EDITORIAL & OPINION — NEW HORIZONS — Social duties the next challenge

The village women arrived early. They climbed on to the drill rig and detached the water line, forcing the driller to stop the machine. They then moved down to the geologists’ office and presented him with a document denouncing the exploration project on the grounds that the company did not have the permission of the people. The women demanded that everything be removed within 24 hours.

The next day, after failing to make any headway in negotiating with the villagers, the geologist received an urgent call from head office. Management wanted to know what was going on, as newspaper articles and the internet web site of an international advocacy group were saying that the company had violated the rights of local people by destroying land and polluting water.

Welcome to the world of social risk. Any confrontation over social issues can be costly, creating disruption, delay or even forcing termination of a project. It also creates a negative image not just for the company involved, but for the industry as a whole.

Social risk has been increasing steadily over the past few years, owing to various aspects of globalization, including: the creation by international bodies (such as the World Bank and the United Nations) of standards and policies to encourage investment in developing nations; modern communication systems, such as the internet, which readily provide information about interaction between communities and mining companies; and access to support networks and mechanisms for opposing a mining project.

Today, any company involved in mineral exploration or development needs to be able to manage social risk. This requires an understanding of the community at the project site, as well as productive communication with them, the government, shareholders and the public.

The objective of such dialogues is to build the trust and confidence of the local community, the people most immediately affected by the project. Only when the project is accepted by the community can the company move forward.

Historically, community relations were usually limited to hiring local labourers and negotiating compensation for access and disturbance caused by activities such as trenching and drilling. Today, the company must consider a more complete program of interaction with the community, one that creates the atmosphere of inclusion and openness.

This demands a commitment and organizational structure that ensures a company can represent itself as socially responsible at all times.

Several major companies have developed policies and procedures to manage social risk. However, mid-size and junior companies are frequently limited in their understanding of the nature of social risk and how to manage the growing challenge of working with communities, non-governmental organizations and others who contest the acceptability of mining.

Confrontation between company and community occurs most often over issues related to land and the attitude of the company or its employees. However, in the rapidly changing circumstances of mineral exploration projects, community expectations often are the source of many conflicts. These expectations are almost always greater than those of the company, which must deal with the reality of deadlines and the financial pressures associated with permitting, raising capital and construction.

Managing social risk from the start of exploration allows the company to address community concerns when its financial exposure is minimal. In this way, tensions can be mitigated long before they develop into a potentially high-profile conflict that could affect the viability of a new mine.

Social issues have eclipsed environmentalism as the major challenge confronting the mining industry. Questions related to social justice, equity, risk and benefit have the same momentum and trajectory as the environmental movement 15 years ago.

However, these social considerations provide a more complex challenge for explorers and developers. The concerns of local populations, unlike environmental issues, cannot be addressed solely through science or technology.

— The author is a consultant based in Vancouver. He has written and spoken extensively on community relations and the management of social risk during mineral exploration and mine development.