mechanisms has grown in popularity, especially following the work of former United Nations (UN) special representative on business and human rights John Ruggie,” says co-editor of the book and one of nine co-authors Emma Blackmore.

Ruggie’s Protect, Respect and Remedy framework, endorsed by the UN Human Rights Council in 2011, identifies the need for governments to protect human rights, for business to respect those rights and for adequate forms of remedy, such as company-community grievance mechanisms.

“While there are increasing amounts of company guidance on the topic of grievance mechanisms, there is little literature incorporating community perspectives and we felt that the voices of communities needed to be heard, as the key stakeholder with whom grievance mechanisms seek to engage,” says Wilson, who also co-edited and co-authored the book.

The IIED recently published a study following the Minerals, Mining and Sustainable Development (MMSD) project completed ten years ago. The MMSD+10 paper shows that, while mining companies have become much better at understanding sustainable development issues, there are still real challenges in implementing those standards on the ground, Blackmore points out.

“While companies are better at managing issues relating to the environment, health and safety, social and community issues still remain the biggest challenge. There is growing recognition of the business case for seeking to obtain and maintain a social licence to operate – the question is how this should be done,” she says, adding that a company- community grievance mechanism can be one tool to help establish and maintain a social licence to operate.

Wilson and Blackmore point out that if conflict with communities is not effectively resolved, it can impact on the company’s bottom line.

“It can cause increased operational costs, closure of a mine and, ultimately, a drop in share price,” they say.

A 2011 survey by the Corporate Social Responsibility Initiative at Harvard Kennedy School, Harvard University, and the Centre for Social Responsibility in Mining at the University of Queensland, Australia, suggests that a major mining project might lose $20- million a week if conflict delays production.

“Another example, cited in a 2007 report from the World Resources Institute, is gold producer Newmont Mining, which sacrificed $2.23-billion in gold reserves when it was forced to close the Minera Yanacocha gold mine project, in Peru, after major tensions with local people,” Blackmore says, highlighting that reputational damage could also result in an inability to hire good-quality talented staff internationally and locally.

However, effective community engagement could, in turn, benefit a mining operation.

Key business case arguments for effective community engagement include being legally compliant if a country has laws relating to company practice for community development or stakeholder engagement; meeting third-party obligations, such as demonstrating compliance with project-finance requirements; and ensuring the smooth running of operations, Wilson says.

Further, effective community engagement helps avoid conflict, public demonstrations and social tension, which, in turn, might cause unanticipated costs. It also ensures effective and efficient project management, as time will not be lost to conflict.

Consequently, effective engagement could also lead to a company becoming an employer of choice, attracting and retaining talent and enthu- siastic staff. It could also lead to investment security being maintained and future investment opportunities being ensured by reducing the risk of project sponsors pulling out or governments attempting to gain control over the project.

Through community engagement, companies could also contribute directly to poverty reduction and poverty prevention, she adds.

Wilson and Blackmore tell Mining Weekly that their main tips for mining companies to ensure more harmonious company-community relationships would be to hire staff with relevant experience, for the mining company to conduct proper risk assessments and to be honest, open and communicate effectively.

Building Trust
Blackmore points out that building trust takes time and patience. “Companies need to find a way to build long-term dialogue with communities, and local representatives of the company should be actively involved,” she says, adding that field officers can play a very important role.

“Further, companies need to be responsive, listen and, ultimately, ensure that these actions lead to some change within the company practice where the company has been at fault or has overlooked something. Admitting fault – or responsibility – can help build trust, as demonstrated especially in the Congo Basin forestry case study in our book,” Wilson adds.

Companies also need to demonstrate, through action, that they are taking people’s concerns seriously and are fulfilling their promises. They also need to ensure that there is good communication with contractors, other service providers and third parties, so that those responsible for carrying out activities on the ground are aware of the promises made and are committed to fulfilling those promises.

“If a company’s commitments are unrealis- tic, this needs to be discussed with the contractors and others in the early stages before promises are made.”

Two of the case studies in the book, TVI Resource Development, in the Philippines, and Congolaise Industrielle des Bois, in the Congo Basin, are examples of the importance of using traditional methods of dialogue.

“Often, using local mechanisms can help, as long as they are not co-opted. Existing, traditional structures can have more legiti- macy. However, there are also issues pertaining to representation, especially if traditional structures are not inclusive, which is quite a delicate area,” Wilson says, citing the inclusion of women in male-dominated local processes as an example.