Business and Economic Development: Mining Sector Report

The central aim of this research is to identify an integrated approach, with associated tools, that will assist companies engaged in metal and minerals extraction to better understand and manage their economic and social impacts on communities in their areas of influence. Improved understanding is expected to enhance the industry’s capacity to contribute positively to community level sustainable development.

The focus is of this research is on the community level. Three overarching contextual factors guide this focus. Mining investment is significantly front-loaded and tied to the physical location of the mineral resource. Companies cannot move operations when political or social conditions deteriorate. Second, important impacts of mining take place on populations with little or no clout that is associated with markets or shareholders. When impacted negatively, localities are able to disrupt mining operations. Third, as mineral deposits are increasingly pursued in more remote and less developed regions, far from central governments, the governmental license to operate is no longer sufficient. Companies are now expected to engage with local communities to obtain a “social license,” an ongoing process of approval from the communities where they operate. The inability to manage community level impacts is now widely understood as a potentially serious risk to mining operations. However, knowledge and examples of practice as to how to do so in a constructive and non-violent way remains sparse.

This research uses an inductive approach, relying heavily on case examples representing real life situations for the core data. The cases are drawn from relatively new mining operations such as Antamina, Escondida and Diavik, as well as older mines such as Cortez, Nôva Lima and Navachab. The research increased our understanding of the on-the-ground realities and complexities of company impacts on communities. This understanding argued for an integrated approach to company-community relationships.

A number of good practices and key areas of impact are noted in the report. Analysis of case data also resulted in a framework that elucidates the core social and economic impacts of mining operations. Community engagement and social license emerged as mutually reinforcing processes that are critical to the company’s ability to contribute more successfully to sustainable development at the community level. A few key economic and social impacts influence the quality of the engagement process. Core areas of economic impact are employment, mining infrastructure, sourcing and procurement practices and community investment. Social impacts focus on company culture and capacity, community culture and capacity, and indigenous rights. We found some good practices and a rich terrain for additional learning and exchange. The study also generated a sustainable development assessment tool, which combines the elements of the framework with an analysis of international standards and management systems. The tool captures both the community engagement aspects of the framework and the requisite management systems for companies to effectively integrate sustainable development into their core business activities. This tool also incorporates established international standards concerning sustainable development, and rates the company on a scale of 1 to 5 as to how close it is to achieving sustainable development on each of eleven categories of analysis. Each of the eleven categories is assessed on a continuum of progress toward sustainability. Ratings permit companies to position themselves on a continuum in the present, to set targets for the future, and to monitor progress.