Mining and CSR, part III

In parts I and II, we saw how three high-profile accidents at Canadian-operated mines in the mid-1990s triggered industry introspection on an unprecedented scale. This week, we conclude with today’s challenges.

Against the backdrop of three major spills at Canadian-operated mines in three years during the mid-1990s — Omai in Guyana, Marcopper in the Philippines and Los Frailes in Spain — national and international mining associations launched a series of initiatives in the late 1990s to help mining companies regain their social licence to operate.

The Mining Association of Canada developed its Toward Sustainable Mining program, focused on four key areas, including tailings management and the implementation of best practices to ensure the proper maintenance and long-term integrity of tailings facilities. The Association calculated that the direct cost of a tailings dam failure averaged US$70 million to US$150 million, and noted that the overall cost to the company and shareholders “can be many times more than the direct costs.”

To their credit, mining companies and consulting engineers took the time to analyze past failures, determine their causes and pose solutions to prevent future failures. This exercise focused on factors that had contributed to past failures — one being the inability of certain construction methods to withstand major seismic events.

The review found that many of the failures had occurred in the Circum-Pacific Seismic Belt, or “Pacific Rim of Fire,” extending along the western coasts of North and South America across to Japan and eastern Asia, including the Philippines and Indonesia. This geological belt hosts many world-class mineral deposits (with Chile’s copper deposits being a notable example), so it’s hardly surprising that many historic failures occurred in this region.

Post-mortems of 18 earthquake-related tailings-dam failures found that 16 had employed low-cost “downstream” construction methods that have since been banned in Chile and Peru, and replaced there (and elsewhere) with higher cost, more stable downstream and centreline construction methods. The others that failed were constructed more than 50 years ago with outmoded practices.

Tailings dam failures that did not involve earthquakes were often attributed to poor drainage or control of the water regime, or were built using poorly consolidated soils or sandy tailings as dam-fill material. Advances in the design and operation of tailings dams and embankments have corrected these and other problems. It is now possible to build permanent tailings facilities that are able to withstand floods, severe earthquakes, and other catastrophic events.

On the exploration front, the Prospectors and Developers Association of Canada developed the Environmental Excellence in Exploration (e3) project in partnership with a consortium of leading mining companies to encourage environmental stewardship during the early stages of global resource development. International codes, standards and tools relating to sustainable development and corporate social responsibility were developed that could be applied by resource companies at home and abroad.

These new tools have helped companies earn their social licence to operate, particularly in developing nations or on lands that are the traditional territories of indigenous peoples.

But in some cases, they are not yet sufficient to overcome local and non-governmental-organization opposition to mine development, as was demonstrated several years ago when residents near the proposed Tambogrande polymetallic mine project in Peru voted against a proposal by Manhattan Minerals to develop a mine because of perceived threats to local agriculture. The lack of local support also undermined the company’s ability to prove to the Peruvian government that it could finance and advance the project.

The efforts of anti-development NGOs have been given a shot in the arm by rising nationalist sentiments in such places as Mongolia, Bolivia, Venezuela, to name but a few.

Companies active in the Philippines also face an anti-development NGO movement that is among the most vigorous and active in the world. In 1995, the nation had more than 50,000 registered non-profit NGOs, another 10,000 “people’s organizations,” and many church activists with international clout and connections.

But in recent years, activists and NGOs have also come under scrutiny, particularly those from developed nations who attempt to rouse anti-mining sentiments in developing regions where jobs and economic revitalization are desperately needed. Western European activists opposed to Gabriel Resources’ proposed Rosia Montana gold mine in Romania campaigned relentlessly to stop the mine, telling locals that it would pollute their environment and destroy their “idyllic lifestyle.”

The region had been mined intermittently for 2,000 years, so the concept of a modern mine that would provide good-paying jobs while cleaning up past environmental damage appealed to local residents, two-thirds of whom were unemployed and impoverished, with no running water or indoor plumbing. Over time, the majority of local residents turned against the activists, many of whom were publicly discredited or chastised by European Union agencies for their false, misleading or exaggerated claims about the mine’s potential impacts.

Indigenous peoples supportive of TVI Pacific’s mining developments in the Philippines took their campaign against anti-development NGOs one step further, and sued several organizations, including one led by a prominent Roman Catholic bishop, for allegedly violating their human rights “for decades by resorting to all kinds of activities to stop mining operations” and economic development in their ancestral domain.

While the tide may be turning toward a more balanced approach to mineral development, the quandary that mining companies now face is that many NGOs and activists want voluntary codes of corporate social responsibility to be enacted into global law, enforceable by fines and sanctions for companies that fail to meet such standards. But what global governance agency should set and enforce such standards has not yet been debated, let alone determined.

Some activists are also calling for companies to provide a range of social services that are not being provided by failed, corrupt or impoverished states. Yet companies that do step up to fill this gap run the risk of being portrayed as corrupt, neo-imperialist, or trying to usurp the role of the state.

Anti-mining activists have long complained that Canada does not yet have laws “to ensure that the activities of Canadian mining companies in developing countries conform to human rights standards, including the rights of workers and indigenous peoples.” Yet, in the next breath, they advocate setting such laws from above and afar.

Industry associations have made the case that it is a throwback to colonialism for Canadians to impose their laws elsewhere in the world, and instead, favour the slower approach of helping developing nations to craft their own laws to better regulate their economies. Resolving this impasse appears to be the next major industry challenge.