How Sustainable Is 'Socially Responsible' Mining?
In a six-day period over Christmas, two prominent anti-mining activists in El Salvador were shot dead in broad daylight.
First, Ramiro Rivera Gomez, vice-president of the Cabanas Environment Committee, which is campaigning to stop Canadian mining company Pacific Rim from opening a gold mine in the area, was killed while walking with his 14-year-old daughter. Six days later, Dora "Alicia" Recinos Sorto was shot returning from washing laundry in a nearby lake. She was eight months pregnant and another prominent member of the CEC.
On January 5, Amnesty International called on the Salvadoran authorities to investigate the killings.
"This has nothing to do with Pacific Rim. It's a local family feud," said Tom Shrake, chief executive of Pacific Rim. "There are radical elements out there that would like people to believe it's about mining, but it's not true."
But stories of violence and disruption at mining sites around the developing world are increasingly common. In Mexico, also in December, authorities temporarily closed down a barite mine operated by another Canadian company, Blackfire Exploration Ltd., after indigenous leader and activist Mariano Abarca Roblero was shot in the head and killed by a passing motorcyclist. Abarca Roblero had been a leader of the Mexican Network of People Affected by Mining, and was involved in the resistance to an open pit extraction mine in Chiapas.
These stories will bring back bad memories for an industry that has spent the last decade lavishing considerable amounts of money and time on trying to clean up its image. In a 2007 article in the Multinational Business Review, Hevina Dashwood explains that mining companies "were caught in the mid-1990s with a significant gap between societal expectations and their institutionalized practices.... For the industry as a whole, the gap had widened so much that companies experienced a legitimacy crisis."
This crisis was averted by a slew of new organizations dedicated to promoting corporate social responsibility (CSR) and improving the image of the industry. In 1999, nine of the biggest mining companies joined forces to create the Global Mining Initiative, intended to provide ideas and strategies for "sustainability in mining." In 2001 the representative body for the mining industry was transformed into the International Council on Mining and Metals (ICMM), which dedicated itself to ten principles--from education to the environment--to which the industry pledged to hold itself.
The field of CSR was so popular in the mining industry during this period that the University of Queensland in Australia founded its own Sustainable Minerals Institute in 2001 to promote the practice. It was, the school said, established "in response to growing interest in and debate about the role of the mining and minerals industry in contemporary society."
But a decade later, there is debate about how much CSR has actually changed the industry.
"The recent murders of mining organizers in Mexico and Guatemala, and horrendous toxic waste spills such as at Barrick Gold's North Mara mine in Tanzania, make it very hard for the mining companies to convince us that their conduct has improved," says Alexis Stoumbelis, executive director of the Committee in Solidarity With the People of El Salvador, which has spoken out about the recent assassinations in the country. "What has changed is the mining companies' attention to and investment in projecting an image of themselves as socially and environmentally responsible."
Tim Purcell, a director of the public relations firm CO3, disagrees: "The larger players have now had to tackle ICMM issues," he said. "Some [issues] are old as the hills, from indigenous tribal issues, to political insensitivity, to profound health and safety issues. But the industry does take these issues seriously, and it shares the concern and strategies about dealing with these things."
"About ten years ago major mining companies had big reputational issues," he continued. "The criticisms...were starting to affect business. Companies weren't getting licenses to operate--things like that."
Winners and Losers
Kenmare Resources PLC, which owns and operates a titanium mine in Mozambique, is one of the success stories of this trend of corporate concern about reputation in the mining industry. It won a Corporate Social Responsibility Award in 2009 from the Chamber of Commerce of Ireland for its development association, KMAD, which was founded in 2004. The company also won the Nedbank Socio-Economic Award for the same project.
"Basically, right at the outset of the project, we knew that in order for this to be a long-term success, we had to make sure that people saw it as an economic good for them--not for the country, but for them directly," says Kenmare's chairman, Michael Carvill. "In order to achieve this, we set up a not-for-profit development organization with the objective of ensuring that the local communities benefit from mines."
KMAD provides many services to local communities in Mozambique, from jobs to healthcare to agricultural training. "We even started a wildlife fund joint-venture, which provided agriculture technicians to tutor people in how to grow stuff that might be sold to the mine, and we lean on the mine so they buy," Carvill says. "It has given people who were in absolute poverty some money, and it has allowed for a better trickle-down effect. We've also built a couple of schools."
The downside of Kenmare's venture for the people of Mozambique is in the fine print. The Moma mine operates in what is called an Industrial Free Zone (IFZ), which makes the processing plant exempt from corporate taxes, import duties, export duties and VAT, with a one percent turnover after six years of production. It is estimated that Moma could have annual revenues of $85 million over a twenty-year period. This kind of deal is often cut between governments and foreign companies, especially when capital costs will be high, and it's one of the main gripes of civil society groups in developing countries, which argue that while jobs and benefits may flow to the communities near the site, the rest of the country is left empty-handed, save for those elements of infrastructure needed to connect the site to the rest of the country.
