Social imperatives

Long gone are the days of mineral exploration companies entering a region and operating with little to no social involvement on a local, regional or national level.

Mining companies now have an opportunity, or maybe an obligation, to stand at the forefront of partnerships with governments at all levels; to assist in, and in some instances spearhead, improvements in social development in the regions where they work. These initiatives will not only improve the public face of resource exploitation, countering the negative media and opposing special interest groups; they may also aid in the opening of prospective mineral exploration areas where there has been a reluctance to do so.

This is not a simple case of creating a facade to gain entry to previously closed areas. Sincere and genuine effort must be made both by the companies, governments, and community organizations in order for a positive effect to be realized.

Change is most often legislated or instituted by governments, and companies are grudgingly forced to react or adapt. If more companies were “proactive” rather than reactive, a stronger voice at the table would enable more effective input into the development of policy. Such social initiatives may help stem the tide of countries, such as Chile, from viewing mining companies as simple cash cows to be milked though significant taxation increases, a policy that is threatening to curtail exploration and development, and ultimately revenues.

Companies that demonstrate increased social initiative could also find themselves in a stronger bargaining position in dealing with large trade unions, such as in Bolivia and Peru, where there have been instances of wide-scale labour unrest affecting mining operations.

An example of a significant change in policy is the new operating environment for exploration and development companies wishing to advance mineral projects in South Africa. The country’s African National Congress government has instituted legislation mandating the involvement of “black economic empowerment” (BEE) organizations in any new mineral project. BEE is a government initiative aimed at increasing black participation in the economy, as a reaction to the previously white control of most industries during apartheid. In South Africa’s mining sector, the new mining act now requires the direct involvement of blacks in any new mineral development project.

The South African program generally seems to be working. Mining companies from large to small are aligning with BEE organizations and even merging with them in some instances.

Major mining companies operating in developing nations already contribute tremendously to their economies through taxation, infrastructure and employment. The onus is on them to institute sustainable, positive programs and, in so doing, establish a legacy beyond the simple life of a mine. The most effective way to achieve this is at the community level, and with government involvement.

More and more, shareholders are demanding that companies improve their social policies. Many larger companies have individuals, if not departments, to address social and cultural issues in their countries of involvement. It is time for the smaller exploration companies to learn from the successes and failures of the majors.

An example of an active shareholder group is the BHP Shareholders for Social Responsibility. This volunteer group is affiliated with several social organizations in Australia and has served as a “watchdog with a vested interest” on BHP’s operations worldwide. The group is by no means anti-mining, and openly states on its web site that it is anxious for the company to succeed in its ventures and increase share price and dividends — but not at any cost.

Increasingly, companies have become wise to the benefits of becoming “good corporate citizens.” The goodwill that is instilled can open borders to mineral exploration to the benefit of companies, communities and governments alike.