"When I first engaged this industry, over thirty years ago, with very few exceptions it was rough-handed and red-necked," said John Elkington, founder of SustainAbility, a strategy consultancy and think tank. "These people were real bruisers. In the same way it's said that you can't make omelets without breaking eggs, they argued that you couldn't dig mines without destroying the environment. They had no time for environmentalists." Now, though, he says, things are different. "I genuinely believe that the ICMM process helped catalyze real progress--and some industry leaders have had some sort of crisis of conscience over the past decade or so."
Recent legal battles would indicate that things have not only not improved, but have gotten worse. One of the most high-profile cases involving local resistance to a new project involves the British company Vedanta. A tribal people in India called the Dongria Kondh are engaged in a civil disobedience campaign to stop the company from developing an open-pit bauxite mine in the Niyamgiri hills, in the state of Orissa, in eastern India. The Dongria worship Niyamgiri's peak as the seat of their god. Vedanta already has a bauxite mine at the base of the hills.
In October a British government agency, UK National Contact Point (NCP), which oversees the enforcement of OECD guidelines on business conduct, released a statement critical of Vedanta. It concluded that "Vedanta failed to engage the Dongria Kondh in adequate and timely consultations about the construction of the mine, or to use other mechanisms to assess the implications of its activities on the community, such as an indigenous or human rights impact assessment."
Vedanta disputes the findings, saying that it "complied in all respects with the Indian regulations" and that the criticisms are "both inaccurate and inappropriate."
In the same month as the NCP ruling, the English High Court froze the £5 million of assets belonging to another British mining company, Monterrico Metals, after twenty-seven men and women were allegedly detained for three days at its Rio Blanco mine in northern Peru. The twenty-seven were protesting the mine's development, but the company disputes the allegations.
"We will be following the progress of the case here in the UK closely," says Gaby Drinkwater of the Peru Support Group. "Human rights groups in Peru believe that the conduct of these companies must be properly investigated. The escalation of social tensions caused by mining projects in Peru, of which Rio Blanco is only one case, is cause for concern."
"Mining activities have a beginning and an end. They do not go on forever," contends ICMM president Dr. R. Anthony Hodge. "Rather, it is mining's contribution that needs to be tested against the criteria of contributing to the well-being of people and the environment. That is what sustainability is all about. From this perspective, mining has a critical contribution to make. I utterly reject those who suggest this is merely PR. If effective systems manage mining responsibly, mining can be an engine of well-being. That is what we seek."
"I'd love to say our projects were entirely altruistic," said Brad Sampson, executive director of Discovery Metals, a copper mining company operating in Botswana. "But the last decade or so, mining companies have realized that unless you bring along the local community, you can't operate. If you don't, you will not get a social license to operate. I'm not talking about paper--but [that] local communities can stop projects [from] developing. You have to get them on side.
"What you are doing with a mining project in a faraway part of the world, you are imposing a degree of change, which is difficult," he concedes. "I think there's no question that the mining industry came with a messy reputation. Whether that is deserved you can debate."
Developing- World Change
Evo Morales, the president of Bolivia, is at the forefront of a change in the attitude among developing-world leaders toward foreign--or, more specifically, Western--mining companies. His country owns half the world's deposits of lithium, which could be hugely lucrative if developed. But his government is reluctant to let Western companies in. It remains unsure whether the words regarding an about-face in mining morality are actually true.
Mining minister Luis Alberto Echazu has said: "We will not repeat the historical experience since the fifteenth century: raw materials exported for the industrialization of the West, which has left us poor."
Instead, Bolivia has bucked conventional developmental economics--which outsources development and production to foreign companies expert in the field and with reserves of capital--and has endeavored to develop its deposits with state-owned companies, rebuffing the overtures of countless Western companies. Morales needs to raise $800 million to construct the mines and processing plants needed for this approach.
"I know that they are in some discussions with France, Korea and Japan [about working in Bolivia], but we don't want to be only raw material exporters. We want to create added value in the country," said Maria Beatriz Souviron, Bolivian ambassador to the UK. "Depending on the conditions they offer, in order to do so there will be an agreement between the countries. The policy of my government is to retain sovereignty over the investments made in the country. So if the people that want to invest in my country follow that rule, then it's fine. If not we'll do it ourselves."
In an industry report announced in December, Bolivian mining was reported to have grown 13 percent in 2009.
Over the last decade, the global mining industry has awakened to the need to address sustainability issues. But for this to be fully realized and its services utilized over the next decade, many within the industry believe, a binding international regulatory framework is the vital next step. "Voluntarism only takes you so far," said Elkington of SustainAbility. "It helps promote experimental approaches and a degree of competitive behavior, but there will always be those companies that prefer not to follow the corporate-citizenship line. They have to be brought under control via appropriate governance--regulatory and legal mechanisms."